UK/Euro Financial Market Daily Morning Briefing 24-05-2006

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London shares off lows in early deals as strong miners counter weak oils

UK blue chips remained under pressure in early deals, although off opening lows, as further gains across mining stocks countered weaker oil stocks and general nervousness after yesterday's strong bounce, dealers said.
   
By 9.20 am, the FTSE 100 Index was down 28.6 points at 5650.1, off its opening low of 5,609.8, while the FTSE 250 was lighter by 52.8 points at 9,181.5, also well above its early low of 9,070.2.
   
Across the Atlantic on Wall Street, US stocks closed lower yesterday, falling back in late trade as investors became nervous after early gains.
   
The Dow Jones Industrial Average closed down 26.98 points at 11,098.35, a fresh 1-month low, while the Nasdaq fell 14.09 points to 2,158.76.
   
In Asia, the Nikkei Index closed up 308.00 points at 15,907.20 while over in Hong Kong the Hang Seng Index closed the morning down 188.52 points at 15,676.04.
   
Oil prices were lower in late morning trade but still remained above 71 usd
as concerns about the forthcoming Atlantic hurricane season continued to underpin prices, traders noted.
   
New York's main contract, light sweet crude for July delivery, was down 47 cents at 71.29 usd a barrel from its close of 71.76 usd in the United States. In London heavyweight oil stocks were dented by lower crude oil price with Cairn Energy purging 73 pence to 2,114, BG Group shedding 4-1/2 at 668, BP losing 8-1/2 at 626-1/2 and Royal Dutch Shell off loading 17 pence at 1,820.

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Vodafone also lost favour with investors as market concerns circled the stock, down 2 at 114-3/4, ahead of next Tuesday's figures.
   
The mobile phone company has cut earnings forecasts twice since November.       Among the gainers, miners made a major u-turn as the downturn in metal prices started to correct. Xstrata was up 42 pence at 1,984, Kazakhmys put on 20 at 1,102-1/2, Antofagasta weighed in 29 pence heavier at 2,101, Anglo American went better by 20 at 2,100, Rio Tinto gained 5 to 1,047 while BHP Billiton was firmer by 6-1/2 1,048-1/2.
   
Also on the upside B&Q owner Kingfisher managed to keep favour with punters even though its results came in 45 pct lower than last year. The stock was up 2-3/4 at 234.
   
For the three months to end April 2006 the group made a retail profit of 68.4 mln stg. This compares to analyst forecasts of 60-70 mln stg and 125.3 mln stg last time.
   
In reaction Duncan Tatton-Brown, finance director of Kingfisher said he reckons analysts' consensus forecasts for year to end-January 2007 profit before tax and exceptional's will "tighten" from about 410 mln stg to about 400 mln stg. 
   
Staying with retailers, shares in GUS edged higher, up 7 at 952, bucking the weak market trend, as investors warmed to pleasing full year results from the owner of Argos, dealers said.
   
At the same time the group revealed it plans to complete the demerger of its ARG retail business and its Experian financial services operations in October. 

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Elsewhere, Shares in Johnson Matthey, the speciality chemicals company, were better by 16 pence at 1,354 after being upgraded to 'equal-weight' from 'underweight' by Morgan Stanley.
   
Shares in Rexam also benefited from an upgrade by the US broker to 'overweight' from 'underweight' on valuation grounds. The stock was up 5 at 484.
   
Meanwhile, Shares in Scottish Power were higher by 0-1/2 at 543-1/2 following an upgrade to 'add' from 'hold' by Dresdner Kleinwort Wasserstein after strong FY results.
   
On the second tier, Great Portland Estates gained favour up 1-1/2 at 455 pence after it said it will make a definitive statement on its conversion to REIT in the second half, and announced a 29.7 pct hike in full year adjusted net assets per share. 
   
Finally, among the FTSE 250 losers GCAP Media, the UK's biggest commercial radio group, eased 4-1/2 pence to 240, as it said profits tumbled by around 40 pct over the fiscal full year, and warned that the prolonged downturn in advertising shows little sign of abating. 
   
