UK/Euro Financial Market Daily Morning Briefing 23-07-2007

Read our new Spread Betting interviews. Click Here.

London shares firmer early on; merger news boosts UK life insurer sector

The FTSE 100 were firmer this morning helped by news of sector consolidation among UK insurers after Friends Provident confirmed it is in merger talks with peer Resolution, although trading was expected to
remain cautious ahead of a busy week for corporate earnings both here and in the US.
   
At 9.15 am, the FTSE 100 was up 13.4 points at 6,598.6, but off opening highs, with the broader indices mixed. Early volume was modest with 306 mln shares trading in 65,181 deals.
  
On Friday, the Dow closed 149.33 points weaker at 13,851.08 with the broader stock indicators also lower. The S&P 500 index fell 18.98 to 1,534.10, and the Nasdaq composite index finished 2.44 easier at 2,687.60.
   
Over in Asia, the Nikkei closed down 194.29 points at 17,963.64, and in Hong Kong the Hang Seng was off 14.44 points at 23,277.46 by the mid session.
   
In London this morning, financials dominated the risers after two of the country's largest life insurers, Friends Provident and Resolution, confirmed they were in negotiations over a possible 8.3 bln stg merger.
   
Resolution took on 14 pence to 642, while Friends Provident added 13-1/2 to 200. If it goes ahead, Resolution shareholders would own 50.9 pct of the merged company while Friends Provident would have a 49.1 pct shareholding.
   
"Friends Provident and Resolution believe a merger would create significant value for both sets of shareholders by combining Friends Provident's new business growth opportunities with Resolution's strong cash flow generation," the groups said in a statement.
   
The news sparked a rush of buying interest throughout the sector, with Prudential up 14 at 738, Legal & General rising 6.9 to 158.1 and Standard Life up 5 at 328.
   
In broker reaction, Collins Stewart said Resolution will be giving up a large part of the benefits stemming from the Abbey Life deal to Friends Provident. "However, we think this is a necessary evil in an otherwise logical business combination," he said.
   
He added the deal "fulfils several objectives," combining the "efficient and scalable operating platform" of Friends Provident with the "massively cash-generative" Resolution.
   
Elsewhere, the ongoing ABN-Amro takeover saga took a new twist after Barclays, up 14-1/2 to 728, raised its all-shares offer for its Dutch peer after announcing the subscription of new shares which, if the takeover succeeds, will hand up to 10 pct of its share ownership to China Development Bank and Temasek Holdings.
   
The move is seen by some traders as putting the UK bank "in play" as, if its move for ABN fails, then they themselves may be more vulnerable to a takeover approach.
   
Barclays, in the meantime revised its offer for ABN-Amro to 67.5 bln eur from 65 bln, which is still 8 pct less than the RBS-led consortium offer.

Use our professional platform to trade on margin and trade tax free. Speculate on Oil, Gold, Foreign Exchange, Worldwide Indices, Equities and Options. Go long or short on all our markets. Click here.

The UK bank's shares also got a lift after pre-announcing first half 2007 results, which showed pretax profit came in at 4.101 bln stg, a 12 pct increase on the same period last year.
   
Earnings per share for the first half of 2007 were up 14 pct on the year, and the bank raised its interim dividend by 10 pct to 11.5 pence per share.
   
Moving away from the financial sector, SABMiller added 15 to 1,321 after Citigroup raised its stance to 'buy' from 'hold' and upped its target to 1,500 pence from 1,215 pence as part of a sector reshuffle.
   
Staying with broker-generated moves, HSBC took on 6 to 901 after Lehman Bros upped its rating to 'overweight'.
   
Lehman argued that the market has paid insufficient attention to the positive growth drivers in Asian and emerging markets and too much attention to the risks in the US and the mediocre trends in the UK.
   
Vodafone ticked up 0.8 to 161.7 ahead of tomorrow's AGM at which activist shareholders are to grill management plans for its stake in US joint venture Verizon Wireless.
   
