UK/Euro Financial Market Daily Morning Briefing 23-10-2007

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London shares push higher in early deals after late Wall Street rally

UK blue chips pushed higher in opening deals gains this morning, bouncing back after yesterday's declines supported by a late rally in to the blue on Wall Street, with miners driving the FTSE 100's advance.
   
At 9.13 am, the FTSE 100 index was 59.4 points higher at 6,518.7, with all the broader FTSE indices also firmer. Early volume was solid with 382 mln shares changing hands in 75,756 deals.
   
Overnight on Wall Street, the DJIA, having been 60 points lower when London markets closed yesterday, ended 44.95 points higher at 13,566.97 after a volatile session following Friday's 300-plus point plunge.
   
The broader US stock indices also finished higher, with the S&P 500 index ending up 5.70 points at 1,506.33, and the Nasdaq composite index closing 28.77 points higher at 2,753.93 as tech issues led the New York recovery.
   
Apple shares stood out in Wall Street trade, adding over 2 pct in value with investors optimistic about its fourth quarter earnings report posted after the New York bell.
   
The optimism proved well-founded as the iPod and iPhone maker saw its fiscal fourth-quarter EPS jump 67 pct to 101 cents, up from 62 cents a year earlier and easily beating Wall Street expectations for 86 cents. Apple shares put on another 5 pct in value in after-hours trade.
   
In Tokyo, the Nikkei 225 index ended 12.11 firmer at 16,450.58, well below earlier highs as investors exercised some caution ahead of the release of quarterly earnings by major companies this week, including Sony.
   
But in Hong Kong, the Hang Seng ended 1,003.23 points higher at 29,376.86, recouping almost all of yesterday's slide on bargain-hunting and with Wall Street's rally.
   
Meanwhile world oil prices slipped further in Asia on Tuesday as worries over slowing economic growth in the US shadowed the market.
   
New York's main oil futures contract, light sweet crude for delivery in December, was 26 cents lower at 85.76 US dollars a barrel in late morning trade.
   
In London, gains in heavyweight mining issues helped fuel the FTSE 100 bounce back supported by solid production news from BHP Billiton and positive news on Chinese growth. 

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A senior research official with China's National Development and Reform Commission (NDRC) predicted that GDP in the country is likely to grow by around 11.5 pct in 2007 and about 11.0 pct in 2008.
   
BHP Billiton issued its Q1 production report overnight in Sydney.
   
The world's largest diversified resources group said output at its iron ore mines in Western Australia and at key coal projects in Australia and Colombia reached record levels in the first quarter to September.
   
And BHP Billiton said strong demand underpinned the record production as capacity was increased.
   
In reaction, BHP Billiton shares added 29 pence at 1,793, while Antofagasta added 25-1/2 pence at 806, Vedanta gained 41 pence at 2,095, and Rio Tinto took on 92 pence at 4,142.
   
Aside from miners, blue chip housebuilders moved higher benefiting from yesterday's 6.7 pct rise in the US Homebuilders Index, which was led by Beazer Homes. Persimmon, which also announced share buy-backs today, took on 41 pence at 990, while Barratt Development added 18-1/2 pence at 672, and Taylor Wimpey gained 6-1/4 pence at 246-1/4.  
   
Elsewhere, blue chip banking issues benefited from moves yesterday by mid cap peer Bradford & Bingley to reassure investors that it was well-placed to deal with the recent credit crunch.
   
Shares in Bradford & Bingley topped the FTSE 250 risers board, up 24-1/2 pence to 278-1/2 after yesterday afternoon's investor presentation went some way to dispel fears that it could face similar funding problems as rival Northern Rock.
   
The key facts to emerge from the presentation, according to Cazenove, were that B&B had raised 1.8 bln stg since September 14 through private placements and medium term notes and it has further, similar issues planned.
   
The reassuring news provided support for other mortgage banks, with Alliance & Leicester gaining 26-1/2 pence at 754, HBOS adding 18-1/2 pence at 844, and Northern Rock firming 8 pence at 193.      
   
Also on the upside with blue chips, BP added 1 penny at 606 after the oil & gas giant reported a better than expected set of third quarter earnings with the performance in Refining & Marketing cheered by investors.
   
BP reported a replacement cost net profit of 4.213 bln usd, down from 5.75 bln previously.

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Production fell 4 pct to 3.651 mln barrels of oil equivalent per day but BP still expects volumes for the year to reach 3.8-3.9 mln boepd, in line with its guidance.
   
Other oil majors, however, featured among the handful of blue chip losers early on, with BG Group down 7 pence at 856 and Royal Dutch Shell off 10 pence at 2,011 reflecting a retreat from record highs by crude prices and with their third quarter results also due soon.
   
And BAT shares also fell back, down 9 pence at 1,776 as Lehman Brothers repeated its 'underweight' status, albeit while raising its price target to 1,490 pence from 1,475 pence, ahead of the tobacco firm's Q3 results due on  November 1.
   
Among the mid cap fallers, Autonomy was easily the worst performer dropping 66 pence lower to 889 after in-line third-quarter results this morning failed to excite, with Evolution Securities prompted to cut its stance to 'reduce' from 'add'.
   
