UK/Euro Financial Market Daily Morning Briefing 25-10-2007

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London shares push higher in early deals after Wall Street recovery

UK blue chips pushed higher in opening deals, bouncing back after yesterday's declines, supported by yesterday's recovery on Wall Street, with Royal Dutch Shell gaining after third-quarter results.
   
At 9.22 am, the FTSE 100 index was 55.5 points higher at 6,537.5, with all the broader FTSE indices also firmer. Early volume was solid, with 367 mln shares changing hands in 88,574 deals.
   
Overnight on Wall Street, the DJIA ended off just 0.98 points at 13,675.25 following earlier steep losses after Merrill Lynch's big write-down raised concern over other banks' exposure to the credit markets.
   
It recovered amid hopes of an imminent interest rate cut, with the Fed scheduled to meet next week to discuss the matter.
   
Broader stock indicators also fell but were also off earlier lows. Standard & Poor's 500 index fell 3.71 points to 1,515.88, while the Nasdaq composite index lost 24.5 points to 2,774.76.
   
The mood was mixed today in Asia. In Tokyo, the Nikkei 225 index closed 74.22 points weaker at 16,284.17. Meanwhile in Hong Kong, the Hang Seng ended its morning up 190.57 points at 29,524.1.
   
Oil prices traded higher in Asia on news US energy stockpiles fell sharply last week and rising tensions in the Middle East after Turkish warplanes bombed Kurdish rebel camps in northern Iraq.
   
New York's main oil futures contract, light sweet crude for delivery in December, was 85 cents higher at 87.95 usd per barrel. Brent North Sea crude for December was up 73 cents at 85.10 usd.
   
Oil is a key focus today, with Royal Dutch Shell up 20 pence at 2,075-1/2 following consensus-beating third-quarter results, which triggered positive broker comment.
   
Earlier, Shell reported earnings for the three months to September of 6.4 bln usd on an adjusted current cost of supply basis, up from 6.9 bln last time. After stripping out one-off items, core earnings declined to 6.1 bln usd from 7 bln, ahead of the consensus figure of 5.6 bln.

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In other earnings news, shares in Aviva soared nearly 3 pct or 20-1/2 pence to 724-1/2 after the UK's biggest insurer said nine-month life and pension sales rose 21 pct to 22.935 bln stg, with strong European growth offsetting slower progress in the UK.
   
The figure beat analysts expectations of 22.707 bln stg.
   
Meanwhile, Reuters took on 8-1/2 pence to 646-1/4 ahead of today's trading statement, with third-quarter sales forecast as being buoyed by a push into China and India as well as record volumes in currency trading.
   
Average consensus figures from six analysts provided by the company forecast revenue in the three months to Sept 30 of 645 mln stg, up from 631 mln last time.
   
Good gains were also seen from Vodafone, 6 pence firmer at 184.2, after consensus-beating third-quarter results from France Telecom and yesterday's JP Morgan upgrade to 'overweight' from 'neutral'.
   
Better levels were seen from Cable & Wireless too, up 4.1 pence at 190.7.
   
Also lending support were the heavyweight miners, with fresh talk of a bid from BHP Billiton for Rio Tinto, with the shares up 32 pence at 1,773, and 110 pence at 4,198 respectively.
   
Also among the top sector gainers was Kazakhmys, which took on 42 pence to 1,419, and Vedanta Resources, which rose 47 pence to 2,110.
   
Lonmin shares, meanwhile, lost out, down 13 pence at 3,237, following a full-year production update that Evolution Securities called "disappointing".
   
Earlier today, the world's third-biggest platinum producer said full-year platinum sales fell 16 pct, in line with its revised forecast range following an August strike at its main operation, and again raised its unit cost guidance for Marikanamm.
   
Elsewhere among today's handful of casualties, GlaxoSmithKline dropped 20 pence to 1,229, continuing yesterday's fall following the pharmaceutical group's third-quarter results that prompted WestLB to cut its rating to 'sell' and HSBC to cut its target to 1,180 pence from 1,220.

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Among the second liners, shares in easyJet soared, up nearly 3 pct or 16-1/2 pence at 599, after the low-cost carrier said it has agreed to acquire GB Airways, excluding its slots at Heathrow airport, from the Bland Group for 103.5 mln stg in cash.
   
The low-cost carrier said the acquisition would strengthen its offering because of the valuable take-off and landing slots at Gatwick and the opportunity to accelerate its route development.
   
Good gains were also seen from PartyGaming, up 0-3/4 pence at 28-1/4, after the UK-listed online poker firm reported a 24 pct increase in third-quarter net revenue compared with the previous year and said it is confident about prospects for the full year.
   
On a negative note, downbeat third-quarter results helped push shares in Arm Holdings to the top of the midcap loserboard, down 8 pence at 141-1/2.
   
The UK microchip designer reported a fall in third-quarter revenues, blaming the weak US dollar, although it said it expects growth to recover in the fourth quarter and is on track to meet expectations for 2007.