According to the Sunday Times, activist investor Efficient Capital Structures (ECS) -- backed by former Marconi executive John Mayo -- has won the backing of fund managers, including Jupiter and Invesco Perpetual in its lobby for hiving off Vodafone's 45 pct holding in Verizon, and to raise its debt levels to finance a cash return as much as 38 bln stg.
   
Turning to the handful of fallers, Johnson Matthey eased 29 to 1781 after Merrill Lynch downgraded its stance to 'neutral' from 'buy' on valuation grounds and due to a question mark surrounding royalties relating to GPC Biotech's oncology product, satraplatin, whose launch may be held up by the FDA.
   
Turning to the second rung, IG Group made a positive start after reporting a higher full-year pretax profit on increased revenues, and said the current year has started well and it is well-positioned for further profitable growth. Its shares were up 2.5 at 314.5.
   
On the downside FKI slid over 14 pct, or 18 pence to 106.25 ahead of its AGM tomorrow, with rumours rife that an earlier confirmed 130 pence takeover approach -- thought to have been from private equity -- may have evaporated.

TradeWin: a bespoke share trading package with a proven profitable track record.

• Ideal for both new and experienced traders
• No complex charts to read and only taking 10 minutes per day to run.
• £4,578 average profit/month tax-free so far in 2007.
This is your chance to make trading really pay. Click Here.

UK Diary of Events

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

US Summary

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

Milan

MILAN - market data at 9.36 am:
   
Main indices:
   
Mibtel at 41,338, down 0.28 pct
   
S&P/Mib at 32,595, down 0.33 pct

Main S&P/Mib gainers:
   
Impregilo up 1.11 pct at 6.19 eur, following Friday's losses
   
Seat PG up 0.89 pct at 0.444
   
Fastweb up 0.62 pct at 39.07
   
Tenaris up 0.57 pct at 17.91
   
Lottomatica up 0.55 pct at 29
       
Main S&P/Mib losers:
   
Alitalia down 0.76 pct at 0.747, reversing initial gains
   
Buzzi Unicem down 0.51 pct at 23.38
   
Mondadori down 0.44 pct at 7.05
   
L'Espresso down 0.35 pct at 3.96, in a weak media sector, ahead of its first-half results on Wednesday
  
Bulgari down 0.34 pct at 11.58
   
Other stocks in the news:
   
Generali down 0.03 pct at 29.75. HSBC initiated the stock with a 'neutral' rating and a target of 32.50 eur
   
Alleanza down 0.04 pct at 9.47. HSBC initiated the stock with an 'underweight' rating and a target of 9.10 eur

Save up to 50% on Jermyn Street style shirts and accessories, from silk ties to silver cufflinks, by shirt-maker Joseph Turner.
Click Here

PARIS - Market data at 10.31 am:

Major indices:
   
CAC-40 down 4.75 points or 0.08 pct at 5,952.41
SBF-80 down 5.91 or 0.08 pct at 7,205.36
SBF-120 down 3.01 or 0.07 pct at 4,346.01

21 CAC-40 stocks up
18 CAC-40 stocks down
1 CAC-40 stock unchanged

Major gainers:
   
Peugeot up 0.65 eur or 1.02 pct at 64.61, ahead of its first-half results on Wednesday.
   
Groupe Danone up 0.49 or 0.87 pct at 56.72. The French ambassador in China, Herve Ladsous, called for an "amicable settlement" of the dispute between Danone and its Hangzhou-based partner, Wahaha.
   
Bouygues up 0.50 or 0.82 pct at 61.65,  Alstom up 0.90 or 0.67 pct at 135.45 and Areva up 9.99 or 1.25 pct at 811.99 following a report in German weekly Wirtschaftswoche that claimed French president Nicolas Sarkozy wants his country to buy Siemens AG's 34 pct stake in Areva NP, its nuclear engineering joint venture with Areva, to allow the creation of a French energy giant uniting Areva, Alstom and Bouygues.
   
But an Areva spokesperson told Agence France-Presse that no change was planned in the capital of Areva NP.

