UK/Euro Financial Market Daily Morning Briefing 22-06-2006

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London shares led higher by miners, oils; helped by strong US, Asian trading

London shares opened higher this morning, boosted by miners, after Wall Street stormed ahead overnight on the back of several upbeat earnings reports and Asian markets soared following strong Japanese trade surplus figures, dealers said.
   
At 8.52 am, the FTSE 100 was 45.9 points ahead at 5,710.9 after closing little changed yesterday, just 6.80 points higher at 5,665.00.
   
The broader indices were also higher, with the FTSE 250 up 27.7 points at 9,120.8.
   
Volume was fair, with 196.7 mln shares changing hands in 25,842 deals.
   
Overnight on Wall street, US blue chips enjoyed a strong session, fuelled by weaker oil prices and stronger-than-expected earnings from FedEx and Morgan Stanley, which overshadowed ongoing inflation fears.
   
Morgan Stanley's second-quarter profit more than doubled from a year earlier and FedEx saw a 27 pct jump in its fiscal fourth-quarter earnings. The results quieted concerns about the possibility of an economic slowdown caused by rate hikes from the Federal Reserve.
   
The DJIA closed 104.70 points firmer at 11,079.50, while the Nasdaq ended 34.14 points higher at 2,141.20 and the S&P 500 index finished the day up 12.10 points 1,252.20.
   
Meanwhile, in Asian trade this morning, the Nikkei 225 index ended the morning session 341.27 points ahead at 14,985.53, while Hong Kong's Hang Seng was also higher, up 201.70 points at 15,861.06 by midday.
   
The strong Asian gains came after Japan's trade balance data revealed a jump in exports, fuelling a 35.2 pct year-on-year rise in the country's trade surplus in May to 384.9 bln yen.
   
In London today, miners topped the blue chip index on the back of rising commodity prices, with gold adding 5.8 usd to trade just below the 600 usd an ounce mark, while silver and copper prices also moved upwards.
   
Recent additions to the FTSE 100 index Vedanta Resources and Lonmin enjoyed a strong start to the session, up 39 pence at 1,348 and up 54 at 2,695, respectively.

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Kazakhmys also climbed higher, up 21 at 1,116, as did peers Antofagasta, 11
firmer at 408 and Anglo American, 61 stronger at 2,167.
   
Support was also provided by the oil sector, fuelled by a rise in the oil price overnight after sharp gains in overall US crude stockpiles offset a smaller-than-expected rise in gasoline inventories.
   
New York's main contract, light sweet crude for delivery in August, was up 0.60 at 70.93 usd a barrel in electronic trading on Thursday morning.
   
This boosted BP up 5-1/2 at 609, Royal Dutch Shell 15 firmer at 1,797 and Cairn Energy 49 higher at 1,983.
   
On the corporate front, Corus Group was buoyed by ongoing sector consolidation news, rising 8-3/4 at 405-1/2.
   
The Financial Times this morning reported that Mittal Steel's chief executive, Lakshmi Mittal is weighing up whether to increase his company's 25.8 bln eur offer for Arcelor.
   
Meanwhile, Old Mutual and Schroders were among the top gainers, boosted by the strength of the equity markets, which pushed Old Mutual up 3-1/2 at 165-1/2 and Schroders up 13 at 1,005.
   
On the downside, only a handful of blue chips traded in the red this morning.
   
Utility stocks' defensive qualities weren't needed today -- United Utilities slipped 1/2 at 653-1/2 while British Energy Group also fell back half a penny at 689-1/2.
   
However, the main faller was British Airways, down almost 5 pct or 17-3/4 at 350 after announcing that the UK Office of Fair Trading and the US Department of Justice are investigating alleged cartel activity involving it and other airlines in relation to pricing of passenger air transportation, including fuel surcharges.
   
BA also said Martin George, its commercial director, and Iain Burns, head of communications, have been given leave of absence during the investigation.
   
On the second line, WS Atkins was higher, adding 28 at 801, after the engineering consultancy and support services group posted a 16 pct rise in pretax profits to 72.4 mln stg for the year to March 31.
   
Atkins said it achieved good results at the top end of expectations, with revenues excluding joint ventures growing by 10 pct to 1.052 bln stg and operating profits excluding goodwill up 25 pct to 62.9 mln stg.
   
However, it also said profits from its role in London Underground maintenance group Metronet had fallen 61 pct to 4.6 mln stg. Among broker changes, Autonomy enjoyed strong gains, thanks to a UBS upgrade to 'buy' from 'neutral'.
   
Autonomy shares rose 11-3/4 to 399-1/2 after the broker said it continues to see upside to its full-year estimates and the share price, primarily from the impact of the Verity purchase.
   
Although UBS cut its target to 475 pence from 500 to reflect the weaker US dollar.

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CSR also benefited from an upbeat research note after Goldman Sachs initiated coverage of the stock with an 'outperform' rating and 1,616 pence target, saying it expects the group should be able to maintain its leadership position in Bluetooth.
   
