UK/Euro Financial Market Daily Morning Briefing 23-08-2006

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London shares easier early on; NY mixed; Fed official revives rate worries

Leading shares were easier in opening deals following a mixed showing overnight on Wall Street after comments from a Federal Reserve official revived fears that US rates could yet rise further, with heavyweight miners weaker with commodity prices and after unexciting results from BHP Billiton, dealers said.
   
At 9.04 am, the FTSE 100 index was 14.0 points easier at 5,888.6, just off its early low of 5,887.9, having reversed from an opening peak of 5,906.3.
   
All the broader FTSE indices also weaker. Early volume was fair, with 136 mln shares changing hands in 22,143 deals.
   
Overnight on Wall Street, the DJIA closed 5.20 points lower at 11,339.80, while the Nasdaq composite index ended 2.27 points firmer at 2,150.02 after a volatile session.
   
Comments by Chicago Federal Reserve President Michael Moskow had erased a good rally by the DJIA in early afternoon New York trade after some opening bargain-hunting following Monday's profit-taking falls.
   
Today in Asia, the Nikkei 225 index ended 18.14 points lower at 16,163.03, while the Hang Seng ended its morning session 47.37 weaker at 17,102.38 amid the revived US interest rate concerns.
   
Meanwhile oil prices edged lower in Asian trade today after calls by Iran for talks to resolve its nuclear stand-off calmed traders' nerves, dealers said.
   
New York's main contract, light sweet crude for October delivery fell 25 cents to 72.85 usd a barrel from its close of 73.10 usd in US trading overnight.
   
Brent crude for October delivery dropped 23 cents to 73.01 usd a barrel.

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In London, weakness in mining issues was a negative feature as commodity prices beat a retreat as well today and after BHP Billiton, the worlds's biggest miner posted largely as expected full year numbers and confirmed a 3 bln usd capital return.
   
The Anglo-Australian group saw its net profit rise 63.4 pct to a record 10.45 bln usd, boosted by the ongoing strength in commodity prices, but the group cautioned global growth may slow on higher costs.
   
In response, JP Morgan said the numbers were good but warned investors to beware of margin erosion. In reaction, shares in BHP Billiton dropped 29 pence lower to 1,027.
   
Other heavyweight miners were weaker in sympathy with BHP Billiton -- Rio Tinto lost 13 pence to 2,730, Xstrata fell back 18 pence to 2,232, and Anglo American shed 77 pence to 2,393 with the stock also trading ex-dividend today.
   
Ex-dividend factors also pinned back other blue chips today, with DSG International, Scottish & Southern Energy, ICI, Pearson, and Schroders all losing payout attractions.
   
On the upside, Brambles was the top FTSE 100 riser, jumping 24 pence higher to 451 after accompanying solid full year results with news of a special dividend payment following recent disposals.
   
Brambles saw its year to June profit before one-off items jump 39 pct higher to 430.1 mln usd, due to strong recurring results and lower average debt, while its net profit rose 16 pct to 362.6 mln usd.
   
Reacting to the figures, UBS said the full year numbers were 'above expectations', pointing out that expectations for 2006 and 2007 are likely to be increased from current EPS.
   
Elsewhere among the blue chip risers, insurer Legal & General took on 1-1/2 pence at 129-1/4 after bullish comment on the shares upside potential in a sector review published today.
   
Intercontinental Hotels rallied after yesterday's post-results decline, adding 6 pence at 904 with today's broker comment reassuring.

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Yesterday's results also provided support for housebuilder Persimmon, up 15 pence at 1,275.
   
And well-received results from Swiss food producer peer Nestle helped Cadbury Schweppes shares take on 2 pence at 553.
   
On the second line there were few features. Paypoint was the top FTSE 250 riser, up 20 pence to 520 after being upgraded to 'buy' from 'neutral' by UBS on valuation grounds.
   
The broker highlighted the fact that while the headline valuation is unlikely to ever look compelling, the current share price offers an attractive entry point into a high quality stock with several long term attractions.
   
And Colt Telecom was the top mid cap faller, down 3-1/4 pence at 123-1/4 as Bridgewell Securities reiterated its cautious stance on the stock following a meeting with management.
   
Bridgewell noted that Colt focused on delivering the operational improvements needed to remain competitive and improve profitability, but noted it remained concerned about market conditions.
   
Ex-dividend factors weighed on Sthree, PZ Cussons, and Bradford & Bingley.

On the economics front, the UK CBI monthly industrial trends survey for August is unlikely to have much of an impact today, while the only US data of note will by July existing home sales numbers.

UK Diary of Events

For a list 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 9.48 am:

Major indices:
   
CAC 40 down 6.89 points or 0.13 pct at 5,121.44
SBF 80 down 1.88 points or 0.03 pct at 5,663.74
SBF 120 down 4.80 points or 0.13 pct at 3,695.95

Volume: 277 mln eur
9 CAC 40 stocks up
27 CAC 40 stocks down
3 CAC 40 stocks unchanged
(CAC 40 index has 39 stocks pending replacement for Arcelor)

Major gainers:
   
Scor, up 0.04 eur or 2.12 pct at 1.93, after analysts at Societe Generale said they see a strong rise in first half results to be released Aug 30.
   
L'Oreal, up 0.75 eur or 0.96 pct at 78.85
   
Veolia Environnement, up 0.21 eur or 0.50 pct at 42.30

Major losers:
   
Capgemini, down 0.56 eur or 1.33 pct at 41.57
   
EADS, down 0.27 eur or 1.20 pct at 22.28, after a report it may face delays in its A400M aircraft project.
   
Safran, down 0.14 eur or 0.94 pct at 14.73. Safran supplies aircraft equipment to EADS.

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FRANKFURT - Market data at 9.45 am

Major indices:
   
DAX 30 - 5,811.67, down 6.74 points or 0.12 pct
MDAX - 8,065.67, down 10.25 points or 0.13 pct
TecDAX - 655.41, up 0.27 point or 0.04 pct
DAX future - 5,825.50, up 5.50 points or 0.09 pct

Major gainers:
   
Munich Re, up 0.88 eur or 0.76 pct at 116.80
   
TUI, up 0.06 eur or 0.40 pct at 14.92
   
Lufthansa, up 0.05 eur or 0.34 pct at 14.90
   
BMW, up 0.13 eur or 0.32 pct at 40.36
   
Allianz, up 0.30 eur or 0.23 pct at 130.40

Major losers:
   
Siemens, down 0.47 eur or 0.71 pct at 65.72
   
Deutsche Boerse, down 0.78 eur or 0.67 pct at 115.22
   
Deutsche Telekom, down 0.07 eur or 0.61 pct at 11.50, as HSBC cut its price target on the stock by 19 pct to 10.20 eur per share from 12.50 eur and reiterated its 'underweight' recommendation
   
Commerzbank, down 0.14 eur or 0.54 pct at 25.89, having gained sharply yesterday
   
SAP, down 0.75 eur or 0.51 pct at 146.85

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