UK/Euro Financial Market Daily Morning Briefing 25-04-2006

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London shares slip back in early deals after mixed results from BP, Tesco

Leading shares were off opening highs in early deals, as mixed earnings news from BP and Tesco outweighed relief at easing oil prices, dealers said.
   
By 9.00 am, the FTSE 100 index was up just 4.4 points at 6,103.1, off its opening high of 6,128.8.
   
Volume was moderate, with 270.9 mln shares changing hands in 35,807 deals.
   
US stocks recovered from their session lows last night, although still closed slightly weaker as easing crude prices and positive earnings from Dow component Caterpillar were overshadowed by a weaker dollar, traders noted.
   
The Dow industrials closed 11.10 points lower to 11,336.30 after ending Friday's session at their best level since January 2000, while the Nasdaq dropped 9.48 points to 2,333.38.
   
June crude was unchanged at 73.33 usd per barrel on Nymex, after falling over 2 pct last night.
   
Across Asia overnight, the Nikkei 225 index closed 55.89 points higher at 16,970.29, while the Hang Seng ended 127.90 points lower at 16,577.77.
   
In the UK, the earnings season began in earnest this morning, with BP and Tesco dominating early proceedings.
   
BP shares dropped back slightly, as the easing oil price and a mixed bag of first quarter numbers gave investors an excuse to take profits after yesterday's record highs.
   
BP said underlying profits were up 7 pct in the first quarter, although headline replacement cost net profit fell to 5.265 bln usd from 5.491 bln a year earlier, pulled down by fair value losses of 395 mln usd on embedded derivatives.
   
In reaction, Merrill Lynch reiterated its 'buy' recommendation.

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Cairn Energy dropped 13 pence to 2406 and BG Group lost 2 pence to 780-1/2, although Royal Dutch Shell bucked the trend with a gain of 14 pence to 2056.
   
Shares in Tesco were also lower, down 0-1/2 pence to 327-1/4, despite posting a forecast-busting record pretax profit of 2.21 bln stg and confirming weekend press reports it is to release up to 5 bln stg from its property portfolio.
   
In an initial response however, Merrill Lynch said UK current trading was a disappointment with margins down.
   
Elsewhere, mining stocks were lower again, as a volatile start to the week by metal prices encouraged further profit taking.
   
Gold futures lost almost 12 usd an ounce yesterday as traders locked in recent gains that brought prices to quarter-century highs, although the metal still closed off the session lows.
   
Anglo American fell 12 pence to 2449, Rio Tinto eased 12 pence to 3117 and BHP Billiton lost 3-1/2 pence to 1170.
   
On the upside, Severn Trent and Kelda were both higher after being upgraded by Morgan Stanley, to 'overweight' from 'equal-weight' and 'equal-weight' from 'underweight' respectively.
   
Old Mutual was also in demand following a better than expected trading update at its US unit.
   
The insurance group announced that its US unit Old Mutual Asset Management had managed assets of 247.6 bln usd at the end of the first quarter of 2006, up 9 pct since the end of 2005 and a new high for the group.
   
Citigroup reiterated its 'hold' recommendation.
   
Corus was the top FTSE 100 riser however, up 2 pence to 89-1/4 after Citigroup raised its objective price on the steel group to 100 pence from 90 and reiterated its 'buy' recommendation. 

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On the second line, Whitbread gained 38 pence to 1195 after a pleasing set of full-year results with pretax profits rising to 181.1 mln stg, up from 160.1 mln in the previous year.
   
Merrill Lynch retained its 'buy' recommendation, saying it believes there remains substantial value trapped within Whitbread's conglomerate structure.
   
Upbeat numbers also lifted Carpetright 35 pence higher to 1205. 
   
The UK's largest floor coverings retailer reported an improving sales trend for its second half and said it is pleased with its current performance despite tough trading conditions.
   
Elsewhere, Autonomy gained 23 pence to 480 as Citigroup upgraded its recommendation on the stock to 'buy' from 'hold', following yesterday's robust first quarter results.
   
Shares in Stanley Leisure also moved higher, up 19 pence to 748, lifted by renewed talk of a bid from Rank Group, up 1-3/4 pence to 229-3/4.
   
