UK/Euro Financial Market Daily Morning Briefing – UK/Euro Financial Market Daily Morning Briefing
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A daily snapshot of the UK, French, German and Dutch markets just after the market open. Including a diary of key financial events across the UK and a summary of U.S after market close. Click here to receive or daily bulletins. News provided by AFX/Associated Press.
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UK/Euro Financial Market Daily Morning Briefing 20-02-2007
02/20/2007
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ADVFN III |
Morning Euro Markets Bulletin |
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Daily world financial news from AFX/Associated Press |
Supplied by advfn.com | | |
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London |
London shares lower in early deals, hit by mixed FY results; Hanson gains
Leading shares were a touch lower in early deals, lacking momentum after Wall Street's holiday yesterday, with Rexam, Scottish & Newcastle and Cadbury Schweppes all dropping on the back of mixed FY results, but Hanson rallying on sector consolidation, dealers said. At 9.08 am, the FTSE 100 index was down 7.6 points at 6,436.8 after closing up 24.9 points at 6,444.4 yesterday. The broader indices got off to a positive start, however. Early volume was solid, with 246.1 mln shares changing hands in 37,288 deals. With Wall Street closed overnight, and Hong Kong still celebrating Chinese New Year, Tokyo's Nikkei 225 index lacked support, closing down 0.97 points at 17,939.12 this morning. In London, Rexam was 19 pence weaker at 525 after the consumer packaging and beverage can maker said its full year pretax profit for 2006 fell by 24 mln stg to 307 mln stg compared, with underlying pretax profit down 1 pct year-on-year to 303 mln stg. In reaction, Citigroup cut its forecast pretax profit and EPS estimates for 2007 by 9 pct to reflect higher input prices not fully passed on. It also reiterated its 'hold' recommendation. Meanwhile, roughly in-line full-year results but a cautious outlook from Scottish & Newcastle hit the brewer's shares this morning, prompting profit-taking after the share price run up yesterday. The shares fell back 21 pence at 554. The Fosters and Kronenbourg 1664 brewer's pretax profit was up 13.9 pct in 2006 to 452 mln stg, on revenues up 7 pct to 4.155 bln stg, but S&N said that the implied net impact on profit of the smoking ban, which comes into effect mid year, would be around 10 mln stg for 2007. Sticking with consumables, Cadbury Schweppes slipped back 11 pence at 565-1/2 in early deals after the world's biggest confectionery maker reported 2006 results below market expectations, reflecting "challenges" in a number of its businesses in the EMEA region, particularly the UK and Nigeria. Pretax profit before exceptional items for the year to end Dec came in at 931 mln stg, compared with 865 mln stg the previous year. Analysts expectations had ranged between 955-988 mln stg. Elsewhere, InterContinental Hotels also unveiled numbers this morning, and also joined the negative trend, losing 20 pence at 1,277 after reporting on a "successful" year but failing to offer any news on recent takeover speculation. The hotelier showed a pretax profit of 247 mln stg, down from 284 mln in 2005, on revenues from continuing operations of 805 mln stg, up from 713 mln, and also announced plans to return a further 850 mln stg to shareholders.