The UK business software company, reported a record 57 pct rise in third-quarter profits to 24.9 mln usd, up from 15.9 mln in the year-earlier period, helped by new business and a significant acquisition.
   
On the upside with second liners, Inchcape shares stood out, adding 32-3/4 pence at 480 after a reassuring trading update.
   
The motors dealer said its third-quarter trading performance continues to be in line with expectations with its like-for-like sales for the period up 3.3 pct.
   
And Debenhams gained 4-1/2 pence at 108 as positive news on current trading accompanied in-line full year results, leading Seymour Pierce to reiterate its 'outperform' stance on the department stores group. Debenhams, which has issued three profit warnings since December, said it has returned to underlying sales and gross margin growth in its new financial year. 

Diary of Events

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US Summary

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PARIS - Market data at 10.35 am:

Major indices:
   
CAC-40 up 34.29 points or 0.61 pct at 5,695.56
SBF-80 up 78.43 or 1.16 pct at 6,857.71
SBF-120 up 28.60 or 0.69 pct at 4,155.87

31 CAC-40 stocks up
9 CAC-40 stocks down

Major gainers:
   
Schneider Electric, up 3.57 eur or 3.86 pct at 96.02. Third quarter sales figures beat analyst expectations at 4.47 bln eur, compared to a consensus of 4.3 bln eur
   
Alstom, up 4.48 or 3.01 pct at 153.18. The group has signed a draft accord to develop a high-speed TGV train link for Morocco
   
Accor, 1.56 or 2.43 pct ahead at 65.84. At yesterday's investor meeting, the hotel group said its new business model could result in a 3.6 point improvement in its return on capital employed and a 45 pct reduction in the volatility of its earnings before interest and tax "compared to the last cycle"
   
Natixis, 0.56 or 3.64 pct higher at 15.96. Today's edition of La Tribune published an unsourced report saying Societe Generale might take over Natixis and in return grant a combined 20 pct stake in itself to the rival bank's two core shareholders, Caisses d'Epargne and Banques Populaires

Major losers:
   
Societe Generale, down 0.35 or 0.31 pct at 113.50
   
Carrefour, 0.17 or 0.36 pct lower at 47.65. Under proposed government reforms of retail regulations, retailers will not be able to negotiate basic list prices set by producers
   
Business Objects, down 0.09 or 0.22 pct at 41.25. The share has outperformed recently on speculation of a counter bid to SAP's 42.00 eur per share buyout offer. Business Objects is also due to publish its third quarter earnings tomorrow

Most active stocks:
   
Alcatel-Lucent, up 0.08 or 1.25 pct at 6.47. 2.35 mln shares traded
   
Natixis, 2.04 mln shares traded

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MILAN - Market data at 10.05 am:
   
Main indices:
   
Mibtel at 30,823, up 0.56 pct
   
S&P/Mib at 39.428, up 0.47 pct

Main S&P/Mib gainers:
   
Impregilo up 2.59 pct at 5.26 eur, recovering from yesterday's losses    
   
Autogrill up 2.39 pct at 13.72, benefiting from the recovery of the dollar yesterday
   
Fastweb up 2.23 pct at 34.36
   
Italcementi up 209 pct at 15.97
   
Fiat up 1.75 pct at 22.71. Today, its heavy machinery unit CNH Global, which accounts for 30 pct of the group's revenues, is releasing its Q3 results

Main S&P/Mib losers:
   
Snam RG down 0.24 pct at 4.38
   
Eni down 0.24 pct at 24.79
   
Generali down 0.07 pct at 30.52
   
Enel down 0.05 pct at 7.94
   
Other stocks in the news:
   
Pirelli up 1.69 pct at 0.887, on expectations it will finalise the sale of a stake in Telecom Italia on Thursday
   
STMicro up 1.34 pct at 11.28, ahead of the release of its Q3 results today
   
Unicredito up 0.85 pct at 5.83. Exane has cut its price target on the stock to 6.80 eur from 7.10 eur, keeping its 'neutral' rating

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BRUSSELS - Market data at 10.36 am:

Main index
   
Bel 20 up 28.88 points or 0.66 pct at 4402.45.

Bel 20 gainers
   
Colruyt rises 3.38 eur or 2.39 pct to 144.52; Degroof upped its stance on Belgian discount supermarket to 'accumulate' from 'hold' following the group's EGM yesterday.
   
Dexia up 0.43 eur or 2.00 pct at 21.88.
   
Bekaert up 1.97 eur or 2.09 pct at 96.42.
   
KBC 0.96 eur or 1.00 pct stronger at 96.80.
   
Fortis up 0.09 eur or 0.41 pct at 21.89.

Bel 20 fallers
   
Suez off 0.18 eur or 0.41 pct at 43.81.
   
Belgacom down 0.19 eur or 0.57 pct at 32.86.

Outside the Bel 20
   
Barco rises 0.96 eur or 1.62 pct to 60.08 after falling yesterday on analysts' concerns about the fall of the US dollar.
   
Roularta off 0.18 eur or 0.33 pct at 55.17; KBC cuts target to 64 eur from 70, maintains 'buy' rating on valuation of peers.

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