UK/Euro Financial Market Daily Morning Briefing 24-02-2006

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London

London shares open higher as well-received Lloyds TSB results lift banks

Leading shares opened higher this morning, with robust earnings news from Lloyds TSB and WPP countering a weak mining sector and last night's negative  Wall Street performance, dealers said.
   
By 9.10 am, the FTSE 100 index was up 14.1 points at 5,850.1, while the broader indices were mixed.
   
Early volume was moderate, with 275.5 mln shares changing hands in 30,330 deals.
   
US stocks slipped back on Wall Street last night, as investors locked in profits after the previous session's gains, with gold stocks, banks, computer hardware companies and Internet stocks all under pressure.
   
The DJIA ended 67.90 points lower at 11,069.20, while the Nasdaq finished the day 4.85 points lower at 2,278.32.
   
Across Asia overnight, the Nikkei 225 index closed 5.81 points higher at 16,101.92, while the Hang Seng ended the day 43.52 points higher at 15,856.05.
   
In London, Lloyds TSB jumped over 3 pct higher as the UK fifth-biggest bank posted a strong set of full-year profits, helped by tight cost controls and robust growth in wholesale banking.
   
Lloyds said pretax profit for the year to Dec 31 2005 came in at 3.820 bln stg on a statutory basis, up 10 pct from 3.477 bln stg the previous year.
   
Merrill Lynch repeated its 'buy' recommendation.
   
Lloyds TSB shares added 19 pence to 560, while HBOS gained 15 pence to 1061,
Royal Bank of Scotland added 32 pence to 1,870 and Standard Chartered gained 16 pence to 1,478.

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WPP topped the early FTSE 100 risers however, with a gain of 34-1/2 pence to 653-1/2.
   
The world's second-largest advertising company posted a better than expected full-year pretax profit of 669.0 mln stg, up from 489.6 mln a year earlier.
   
In reaction, Merrill Lynch repeated its 'buy' recommendation, although noted that retail banking appeared a little weak.
   
British Energy results also pleased, with the nuclear power generator posting an adjusted operating profit of 242 mln stg for its third quarter to Jan 1 2006, reflecting the benefit of higher electricity prices and contracted winter prices.
   
Dresdner Kleinwort described the numbers as "broadly in line", although argued that it feels the group "is factoring in higher commodity prices and should be trading at a bigger discount to Drax."
   
The German-owned broker repeated its 'sell' recommendation.
   
Elsewhere, Capita shares were up 13-1/2 pence at 468-1/2 after UBS upgraded its recommendation to 'buy' from 'neutral' following solid full-year results from the outsourcing giant yesterday.
   
The Swiss broker said growth has occurred in all divisions with the strongest momentum in Corporate Services and Integrated Business operations.
   
National Grid rose 12-1/2 pence to 610 after confirming reports that it is to acquire New York utility and natural-gas distributor KeySpan Corp.
   
The Wall Street Journal today reported that National Grid is offering 42 usd per share for KeySpan.
   
Miners featured heavily among the blue-chip fallers, as metal prices turned lower, ending a volatile week on the downside.

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Gold futures lost 1 pct last night to close at their lowest level in a week after chalking up gains totaling nearly 14 usd an ounce in the past few sessions

BHP Billiton fell 23 pence to 966, Xstrata dropped 31 pence to 1695, Rio
Tinto eased 40 pence to 2782 and Anglo American slipped 30 pence to 2163.   
   
Also on the downside, Next shares fell 20 pence to 1646 after ING downgraded the shares to 'hold' from 'buy' on valuation.
   
Ladbrokes suffered a poor market debut, its shares dropping 4 pence to 372-1/2 as Morgan Stanley initiated coverage on the bookmaker with a 'neutral' recommendation and 370 pence target.

Ladbrokes began trading at 377 this morning after changing its name from Hilton Group, following the sale of its hotels business to Hilton Hotels Corporation for 3.5 bln stg leaving it to focus on its gambling operations.
   
