UK/Euro Financial Market Daily Morning Briefing 20-06-2007

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London shares open higher; NY closed up; Man Group higher
 
Leading shares opened higher, ahead of the release of Bank of England minutes, as Wall Street closed firmer overnight. Man Group led blue chip risers after it reported that the net asset value of its AHL Diversified Futures fund rose.
   
At 9.04 am, the FTSE 100 index was 29 points higher at 6,670.2 having closed yesterday 53.5 points lower at 6,650.2 off an earlier high of 6,721.4. The broader indices were also higher. Volume was average with 264 mln shares changing hands in 47,358 deals.
   
Last night on Wall Street, modest gains were made in a choppy session as tensions on the bond market eased and economic data showed the housing market still weak but generally in line with expectations.
  
The Dow Jones Industrial Average rose 22.44 points to close at 13,635.42 while the tech-rich Nasdaq added a fractional 0.16 points to 2,626.76. The Standard & Poor's 500 index managed a rise of 2.65 points to 1,533.70. There is no US economic data due out today. 
  
On Asian markets, the Nikkei 225 index closed up 48.07 points at 18,211.68, while the Hang Seng Index ended the morning up 284.80 points or 1.32 pct at 21,867.69.
  
Oil prices eased in Asian trade ahead of the weekly US energy inventory report, shrugging off concerns of possible supply disruption from a labour union strike in Nigeria.
   
New York's main oil futures contract, light sweet crude for delivery in July, fell 18 cents to 68.92 usd per barrel from 69.10 usd per barrel in late US trades. Brent North Sea crude for August delivery was down eight cents at 71.76 usd.
  
In UK economic news, the market will closely watch the Bank of England minutes to see the degree of support for a future rate hike, with analysts expecting at least two members will have voted for a hike at the June MPC meeting.
   
Elsewhere, the UK May Public Sector Net Borrowing is seen rising to 7.0 bln stg compared to 7.5 bln stg the previous year, while Public Sector Net Cash Requirement is seen rising to 7.0 bln stg compared to 7.5 bln stg the previous year. 
   
And the UK May M4 money supply is seen increasing month-on-month to 1.0 compared to 1.3 the previous, while year-on-year it is seen increasing to the 13.3 the same as the previous. UK May M4 lending is also seen rising to 18 bln stg compared to 21.1 bln stg the previous year.
   
Turning to the UK markets, Man Group was the top blue chip riser up 15 at 627 after the group said last yesterday the net asset value of AHL Diversified Futures Ltd as at the close of business yesterday was 32.37 usd, up 3.55 pct from last week and up 5.3 pct over the last 12 months.

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Commodity stocks were also higher after Goldman Sachs said as part of a mining sector review that it expects rising global growth in 2008 to lead to accelerating demand growth for metals, further tightening supply/demand balances.
   
Xstrata was up 32 at 3,110, with Goldman Sachs also upgrading the group to 'buy' from 'neutral' and raising its price target to 3,730 pence from 3,365 pence.
   
Its peers were also higher BHP Billiton edged up 14 at 1,379, Vedanta Resources was 19 higher at 1,590 and Antofagasta was 4-1/2 firmer at 627-1/2.
   
Vague bid speculation rumours helped shares in Lloyds TSB up 11-1/2 at 586 on vague bid rumour speculation. And peer Standard Chartered was up 14 at 1,680 ahead of its trading update.
   
On the downside in the blue chips DSG International fell back 3-1/2 at 167   after the group reported an expected 5 pct fall in underlying pretax profit with revenue growth in most of its operations offset by a poor performance from its troubled UniEuro business in Italy.
   
Broker comment saw shares in ICI fall back 4 at 635 after Lehman Brothers cut to 'underweight' from 'equal-weight'.
   
Turning to the midcaps, Tullow Oil was the top riser up 41-1/2 pence or 9.28 pct at 488-1/4  after Merrill Lynch added the group to its Europe 1 list and increased its net asset value based price objective by 35 pence to 560 pence per share.
   
Merrill Lynch pointed out that for Tullow Oil the market has failed to appreciate Mondays announcement of the successful Mahogany-1 exploration well.   

The broker added that announcement has transformed Tullow Oil into one of the strongest-in-sector M&A candidates.
   
Meanwhile, a trading update helped shares in Misys rise 13-3/4 at 248-1/4 after the group reported its underlying full-year revenue would be flat, but announced margins that were better than expected.
   
The group also said its its three-to-five-year recovery plan announced in March was going according to plan.
   

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Johnston Press was 6-1/2 firmer at 431 after the company's trading  update in which it said it sees a satisfactory full-year result as ad sales  declines slow.

