UK/Euro Financial Market Daily Morning Briefing 21-11-2007

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London shares open lower ahead of BoE minutes, banking stocks fall

At 8.57 am, the FTSE 100 index was down 58.2 points at 6,168.3, off a low of 6,127.3, having closed last night 105.7 points firmer at 6,226.5, while the FTSE 250 index was 220.4 points lower at 10,279.5.
   
Volume was average with 244 mln shares changing hands in 78,260 deals. Ex-dividend stocks also contributed 10.29 points to the falls with Cable & Wireless, Carnival, HSBC, Sainsbury and Vodafone all going ex-dividend today.
   
Overnight in Wall Street, stocks finished higher after an extremely volatile session, with investors still jittery about mortgage-related problems at the nation's major lenders. They also took the view the latest Federal Reserve comments suggested another rate cut.
   
The Dow Jones Industrial Average index closed up 51.70 points at 13,010.14. Today, investors will watch the University of Michigan survey of consumer sentiment for November which economists expect the survey to remain at 75.0 for the month.
   
On Asian markets, stocks were lower as investors fretted over continuing volatility on Wall Street, a weakening US dollar and a jump in crude oil prices. The Hang Seng index ended the morning down 925.54 points at 26,845.67, while the Nikkei 225 Stock Average closed 373.86 points lower at 14,837.66.
   
In Asian trading hours, oil prices rose above 99 usd a barrel as the greenback's fall drove demand for dollar-denominated crude.
   
New York's main contract, light sweet crude for January delivery, pulled back from a new intra-day high of 99.29 usd, but was still up 94 cents at 98.97 usd from its record finish of 98.03 in New York yesterday.
   
Brent North Sea crude for January delivery was up 87 cents at 96.36 usd. In the UK, investors will focus on minutes to the last Bank of England's rate-setting meeting -- when interest rates were held at 5.75 pct - for any clues as to whether or not there will be a December rate cut.
   
Only one member of the Monetary Policy Committee, the perceived dove David Blanchflower, voted to cut rates in October and if it emerges that other rate-setters joined him in November, the odds of a cut in December may shrink.
   
Looking at the UK blue chips, banking stocks were again under pressure with Northern Rock the top faller, down 13.9 pence or 14.33 pct at 83.1.
   
The group said it has received additional indicative expressions of interest covering a range of options for the business, one of which contemplates an offer for the company "materially below" yesterday's closing market price of 97 pence.
   
Its peers were also lower Alliance & Leicester was off 25-1/2 pence at 568-1/2, Barclays was down 18-1/2 pence at 498, HBOS fell 24 pence at 717 and Lloyds TSB was down 12-1/2 pence at 459-1/2.

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After earnings news, Daily Mail & General Trust (DMGT) fell 24 pence at 553 as it said its business-to-business operations helped its annual pretax profit before exceptionals and amortisation rise 11 pct to a record 288 mln stg.
   
British Airways was down 8-3/4 pence at 326 as the Daily Mail reported that the group is pondering a 160 mln stg bid for BBVA's Iberia stake. Home construction stocks were also under pressure because of fears of a downturn in the housing market.
   
Taylor Wimpey was off 6.6 pence at 184 and Barratt Developments was down 23-3/4 pence at 463. Its mid cap peers were also lower, Bellway was down 40 pence at 952. There were few blue chip risers with oil stocks the major risers following higher prices.
   
BG Group was up 6-1/2 pence at 978-1/2 and Royal Dutch Shell gained 20 pence to 1,988. In the mid-caps, Paragon Group of Companies continued its slump from yesterday, down 15-1/2 pence at 109-3/4 as the group announced the possibility of a rights issue to raise 280 mln stg.

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Elsewhere, Northgate fell 57 pence to 728 as ABN Amro reinitiated coverage on the group with a 'sell' rating and price target of 650 pence.
   
London Stock Exchange shed 123 pence to 1,763 after Banca Monte dei Paschi di Siena said its MPS Finance Banca Mobiliare Spa unit sold its 2.93 pct stake in the UK group at 17.70 stg per share.
   
On the upside, there were few mid-cap risers with exploration and production companies the main gainers.
Dana Petroleum was up 9 pence at 1,248, Venture Production gained 9 pence at 778, Soco International was 4 pence higher at 2,291 and Premier Oil was 10 pence firmer at 1,157.