Major losers:
   
Vallourec down 4.38 or 2.03 pct at 211.80, extending its sharp drop from Friday when its announcement of the sale of two French units to Arcelor Mittal served to cool speculation that Arcelor Mittal may make a bid for the whole of Vallourec.
   
Renault down 1.18 or 1.05 pct at 111.00. Like Peugeot, it reports first-half results on Wednesday.
   
Dexia down 0.33 or 1.39 pct at 23.33, Credit Agricole down 0.32 or 1.09 pct at 29.13 and BNP Paribas down 0.54 or 0.64 pct at 83.70 amid continuing worries about subprime mortgages.
 
Most active stocks:
   
Axa, 2.2 mln shares; down 0.24 or 0.77 pct at 31.10
   
Alcatel-Lucent, 2.0 mln; up 0.06 or 0.61 pct at 9.96

£105,000 profit! spread betting UK shares with the Intelli-Trend system!
Click Here to find out more.

FRANKFURT - market data at 10.17 am

DAX - down 12.49 points, or 0.16 pct, at 7,862.36
MDAX -  up 21.14 points, or 0.19 pct, at 11,131.92
TecDAX - down 0.71 points, or 0.08 pct, at 939.80

Major Decliners:
   
Hypo Real Estate, down 1.87 eur or 3.80 pct at 47.30, after the bank said it agreed to buy Depfa Bank PLC in a deal valuing the Dublin-based public financing specialist at about 5.7 bln eur
   
Adidas, down 0.48 eur or 1.07 pct at 44.53
   
TUI, down 0.19 eur or 0.93 pct at 20.26
   
Deutsche Bank, down 0.85 eur or 0.82 pct at 103.00
   
BMW, down 0.36 eur or 0.76 pct at 47.08

Major Advancers:
   
SAP, up 1.56 eur or 4.13 pct at 39.33, with traders pointing to an article in Barron's magazine, which mentioned the business software manufacturer as a likely takeover target
   
Fresenius Medical Care, up 0.49 eur or 1.48 pct at 33.70
   
Deutsche Postbank, up 0.37 eur or 0.60 pct at 61.73
   
RWE, up 0.26 eur or 0.32 pct at 80.61
   
Commerzbank, up 0.07 eur or 0.21 pct at 33.80

Other Major Movers:
   
MDAX-listed Depfa, up 1.98 eur or 14.35 pct at 15.78, after Hypo Real Estate offered 6.80 eur and 0.189 new Hypo Real Estate shares for each Depfa share, valuing each share of Depfa at 16.14 eur.
   
TecDAX-listed Tele Atlas, up 4.25 eur or 25.48 pct on news that TomTom intends to make a 2 bln eur takeover offer
   
Freenet, down 6.19 eur or 25.16 pct at 18.41 after the shares traded ex-dividend of 6 eur; traders said the special dividend of 5.5 eur per share and regular dividend of 0.50 eur had prompted some profit-taking.

ADVFN Poker will match your first deposit up to $500. All you have to do is open an account with us, deposit money and play in our buzzing cash games or exciting tournaments. We will credit your bonus automatically! Play Now

BRUSSELS - market data at 10.07 am;
   
Main index
   
Bel 20 up 2.00 points, or 0.04 pct, at 4,581.36

Bel 20 gainers
   
Cofinimmo up 1.98 eur or 1.44 pct at 137.39
   
InBev rises 0.85 eur or 1.41 pct to 61.30; rating upped to 'buy' from 'hold', target raised to 70 eur from 51 at Citigroup in anticipation of industry consolidation
   
Ackermans up 0.73 eur or 1.01 pct at 73.00
   
Groupe Bruxelles Lambert gains 0.63 eur or 0.69 pct to 92.60

Bel 20 fallers
   
Mobistar falls 1.33 eur or 2.19 pct to 59.41; Mobistar cut to 'equal weight' from 'overweight' at Lehman Brothers; target cut to 62 eur vs 71 at KBC
   
Dexia down 0.27 eur or 1.14 pct to 23.40
   
Fortis inches down 0.02 eur or 0.07 pct to 29.96; RBS-led consortium offer viewed stronger than Barclays

ADVFN Services