Diary of Events

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

US Summary

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

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PARIS - Market data at 10.45 am:

Major indices:
   
CAC-40 up 52.95 points or 0.93 pct at 5,727.62
SBF-80 up 71.76 or 1.04 pct at 6,947.19
SBF-120 up 39.56 or 0.95 pct at 4,183.53

34 CAC-40 stocks up
6 CAC-40 stocks down

Major gainers:
   
France Telecom, up 1.42 eur or 5.98 pct at 25.17. The telecoms operator outstripped analyst forecasts this morning with gross operating profit of 13.50 bln eur
   
Alstom, up 6.11 or 4.02 pct at 158.13. The French government said it is considering to extend the TGV network by another 2,000 km by 2020. Lehaman's also raised its price target for the share to 170 eur from 140 eur. Indian rival ABB today reported a 41 pct jump in Q3 net profit
   
Bourbon, 1.93 or 4.09 pct ahead at 49.16. Exane BNP Paribas upped the stock to 'outperform' from 'neutral' in a sector review issued today
   
Rexel, 1.04 or 7.77 pct higher at 14.42. The group today unveiled a 3 bln eur bid for Dutch rival Hagemeyer

Major losers:
   
L'Oreal, down 2.85 or 3.12 pct at 88.59. UBS cut its stance on the group to 'neutral' from 'buy' following the stocks' strong performance since the start of the year
   
Air Liquide, off 0.54 or 0.57 pct at 93.50. The share rose sharply ahead of this morning's sales publication, and outperformed a broadly negative market   

Credit Agricole, down 0.10 or 0.38 pct at 26.33, Societe Generale, down 0.19 or 0.17 pct at 111.63, BNP Paribas down 0.02 or 0.03 pct at 73.43. Banks are under pressure after Merrill Lynch yesterday unveiled  7.9 bln usd of write-downs from exposure to mortgage-related securities

Most active stocks:
   
Alcatel-Lucent, up 0.01 or 0.16 pct at 6.46. 2.84 mln shares traded
   
France Telecom, 13.19 mln shares traded

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FRANKFURT - Market data at 10.31 am

DAX - up 61.35 points, or 0.78 pct, at 7,890.31
MDAX - up 127.39 points, or 1.22 pct, at 10,551.18
TecDAX - up 15.73 points, or 1.61 pct, at 992.67
DAX futures - down 4.50 points, or 0.06 pct, at 7,939.00

Major Advancers:
   
Siemens, up 1.80 eur, or 2.00 pct, at 91.80, after Siemens' Osram unit expects to experience strong growth in its light emitting diode (LED) business over the coming years as the range of applications for the technology widens
   
Deutsche Telekom, up 0.26 eur, or 1.94 pct, at 13.65, continuing a 5 day advance as the shares rebound from a recent drop
   
Linde, up 1.61 eur, or 1.81 pct, at 90.68, ahead of results on Oct 30
   
RWE, up 1.62 eur, or 1.71 pct, at 96.17 after the German coalition has agreed on an amendment for tightened price control of German utilities, which was not as bad as feared, and due to continued positive effects after RWE shares were upgraded by Goldman Sachs and Societe Generale yesterday
   
Continental, up 1.42 eur, or 1.48 pct, at 97.25 ahead of results on Oct 31
  
Major Decliners:
   
Allianz, down 1.02 eur, or 0.67 pct, at 151.00, as fears continue that the insurer's Dresdner Bank unit may be hit harder than previously expected by this summer credit crisis stemming from the US subprime mortgage. Traders also spoke of vague rumours that the insurer might issue a profit warning.
   
Merck KGaA, down 0.39 eur, or 0.43 pct, at 87.40
   
Henkel, down 0.01 eur, or 0.03 pct, at 35.45
   
Other Stock in Focus:
   
MDAX-listed SGL Carbon AG, down 2.79 eur, or 6.18 pct, at 42.35, after issuing an in-line third-quarter earnings report amid market disappointment that the carbon and graphite producer did not raise its forecasts as hoped.
   
MDAX-listed MTU Aero Engines Holding AG, up 0.78 eur, or 1.82 pct, at 42.53 on the back of better than expected third-quarter results from the MDAX-listed aircraft engine specialist.
   
MDAX-listed Wincor Nixdorf, up 1.38 eur, or 2.20 pct, at 64.00 after the company gave guidance for next year that was slightly more optimistic than expected as its release of full year figures that were largely in-line with forecasts.

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AMSTERDAM - Market data at 9.46 am

Major indices
   
AEX 546.47, up 0.58 pct
AMX Midcap 729.31, up 1.65 pct
Government bonds traded mixed

Major gainers
   
TomTom added 2.38 pct to 63.22 eur as Rabo Securities raised its price target on the stock to 75 eur from a previous 61 and maintained its 'buy'recommendation on following yesterday's third-quarter earnings
   
Vedior was 1.01 pct up at 16.0 eur as it released what some analysts called"encouraging" third-quarter numbers
   
SBM Offshore gained 1.55 pct to 26.94 eur as Exane BNP Paribas upped its target on the issue to 33 eur from 31, while maintaining its 'Outperform' rating
   
DSM added 1.31 pct to 39.56 eur as it reported third-quarter earnings in line with market expectations and reiterated its full-year outlook
   
Shell climbed 0.78 pct to 29.87 eur as it reported weak earnings in the third quarter, hurt by falling production and refining margins and increased costs, but still ahead of analysts' expectations
   
Fugro led midcap gainers, gaining 4.66 pct to 61.75 eur as Exane BNP Paribas upped its target to 68 eur from 58, while reiterating its 'Outperform' rating
 
Major decliners
   
Hagemeyer dropped 3.94 pct to 4.63 eur as Rexel announced a 4.60 eur-per-share takeover bid, valuing the company at 3 bln eur. Sonepar will withdraw its earlier 4.25 eur bid on Hagemeyer and instead buy selected Hagemeyer assets from Rexel, should the takeover succeed
   
Staffer Randstad continued yesterday's drop, off 2.41 pct at 37.30 eur
   
ASMI fell 0.93 pct to 20.20

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