CSR traded 23 ahead at 1,313.
   
Among the negatively-traded mid-caps, Bradford & Bingley stood out after losing its initial gains to trade over 4 pct lower or 18-3/4 pence at 440-1/4.
   
In a trading update before its July 27 interim results, B&B said it is "comfortable" with the current average analyst forecast for underlying full-year pretax profit of 329.6 mln stg, up from 310.1 mln stg in 2005.
   
In reaction, however, WestLB said the numbers were okay but that the group remains a "structural sell".
   
WestLB warned that it sees a dramatic decline in profitability because of a possible increase of "several hundred percent" in non-standard mortgage loan impairment charges.
   
And interim results from Crest Nicholson also failed to inspire investors after first-half pretax profit came in at 39.2 mln stg from 48.9 mln on revenues of 355.1 mln stg against 350.6 mln year-on-year.
   
Merrill Lynch reiterated its "buy" recommendation on the stock, but pointed out that the first half margin was 13.7 pct versus the broker's 14.7 pct forecast.
   
Crest Nicholson shares slipped 2-1/4 at 513.
   
Finally, on the economic front later today, investors will be awaiting data from across the Atlantic, with US jobless claims and leading indicators eyed for signs of the health of America's economy.
   
Leading indicators are expected to have dropped to -0.4 pct in May from -0.1 pct in the previous month, while jobless claims are seen rising to 305,000 in June from May's figure of 295,000.

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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PARIS - Market data at 9.57 am:

Major indices:
   
CAC-40 up 44.04 points or 0.92 pct at 4,818.77
SBF-80 up 51.37 points or 0.94 pct at 5,501.04
SBF-120 up 31.93 points or 0.92 pct at 3,490.95

Volume: 667 mln eur
32 CAC-40 stocks up
6 CAC-40 stocks down
1 CAC-40 stock unchanged
(Arcelor temporarily removed from CAC-40)

Major gainers:
   
Lafarge, up 2.75 eur or 2.99 pct at 94.70, after raising its EPS guidance.
   
Danone, up 2.10 eur or 2.28 pct at 94.40
   
Sanofi-Aventis, up 1.35 eur or 1.85 pct at 74.30, after its Acomplia anti-obesity drug was approved for sale in the EU.

Major losers:
   
Veolia Environnement, down 0.38 eur or 0.97 pct at 38.95
   
Pernod Ricard, down 0.90 eur or 0.60 pct at 149.40
   
L'Oreal, down 0.35 eur or 0.50 pct at 70.35

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AMSTERDAM - Market data at 9.59 am:

Major indices:
   
AEX index             431.15, up 4.51 points
AMX Midcap index      557.87, up 7.35 points
Govt bonds            unchanged to slightly lower

Major gainers:
   
Hagemeyer firmed 2.64 pct at 3.50, Buhrmann was up 1.98 pct at 11.33
   
Wolters Kluwer rose 2.27 pct at 18.05
   
Philips added 1.84 pct at 24.30, extending yesterday's strong gains on news of a sale or IPO of its Semiconductors division before year end
   
Vedior put on 1.09 pct at 15.78 as Citigroup reiterated a 'buy' recommendation    
   
Corio was 0.51 pct higher at 45.40 amid news it acquired a further share in Italian shopping centre Globo
   
Crucell jumped 5.07 pct at 15.75
   
Mittal Steel climbed 4.38 pct at 27.17 amid a report in the FT the steel group is weighing up whether to increase its 25.8 bln eur offer for Arcelor

Major losers
   
Heineken slipped 0.18 pct at 32.39
   
Reed Elsevier shed 0.17 pct at 11.45, VNU edged 0.03 pct lower at 29.53

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FRANKFURT - Market data at 10.25 am
   
Major indices:
   
DAX 30 - 5,567.31, up 63.90 points or 1.16 pct
MDAX - 7,684.46, up 114.98 points or 1.52 pct
TecDAX - 636.35, up 8.70 points or 1.39 pct
DAX future - 5,604.50, up 44.50 points or 0.80 pct

Major gainers:
   
Deutsche Boerse, up 3.26 eur or 3.21 pct at 104.96, as Cheuvreux upgraded its stance on the stock to 'selected list' from 'outperform' and hiked its price target to 144 after raising its growth estimates for the German exchange operator
   
ThyssenKrupp, up 0.79 eur or 3.21 pct at 25.37
   
Commerzbank, up 0.72 eur or 2.61 pct at 28.26
   
Infineon, up 0.22 eur or 2.55 pct at 8.84
   
Allianz, up 2.58 eur or 2.16 pct at 122.20, as investors welcomed the insurance giant's restructuring measures, which were positive but widely expected by the market

Major losers:
   
Lufthansa, down 0.12 eur or 0.85 pct at 14.03
   
Schering, down 0.05 eur or 0.06 pct at 89.20

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