On the downside, shares in Venture Production were lower after investors took profits following the release of full year earnings which were seen as in line with forecasts.
   
Venture Production shares fell 40 pence to 760.

US Summary

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Diary of Events

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PARIS - Market data at 9.29 am:

Major indices:
   
CAC-40 up 26.17 points or 0.50 pct at 5,247.61
SBF-80 up 50.88 points or 0.82 pct at 6,221.49
SBF-120 up 19.93 points or 0.52 pct at 3,825.21

Volume: 316 mln eur
34 CAC-40 stocks up
4 CAC-40 stocks down
2 CAC-40 stock unchanged

Major Gainers:
   
Renault, up 4.10 eur or 4.77 pct at 90.05, after reporting a higher than expected 5.8 pct like-for-like rise in Q1 sales
   
Peugeot, up 0.80 eur or 1.60 pct at 50.80, as auto stocks rose broadly.
   
PPR, up 1.40 eur or 1.39 pct at 102.40, after an upgrade to 'outperform' from 'in-line' at Goldman Sachs.

Major Losers:
   
Bouygues, down 0.22 eur or 0.51 pct at 42.51
   
Arcelor, down 0.08 eur or 0.23 pct at 34.01
   
Electricite de France, down 0.11 eur or 0.23 pct at 48.53

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FRANKFURT - Market data at 9.56 am
   
Major indices:
   
DAX 30 - 6,100.16, up 21.07 points or 0.35 pct
MDAX - 8,830.23, up 50.22 points or 0.57 pct
TecDAX - 742.83, up 3.94 points or 0.53 pct
DAX future - 6,123.00, up 3.50 points or 0.06 pct

Major Gainers:
   
MAN, up 1.25 eur or 2.00 pct at 63.78, as consensus-beating first-quarter results and hiked estimates for the full-year heavy trucks market from Swedish peer Volvo AB boosted sentiment towards the stock
   
Volkswagen, up 1.13 eur or 1.77 pct at 64.82, lifted by the strong numbers from Volvo today and by solid figures from French peer Renault last night
   
ThyssenKrupp, up 0.44 eur or 1.63 pct at 27.41, as Citigroup hiked its price target on the stock by some 55 pct to 35 eur from 22.6 and reiterated its 'buy' recommendation
   
Infineon, up 0.08 eur or 0.87 pct at 9.28, as Lehman Brothers upgraded its stance on the stock to 'overweight' from 'equal-weight' and hiked its price target to 12 eur from 8
   
Deutsche Boerse, up 0.93 eur or 0.81 pct at 116.23

Major Losers:
   
BASF, down 0.62 eur or 0.89 pct at 68.85
   
Metro, down 0.25 eur or 0.55 pct at 45.12   
   
Hypo Real Estate, down 0.42 eur or 0.75 pct at 55.88
   
SAP, down 0.45 eur or 0.25 pct at 176.27
   
Fresenius Medical Care, down 0.21 eur or 0.22 pct at 94.83

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AMSTERDAM - Market data at 10.27 am

Major indices:
   
AEX index             477.72, up 2.08 points
AMX Midcap index      640.14, up 3.29 points
Government bonds      unchanged to slightly lower
       
Major Gainers:
   
TomTom jumped 6 pct to 34.61 eur after the car navigation systems maker posted better-than-expected results for the first quarter and raised its full-year outlook
   
Unilever advanced 1.22 pct at 57.85 after a strong first-quarter sales report from rival Nestle
   
Among financials, Fortis put on 1.88 pct at 29.80, Aegon gained 0.96 pct at 14.65 and ING rose 0.34 pct at 32.79 while ABN Amro, due with first-quarter results tomorrow, added 0.41 pct at 24.60
   
Biotech company Crucell firmed 2.78 pct at 22.93 ahead of Thursday's trading update

Major Losers:
   
Hagemeyer slumped 5.86 pct at 4.34 after the company's first-quarter trading update showed an acceleration in organic sales but a disappointing outlook for revenue growth for the remainder of this year
   
After last week's sharp gains on strong first-quarter results, Akzo Nobel was down 2.11 pct at 47.69 in profit-taking, with peer DSM also down 0.85 pct at 37.17.
   
Getronics lost 12 cents or 1.22 pct at 9.69, trading ex-dividend of 7 cents

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