UK Diary of events:

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

US Summary:

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

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Major indices:
CAC-40 down 90.95 points or 1.65 pct at 5,415.73
SBF-80 down 123.70 or 1.99 pct at 6,095.05
SBF-120 down 68.93 or 1.73 pct at 3,913.23

2 CAC-40 stocks up
38 CAC-40 stocks down

Major gainers:
Total, up 0.67 eur or 1.13 pct at 55.53. Oil prices hit a record high of 99.29 usd a barrel earlier in Asia trade
EDF, 0.54 or 0.98 pct ahead at 55.45. Le Figaro reported today that EDF is close to taking a 30 pct stake in the company which will operate the two EPR European pressurised water nuclear power plants Areva expects to sell to China

Major losers:
Alcatel-Lucent, down 0.24 or 4.55 pct at 5.04, after Ericsson's warning over Q4 sales late yesterday Societe Generale, down 3.85 or 3.83 pct at 96.73, following a downgrade to 'sell' from 'neutral' at Goldman Sachs
   
Natixis, 0.60 or 5.09 pct lower at 11.19 Soitec, down 0.44 or 4.99 pct at 8.38. AMD, Soitec's biggest customer, closed 6.5 pct lower in New York yesterday in the wake of several negative
analyst reports

Most active stocks:
Alcatel-Lucent, 7.79 mln shares traded Euro Disney, unchanged at 0.10 eur. 4.46 mln shares traded

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DAX - down 99.26 points, or 1.30 pct, at 7,531.05
MDAX - down 205.33 points, or 2.18 pct, at 9,217.74
TecDAX - down 23.32 points, or 2.57 pct, at 882.92
DAX futures - down 67.00 points, or 0.88 pct, at 7,563.00

Major Decliners:
Hypo Real Estate, down 2.27 eur, or 6.43 pct, at 33.03, as traders pointed to general weakness in financial stocks which was compounded with technical trading reasons after the shares fell below a key support level at 35 eur per share.
   
Continental, down 2.28 eur, or 2.56 pct, at 86.72, after the shares corrected from yesterday's gains and continued their prolonged downward slide Commerzbank, down 0.57 eur, or 2.27 pct, at 24.55, also coming under pressure on financials
   
Metro, down 1.50 eur, or 2.33 pct, at 62.85
MAN, down 21.36 eur, or 2.21 pct, at 104.45

Major Advancers:
Deutsche Postbank, up 1.18 eur, or 2.16 pct, at 55.90, after statements from Deutsche Bank CEO Josef Ackermann that the bank has not ruled out interest in a bid for Germany's largest retail bank rekindled speculation of a bidding war should Postbank eventually come up for sale
   
TUI, up 0.20 eur, or 0.85 pct, at 19.02, after the Frankfurter Allgemeine Zeitung reported, citing sources, that Russian investor Alexei Mordachov is considering increasing his current 3 pct stake in the shipping and tourism conglomerate to 20 pct.
   
Other Stocks in Focus
TecDAX-listed Versatel, up 0.25 eur, or 1.81 pct, at 14.04 after Exane BNP Paribas raised its stance on the stock to 'neutral' from 'underperform' and JP Morgan lifted its price target to 14.30 eur per share from 12.50 and reiterated its 'overweight' rating

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AMSTERDAM - Market data at 10.44 am

Major indices
   
AEX 486.06, down 7.78 points
AMX Midcap 625.73, down 18.05 points
Government bonds Mainly higher

Major decliners
   
Corporate Express slumps 4.64 pct at 5.96 eur
   
DSM slips 3.54 pct at 32.43
   
TNT down 3.40 pct at 22.59 eur
   
Philips down 3.06 pct at 26.59 eur as it said it will assist regulatory authorities in investigations into possible anti-competitive activities in the cathode ray tubes (CRT) industry  
   
Ahold down 1.35 pct at 9.53 eur after it reported Q3 earnings that beat estimates but failed to ward off concerns over a slowdown in the fourth quarter, trading sources said
   
Nutreco down 5.08 pct at 37.40 eur
   
Corio down 4.93 pct at 51.05 eur ahead of third quarter results tomorrow
   
Crucell 0.09 pct lower at 11.29 eur amid news of an upgrade to 'neutral' from 'sell' at Goldman Sachs

Major gainers
   
Royal Dutch Shell up 1.26 pct at 28.06 eur amid news it has signed a non-binding memorandum of understanding with Regal Petroleum to acquire a 51 pct interest in a Regal subsidiary that indirectly holds the licences for various gas fields in the Ukraine
   
ASML puts on 0.18 pct at 22.52 eur
   
Heijmans up 0.81 pct at 23.58 eur
   
TKH up 1.03 pct at 14.75 eur after 'satisfactory' third quarter results in which it reiterated its full-year net profit outlook, market sources said

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