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IHG said it will pay out 700 mln stg in the second quarter of 2007 as a special dividend and a further 150 mln stg in a share buyback which is yet to commence. Barclays was over 1 pct lower, down 5 pence at 776-1/2, after full-year numbers failed to excite the market. The UK's third-biggest bank said that full-year pretax profits rose to 7.136 bln stg from 5.28 bln stg, narrowly beating analysts' expectations of 7.025 bln stg. Earnings apart, Prudential fell back 7-1/2 pence at 717-1/2 on the back of news the UK insurance group is coming under pressure to slash the value of its Taiwanese life business by as much as 700 mln stg when it reports full-year results next month, according to an unsourced report in the Independent. The paper said Prudential will likely follow the lead set by Dutch peer ING Groep in cutting the value of its business in Taiwan, where the UK company has a large number of life insurance policies offering guaranteed returns of up to 7 pct. And BAE Systems was also hit by press stories, 5 pence easier at 454-1/4 following a report in the Financial Times that SAAB, the engineering group 20 pct owned by BAE, is under investigation by Swedish authorities over bribery allegations relating to the UK arms manufacturer's dealings in the Czech Republic. In the property sector, Land Securities dropped 52 pence at 2,242 after revealing it expects to pay a REIT conversion charge of about 315 mln stg. The group said its investment portfolio assets have been revalued at 14.8 bln stg, a 1.6 pct surplus since the interim results to end-Sept 2006, but it will pay a REIT charge relating to 2 pct of the revalued qualifying assets in July this year. On the upside, Hanson jumped up 38-1/2 pence at 850 on the back of sector consolidation news in the US. The UK group was reiterated as one to 'buy' by ABN Amro this morning, following news overnight that US construction aggregates producer Vulcan Materials plans to acquire Florida Rock Industries for 4.6 bln usd. The broker said this deal is "excellent news" for Hanson and suggests it could be worth 1,150 pence a share on a takeout. Another top blue-chip performer was Drax Group, 26 pence to the good at 688, benefiting from an upgrade to 'buy' from 'neutral' by Goldman Sachs with the price target set at 767 pence. Peer British Energy was among the top risers on the second line too, 14 pence ahead at 405, as the same broker also upgraded it to 'buy' from 'neutral' and set a price target of 451 pence.
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The mining sector also provided support, rallying on the back of overnight strength in Australian trade, with Kazakhmys up 15 pence at 1,141, Xstrata 12 pence better at 2,545 and Vedanta Resources adding 9 pence at 1,318. Among the mid-caps, EMI Group soared over 7 pct higher, up 15-3/4 pence at 237-1/4, after the beleaguered UK music company said it has received another takeover approach from US rival Warner Music. EMI, which has issued two profit warnings since mid January, said Warner Music had not tabled a firm proposal, and that there was no guarantee it would do so. On the broker front, bullish comment and an upgrade to 'buy' from 'neutral' by UBS sent shares in FirstGroup 9-1/2 pence higher at 626-1/2. The broker told clients it has upped its stance and raised its price target to 700 pence from 575 in light of the group's recent Laidlaw acquisition. FirstGroup was also in play after the UK's Department for Transport said it is short-listed, along with Arriva Trains, National Express and the joint venture unit of Stagecoach and Virgin Wings as bidders for the Intercity East Coast (ICEC) franchise. On the downside, meanwhile, Morgan Crucible led the casualties, down 10-1/4 pence at 282-3/4, as in-line full-year numbers provided an opportunity to take profits after last week's rally. The engineering group said it achieved margin improvements across its businesses as it reported a 32.9 pct increase in underlying annual pretax profit to 70.3 mln stg. In response, Altium maintained its 'buy' recommendation and lifted its price target to 325 pence from 300. Finally, it was a similar story at Morgan Sindall, which said it has made an "encouraging" start to 2007 as it reported a 14 pct increase in the full year pretax profit to 47.6 mln stg, but the shares dipped 20 pence lower at 1,347 following the release. On the economic front, UK public finances data for January are expected to show a large surplus as the Treasury's coffers are boosted by a large influx of tax revenues during the month. UK public sector net borrowing -- the government's preferred measure of borrowing -- is expected to be -10 bln stg compared with -9.9 bln in January 2006. Another measure of borrowing is expected to show a public sector net cash repayment of 22.5 bln stg after a repayment of 21.4 bln in January 2006. These figures would keep the public finances roughly on the same level for the fiscal year to date as they were at the same point last year, still leaving a good chance that Chancellor of the Exchequer Gordon Brown will achieve his forecasts for the year.
UK Diary of Events
For a diary of key financial and corporate events in the UK today, click here
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Paris |
PARIS - Market data at 10.02 am:
Major indices: CAC-40 down 9.19 points at 5,730.71 SBF-80 down 15.98 at 7,113.49 SBF-120 down 7.26 at 4,199.78
Volume: 560 mln eur 13 CAC-40 stocks up 27 CAC-40 stocks down
Major gainers: Technip, up 2.08 eur or 4.2 pct at 52.18 ahead of 2006 earnings presentation on Thursday. Danone, up 1.14 or 0.9 pct at 126.99 after an upgrade to 'buy' from 'hold' by Citigroup analysts, who raised their price target to 145 eur from 122 eur. Lafarge, up 1.23 or 1.1 pct at 117.68 and leading advance among CAC-40 components, ahead of the group's 2006 results on Friday.