Bridgewell Securities retained its 'neutral' recommendation on Johnston Press.
   
A broker upgrade helped shares in Halma rise 7-3/4 at 236-1/2 after Bridgewell Securities upgraded the engineering company to 'neutral' from 'underweight' following yesterday's results.
  
Bridgewell said Halma's full-year results were slightly ahead of the broker's expectations.
  
On the downside, William Hill was 2-1/2 lower at 618-1/2 after HSBC  downgraded the group to 'neutral' from 'outperform' with a price target of 680 pence.
   
ITE Group was lower on profit taking follow recent gains after the appointment of Bill Dye as chief executive.

Diary of Events

For a diary of key financial and corporate events in the UK today, click here

US Summary

For a summmary of US stocks at yesterday's close of trade, click here

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PARIS - Market data at 10.05 am:

Major indices:
   
CAC-40 up 39.18 points, or 0.65 pct, at 6,110.85
SBF-80 up 29.41, or 0.40 pct, at 7,332.77
SBF-120 up 26.88, or 0.61 pct, at 4,455.65

Volume: mln eur
30 CAC-40 stocks up
10 CAC-40 stocks down

Major gainers:
   
Neuf Cegetel up 0.68 eur, or 2.03 pct, at 29.10 after UBS initiated coverage on the telecoms company with a 'buy' recommendation and a 36 eur target, according to dealers. The broker UBS said Neuf has strong growth prospects, will have near zero debt by 2009 and may make further acquisitions.
   
Arcelor Mittal up 0.94, or 1.92 pct, at 49.89. Yesterday, CEO Lakshmi Mittal told investors that the steelmaker is six months ahead of schedule in terms of merger synergies, with these expected to reach 830 mln usd by June 30, out of the 1.6 bln envisaged by 2009.
   
Lafarge up 2.02, or 1.54 pct, at 133.57
   
EADS up 0.19, or 0.78 pct, at 24.45 as the shares continued to benefit from the newsflow from the Paris Air Show. After notching up 339 orders on Monday, Airbus said yesterday that US leasing company Intrepid Aviation Management LLC has ordered 20 A330-200s, the biggest order yet for the freighter jet.

Major losers:
   
Veolia Environnement down 0.40, or 0.70 pct, at 56.50. Veolia is planning further acquisitions in its water division to help boost growth, the division's deputy head Jean-Michel Herrewyn told Die Welt.
   
Sanofi-Aventis down 0.15, or 0.24 pct, at 61.95. The drug company had closed slightly higher yesterday after it won a patent case in the US covering blockbuster Plavix, but the outcome was widely expected by the market. According to one dealer, this morning's drop is linked to renewed talk of a Sanofi-Aventis bid Bristol-Myers Squibb, its commercial partner for Plavix in the US, which could be dilutive for Sanofi shares.

Most active stocks:
   
Total, up 0.77, or 1.31 pct, at 59.72, in volume of 113 mln eur
   
Sanofi-Aventis, 85 mln

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MADRID - Market data at 10.10 am
   
IBEX-35 index                 up 78.2 points at 15,078.5
   
Major gainers:
   
Telefonica, up 0.13 eur at 16.47, after UBS upgraded its shares to 'neutral' from 'reduce' and raised its target to 16.70 eur from 15.70 eur, forecasting sustained earnings momentum.
   
Repsol, up 0.19 at 28.79, after a report in Argentina's Ambito Financiero the company is about to close the sale of YPF to businessman Enrique Eskenazi for 3 bln usd.
   
Other leading blue chips, with BBVA up 0.15 at 18.46 and SCH up 0.06 at 13.88.
   
Iberia, up 0.03 at 3.77, after the Wall Street Journal said Lufthansa has discussed a possible bid for the flag carrier together with APAX.
   
Issues with renewable interests, with Gamesa up 0.47 at 27.86, Acciona up 1.90 at 205.30 and Solaria up 0.37 or 3.11 pct at 12.25, after Solaria's strong debut yesterday.
   
Cintra, up 0.16 at 12.00. Yesterday, Cintra failed to secure an initial recommendation from the Texas Transportation Commission on its bid for the Texas SH-121 motorway contract.
   
Major losers:
   
Altadis, off 0.15 at 50.05, after sources close to the operation told Thomson Financial News yesterday a bid for the tobacco company by the CVC Capital Partners-led consortium is not imminent.
  
Selected constructors, with ACS down 0.30 at 47.07 and Sacyr off 0.03 at 38.36, as sector slowdown concerns continued to weigh.

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