Second line gaming stock 888 Holdings fared better however, adding 8 pence to 201-1/2 as talk of a bid from Ladbrokes did the rounds again.
  
Remaining with the midcap risers, Wellington Underwriting gained 3-3/4 pence to 94-3/4 after a bullish trading statement.
   
The Lloyd's underwriter estimated its year to December pretax loss at 25-30 mln stg, against a market consensus of 48 mln and said trading conditions so far in 2006 are "encouraging".
   
On the downside, Davis Service Group shares fell 14 pence to 502-1/2 following the group's 9 pct increase in annual profit after its continental European division Berendsen pared costs after closing inefficient plants.
   
On the economic front, US durable goods orders for January are due at 1.30 pm this afternoon, with a 0.3 pct fall expected for the headline data and a 0.7 pct rise in the ex-transportation measures.

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Diary of Events

For a list of key UK financial and corporate events this week, click here 

Amsterdam

AMSTERDAM - market data at 09.26 GMT

   
Major indices:

   
AEX index             465.04, up 0.45 point
AMX Midcap index      604.44, up 1.75 points
Government bonds      mixed

Major gainers:
   
Wolters Kluwer rose 0.78 pct at 18.08 eur
   
Royal Dutch Shell firmed 0.66 pct at 25.88
   
KPN added 0.56 pct at 9.0
   
TNT was up 0.47 pct at 28.08, fourth-quarter results due on Monday
   
Ahold climbed 0.29 pct at 6.92 after CEO Moberg told the FT the retailer is
considering large acquisitions, while it may also set up a chain of non-food
stores in the Netherlands

   
Major losers:
   
Van der Moolen continued yesterday's slide after the stock market
specialist's disappointing fourth-quarter results, tumbling 5.85 pct to 7.40 as
ING downgraded the stock to 'sell' from 'hold'
   
Numico, the biggest decliner among blue chips yesterday after in-line
results but a disappointing outlook, fell 3.8 pct to 35.72 as Goldman Sachs cut
its stance on the group to 'in line' from 'outperform'   
   
Heineken gave up 0.65 pct at 32.06 in the wake of rival InBev's
disappointing results
   
VNU shed 0.58 pct at 27.40 amid reports a group of seven private-equity
firms is poised to submit a firm bid of some 7.2 bln eur for the Dutch group,
possibly as early as today

Frankfurt

FRANKFURT - market data at 08.18 GMT

Major indices:
   
DAX 30 - 5,869.91, up 12.03 points or 0.21 pct
MDAX - 8,317.67, up 7.58 points or 0.09 pct
TecDAX - 736.58, up 1.22 points or 0.17 pct
DAX future - 5,877.00, up 15.50 points or 0.26 pct

Major gainers:

ThyssenKrupp, up 0.25 eur or 1.19 pct at 21.26, as an apparent upgrade of
the US steel sector to 'attractive' from 'neutral' at Goldman Sachs boosted
sentiment towards the stock
   
Fresenius Medical Care, up 0.79 eur or 0.88 pct at 90.36
   
Continental AG, up 0.75 eur or 0.86 pct at 87.80, on the back of upbeat
broker comments on its full-year 2005 results and 2006 outlook, which prompted
Morgan Stanley to hike its price target on the issue to 95 eur from 75
   
RWE, up 0.55 eur or 0.76 pct at 73.15, recovering from sharp losses
yesterday, as Citigroup raised its target price on the stock to 85 eur from 72
and reiterated its 'buy' rating
   
Metro, up 0.28 eur or 0.64 pct at 44.08

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Major losers:

Altana, down 0.44 eur or 0.97 pct at 44.81
   
Henkel, down 0.35 eur or 0.38 pct at 92.50
   
Munich Re, down 0.34 eur or 0.29 pct at 115.11
   
Schering, down 0.14 eur or 0.24 pct at 58.26
   
Hypo Real Estate, down 0.12 eur or 0.22 pct at 55.43

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