Major losers: Seb, down 6.58 or 4.9 pct at 128.40, after the home appliance maker said net profit dropped 13.7 pct to 88 mln eur last year, due to higher restructuring and asset impairment charges than anticipated, dealers said. Air France-KLM, down 0.51 eur or 1.4 pct at 35.05. The airline denied an Italian press report that said it is preparing a takeover bid for Alitalia, amid speculation that Lufthansa is also considering an offer. Air France-KLM already owns about 2 pct of Alitalia, in a which a controlling stake is being sold by the Italian government. AGF, down 0.01 eur at 127.31 after posting 2006 net profit of 1.9 bln eur, up 18.4 pct from the year before and ahead of analyst expectations. Dealers said the share price reaction has been subdued, since the AGF's parent company Allianz is in the middle of its minority takeover bid, a deal launched in January that values AGF at about 126 eur per share.
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Amsterdam |
Amsterdam - Market data at 10.33 am
Major indices AEX 508.50, down 0.72 point AMX Midcap 722.66, up 1.37 point Government bonds slightly lower
Major losers Rodamco Europe gave up 0.51 pct at 110.93 after yesterday's rally, while Corio shed 0.4 pct at 74.58 and Vastned Retail traded 0.11 pct lower at 78.47 Heineken lost 1.49 pct at 39.70 ahead of full-year results due out tomorrow Royal Dutch Shell slipped 0.39 pct at 25.25, SBM Offshore eased 0.39 pct at 27.79
Major gainers: Grolsch outperformed, rising 3.48 pct at 33.0 as investors welcomed news the brewer will introduce a 'plus' dividend, and reported in-line full-year results Numico added 0.75 pct at 41.42, ahead of tomorrow's fourth-quarter figures Nutreco, up 2.15 pct at 54.20, extended yesterday's gains on news it acquired BASF's premix activities, with ING, UBS and SNS Securities all raising their targets TomTom advanced 0.79 pct at 33.20 Fugro put on 0.84 pct at 37.24 on news of a 29 mln eur seismic order in the Middle East. In January, Fugro announced a seismic contract worth more than 40 mln eur in Norway, and Rabo analysts noted the order intake in seismic highlights the currently strong market conditions
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Frankfurt |
German shares AFX at a glance outlook
Forthcoming Events Today Heidelberg Cement FY results Volkswagen FY Results (anticipated, unannounced)
Tomorrow Deutsche Boerse FY results and annual news conference Allianz FY results, annual news conference (0900) BASF FY results, annual news conference Continental FY results, annual news conference Fresenius Medical Care FY results, annual news conference ProSieben Sat.1 Media AG FY results German final Q4 GDP (0600) FY 2006 public deficit (0600)
Company News Norddeutsche Landesbank raises voting rights in CeWe Color to 5.7317 pct
Macroeconomic News German Jan PPI flat vs Dec, up 3.2 pct yr-on-yr
Market News VW reinitiated at 'overweight' at Morgan Stanley; price target 107 eur - traders BMW lowered to 'underweight' at Morgan Stanley; price target 45 eur - traders
Forex
London 0920 GMT |
Sydney 0535 GMT |
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US dollar |
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yen 120.03 |
up from |
119.72 |
sfr 1.2367 |
up from |
1.2328 |
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Euro |
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usd 1.3144 |
down from |
1.3180 |
yen 157.76 |
down from |
157.83 |
sfr 1.6254 |
up from |
1.6247 |
stg 0.6744 |
down from |
0.6747 |
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Sterling |
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usd 1.9490 |
down from |
1.9535 |
yen 233.93 |
up from |
233.90 |
sfr 2.4103 |
up from |
2.4075 |
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Australian dollar |
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usd 0.7854 |
down from |
0.7869 |
stg 0.4030 |
up from |
0.4028 |
yen 94.28 |
up from |
94.22 |
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