UK/Euro Financial Market Daily Morning Briefing 25-10-2006

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London shares higher early on after mixed Wall Street; miners rally

UK blue chips were modestly higher in early deals after a mixed Wall Street session overnight in nervous trade ahead of today's FOMC decision on US interest rates, just supported by rallying miners and strength in Tate & Lyle after starch operations news and another broker upgrade.
  
At 9.10 am, the FTSE 100 index was 11.0 points higher at 6,193.5, with all the broader FTSE indices firmer aside from the techMARK 100 index Early volume was solid with 224 mln shares changing hands in 33,099 deals.
   
Overnight on Wall Street, the DJIA closed 10.97 points higher at 12,127.88, a new record close, but the Nasdaq composite index ended down 10.72 points at 2,344.84 on profit-taking as investors awaited the result of the Federal Reserve meeting.
   
While most investors expect the US central bank's policymakers to leave interest rates unchanged for the third straight meeting, there is still concern about the Fed's assessment of the economy.
   
After-hours in the US, internet retailer Amazon reported that its third quarter earnings fell by about a third but the company still managed to beat analysts' expectations, sending its shares up more than 14 pct.
   
In Asia, the Nikkei 225 index finished 81.17 lower at 16,699.30, while the Hang Seng at midday was 1.72 points lower 18,151.69. Oil prices were firmer in Asian trade as confidence increased that OPEC will actually make the cuts in production it has promised.
   
New York's main crude contract, for December delivery, was up 0.22 usd at 59.57 usd a barrel from 59.35 usd in late US trade.
   
In London, Tate & Lyle shares topped the FTSE 100 leaders board early on, adding 26 pence at 798 after news the group is looking to dispose of European starch operations, either fully or partly, due to the current EU sugar regime.

The stock extended gains already made after being upgraded to 'buy' from 'hold by Deutsche Bank today with an increased price target of 900 pence, up from 550
previously.
   
The broker pointed out that, in its view, Tate & Lyle has undergone a fundamental transformation over the past few years and, in its view, is poised to exploit the tremendous growth in value-added ingredients. Yesterday Tate & Lyle shares got a lift from an upgrade by Morgan Stanley.

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Elsewhere a rebound by the recently under-pressure mining sector provided the main support for blue chips helped by a firmer oil price, although metal prices were a tad lower -- Xstrata gained 24 pence at 2,236, while Rio Tinto took on 23 pence at 2,873, and BHP Billiton added 6 pence at 1,020.
   
And Lonmin put on 11 pence at 2,860 helped by its latest production report. The firm said its annual production of platinum in concentrates reached a record 1.017 mln ounces, ahead of its own target of 1 mln oz. It was 8 pct higher than the 941,940 oz it produced in the previous year.
   
Elsewhere, Hammerson took on 16 pence at 1,331 after Citigroup hiked its price target for the real estate group to 1,470 pence and repeated its 'buy;' stance after last week's trip to see the firm's operations in Paris.
   
Other property blue chips also moved higher again, with Land Securities up 17 pence to 2,076, British Land ahead 11 pence at 1,445, and Slough Estates up 5 pence at 707-1/2 helped also by a recent bullish note on the sector from Goldman Sachs.
   
And Amvescap shares gained 3-1/2 pence at 628-1/2 ahead of its Q3 numbers due later today.
   
On the downside, insurance stocks were a weak feature after UBS cut its stance on the European sector to 'neutral' in a strategy note published today.
   
The news affected Standard Life, down 3 pence to 281, Royal & Sun Alliance off 1-1/2 pence at 148, Friends Provident down 1-3/4 pence at 194-1/4, and Aviva off 5-1/2 at 796-1/2 ahead of Q3 new business figures due tomorrow.
   
Banking blue chips were also weak, with Royal Bank of Scotland a feature, down 15 pence at 1,858 amid market chatter the firm could have acquired at 12.5 pct stake in Spain's Bankinter.
   
And broker comment impacted British Airways, down 2-3/4 pence to 459-1/2 after being downgraded to 'hold' from 'buy' by Deutsche Bank, albeit with an increased price target.
   
On the second line, First Choice shares gained 4-1/2 pence at 231-1/2 after an uninspiring trading update led to a revival of possible takeover talk for the under-pressure tour operator.