Shares in Kesa Electricals were also lower in early deals reflecting the weaker tone to the overall market after posting a 6.5 pct rise in first quarter sales, which prompted mixed reaction from brokers.
   
Shares in Kesa were 1-1/2 pence lower at 299.
   
Earlier, Europe's third-biggest electricals retailer, said turnover growth in its fiscal first quarter has been driven by sales of flat-screen televisions ahead of this summer's football World Cup, as expected, but cautioned that sales of white goods remained "weak".

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AMSTERDAM - Market data at 10.06 am
   
Major indices
   
AEX                437.19, down 2.39 points
AMX Midcap         565.86, down 4.99 points
Government bonds   Mixed

Major gainers
   
Second-liner Stork jumped 5.41 pct to 42.64 eur after receiving a new order from Airbus and price target hike at SNS Securities.
   
Local issue Imtech soared 3.51 pct to 38.30 eur after announcing 50 mln eur in new orders in the UK and an upgrade to 'buy' at Delta Lloyd Securities.
   
TNT was up 1.94 pct to 28.42 eur after announcing a contract renewal with Reebok.
   
Buhrmann added 1.76 pct to 12.12 eur after the acquisition of Coastwide Laboratories in the US and an upgrade to 'buy' at Delta Lloyd Securities.
   
Getronics put on 0.69 pct to 8.71 eur.

Major losers
   
Ahold dropped 0.32 pct pct to 6.23 eur after reporting a generally well-received trading update, but sales at its US supermarkets disappointed, dealers said.
   
ABN Amro shed 0.79 pct to 21.27 eur.
   
Philips declined 0.89 pct to 24.57 eur.
   
KPN dropped 0.91 pct to 8.71 eur after the acquisition of Enertel for 10 mln eur.
   
ING shed 1.13 pct to 30.65 eur.
   
SBM Offshore dropped 2.21 pct to 79.80 eur.
   
LogicaCMG shed 2.33 pct to 2.51 eur.
   
Heijmans shed 2.42 pct to 39.16 eur.

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PARIS - Market data at 10.05 am:

Major indices:
   
CAC-40 down 36.15 points or 0.73 pct at 4,894.54
SBF-80 down 66.13 points or 1.19 pct at 5,469.44
SBF-120 down 28.86 points or 0.81 pct at 3,536.65

Volume: 741 mln eur
4 CAC-40 stocks up
36 CAC-40 stocks down

Major gainers:
   
Bouygues, up 0.31 eur or 0.74 pct at 42.01
   
Air Liquide, up 1.00 eur or 0.62 pct at 163.40

Major losers:
   
Iliad, down 2.95 eur or 4.49 pct at 62.75, after HSBC started it at 'neutral' with a 66 eur price target but said it prefers competitor FastWeb.
   
Thomson, down 0.33 eur or 2.19 pct at 14.76
   
Credit Agricole, down 0.56 eur or 1.88 pct at 29.17, as bank and insurance stocks were among the larger losers. Separately, HSBC said it doubts Credit Agricole will bid for Alliance & Leicester.

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FRANKFURT - Market data at 10.01 am   

Major indices:
   
DAX 30 - 5,634.18, down 44.31 points or 0.78 pct
MDAX - 7,913.47, down 62.69 points or 0.79 pct
TecDAX - 648.14, down 1.45 points or 0.22 pct
DAX future - 5,638.0, down 38.0 points or 0.67 pct

Major gainers:
   
Deutsche Boerse, up 1.26 eur or 1.23 pct to 104.02
   
MAN, up 0.23 eur or 0.40 pct to 58.25

Major losers:
   
Thyssen Krupp, down 0.56 eur or 2.16 at 25.37
   
TUI, down 0.330 eur or 2.07 pct to 15.65
   
Infineon, down 0.16 or 1.80 at 8.71
   
Metro, down 0.77 or 1.75 pct to 43.31
   
Hypo Real Estate, down 0.83 eur or 1.74 pct to 46.76

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