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And Countrywide added 6 pence at 521 after the Daily Telegraph reported that the estate agency group has accepted an indicative offer of about 900 mln stg from private equity firm 3i Group.
   
On the downside, Partygaming was a big faller, off 0-3/4 pence at 28-1/4, reversing a recent rally after being downgraded to 'hold' from 'buy' by Dresdner Kleinwort in a review of the on-line gaming sector.
   
Autonomy extended yesterday's decline, losing 5-3/4 pence at 486-1/4 downgraded to 'neutral' from 'overweight' by JP Morgan, following, what the broker called, unexciting Q3 results.
   
And other tech issues were also weak, impacted by yesterday's Nasdaq decline after Texas Instrument's disappointing results late on Monday -- Spirent shed 1-3/4 pence at 60, CSR lost 10 pence at 746, and Computacenter fell back 2-3/4 pence to 245-1/4.
   
On the macro front, no UK data is scheduled for release today, and similarly, across the pond, US September existing homes sales numbers are unlikely to cause much excitement.
   
All eyes, however, will be directed towards the outcome of the FOMC, with an announcement on US interest rates due after the London close today.

UK Diary of Events

For a diary of key UK financial and corporate events today, click here

US Summary

For a summary of US stocks at yesterday's close of trade, click here

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AMSTERDAM - Market data at 10.05 am
   
Major indices
   
AEX                491.91, down 0.98 points
AMX Midcap         623.56, up 0.20 points
Government bonds   Flat

Major gainers
   
Wolters Kluwer added 3.52 pct to 22.08 eur
  
DSM gained 0.73 pct to 37.14 eur ahead of third quarter earnings tomorrow
   
TomTom put on 0.19 pct to 31.44 eur ahead of earnings tomorrow
   
Univar rose 0.79 pct to 39.60 eur
   
LogicaCMG rose 0.40 pct to 2.53 eur after Lehman Brothers initiated coverage with an 'equal-weight' rating and 185 pence price target
   
Arcadis rose 0.53 pct to 38.10 eur following news of two acquisitions in Belgium

Major losers
   
Buhrmann dropped 0.94 pct to 12.71 eur
   
ING shed 1.25 pct to 35.47 eur
   
Stork dropped 0.80 pct to 39.68 eur following mixed third quarter results
   
Vedior lost 0.38 pct to 15.62 eur following news of an acquisition in the UK and ahead of earnings tomorrow

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FRANKFURT -  Market data at 9.30 am  

Major indices:

DAX 30 - down 7.26, or 0.12 pct at 6,240.01
MDAX - up 16.77, or 0.2 pct at 8,730.55
TecDAX - up 0.66, or 0.1 pct at 687.06
DAX future - down 6 at 6269.5

Oil - up 0.22 usd at 59.57 usd a barrel from 59.35 usd
Gold - 583.85-584.35 usd an ounce
Euro/dollar - 1.2567 usd from 1.2568.

DAX 30 risers
   
ThyssenKrupp, up 0.51 eur, or 1.77 pct at 29.33; up on strong performance from peer US Steel
   
Deutsche Lufthansa, up 0.18, or 1.02 pct at 17.78; UBS ups target to 18.5 eur from 16.5, 'neutral'
   
Deutsche Post, up 0.1 or 0.05 pct at 21.64; upgraded to 'add' at WestLB
   
TUI, flat at 17.39
   
Adidas, up 0.04, or 0.10 pct at 39.36; Sells Greg Norman Collection to McGregor Golf.
    
DAX 30 fallers
   
Infineon, down 0.07, or 0.72 pct at 9.64; Faces FY charge of 80 mln eur from BenQ Mobile insolvency.
  
Continental, down 0.65, or 0.7 pct at 91.85; Goldman Sachs cuts to 'neutral' from 'buy'.
   
MAN, down 0.55, or 0.79 pct at 69.47
   
Deutsche Telekom, down 0.08, or 0.62 12.88; Vivendi files a 7.5 bln usd lawsuit in the US against DTE over the ownership of a Polish phone company
   
Deutsche Boerse, down 0.73, or 0.57 pct at 128.35

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