UK/Euro Financial Market Daily Morning Briefing 26-06-2006

How to turn a £10 bet into £2,000+ in one day! Click Here

London shares open higher as miners, M&A gains offset utility weakness

Leading shares were a touch higher in opening deals, as a rally in heavyweight miners and M&A-fuelled gains in Shire and Corus helped to offset weakness in the utility sector, dealers said.
   
At 9.05 am, the FTSE 100 was up 4.2 points at 5,686.3, but off an early high of 5,716.5, with the broader indices turning negative.
   
Heavyweight miners helped to underpin blue-chip gains, boosted by sector consolidation hopes on reports Phelps Dodge has agreed to buy Canada's Inco and Falconbridge for 40 bln usd.
   
Lonmin rose 65 pence to 2,764, Rio Tinto gained 67 pence at 2,868, BHP firmed 24 pence at 1,018, Kazakhmys was up 23 pence at 1,119 and Antofagasta was 8 pence higher at 408.
   
But in contrast, Xstrata, which is also bidding for Falconbridge, fell 6 pence to 1,931.  
   
Shire was the top riser, gaining 19-1/2 pence to 774 on the back of a report in The Independent on Sunday that Serono is gearing up its 5.5 bln stg acquisition drive, which could include a move on the UK drugs group.
   
In response, JP Morgan believes Shire is in a good position in any potential takeout discussion, although the company expressed more interest in acquisitions rather than being acquired.
   
Sector consolidation hopes also fuelled gains in Corus after peer Arcelor finally accepted a 40.4 eur per share takeover offer from Mittal Steel.
   
The decision, which ends a five-month bitter standoff between the two groups, will create a global steel giant whose production will dwarf that of its nearest competitors.
   
In contrast, the utility sector was under pressure after energy regulator Ofgem outlined price controls for the four main gas and electricity transmission networks in the UK.
   
The proposals could double investment to 4 bln stg over the next five years but dealers cautioned the sum is less than what the suppliers have said is needed.

Use our professional platform to trade on margin and trade tax free. Speculate on Oil, Gold, Foreign Exchange, Worldwide Indices, Equities and Options. Go long or short on all our markets. Click here.

However, Merrill Lynch was more upbeat, saying it would be surprised if revenues fall and does not expect the shares to react in significantly, partly because lengthy negotiations must still be completed.
   
National Grid fell 7-1/2 pence to 592-1/2, Scottish & Southern was down 10 pence at 1,119, and Scottish Power was off 4 pence at 579-1/2.
   
Peers Severn Trent were 14 pence lower at 1,177, and Kelda was off 5-1/2 pence at 748 and Centrica down 1-1/4 pence at 273 in sympathy.
   
Cadbury Schweppes was another loser, down 7 pence at 511, dogged by news on Friday it was withdrawing 1 mln chocolate bars after finding traces of salmonella.
   
According to The Sunday Telegraph, the confectionery giant failed to inform food watchdogs about the contamination at one of its factories, despite nine cases of the bacterium being identified over a four-month period.
   
And weekend press reports hit BAE, down 2 pence at 354-1/2 on reports investors warned the defence giant it may have to postpone the sale of its stake in aircraft manufacturer Airbus or risk losing hundreds of millions of pounds on the deal.
   
According to The Sunday Express, valuations have fallen from 4 bln stg to 3 bln, sparking shareholder concern.
   
And The Sunday Telegraph said BAE is preparing to take legal action if the valuation of its 20 pct stake in Airbus fails to live up to expectations.
   
However, SABMiller was the worst performer, off 15 pence at 945, with the weak rand continuing to dog the drinks group.
   
On the second line, De Vere was the major riser, after the hotel and leisure group agreed a 723.5 mln stg offer from vehicle AHG Venice.
   
The news increased hopes of a bidding war, with private equity group Permira also circling.
   
M&A news also lifted Stanley Leisure, 9 pence higher at 644 after the company confirmed it is in nil-premium merger talks with London Clubs International.     

In response, Merrill Lynch said the news lessens the likelihood of Genting International making a bid for either group and retained its "sell" rating on Stanley Leisure.

GFX provides 24/7 support, multilingual customer service, free charts and news, fractional lots, hedging, and 0.5% margin. To try a free demo click here.

A positive trading statement provided the spur for Inchcape, up 5-3/4 pence at 437 after the group said trading in each of its six core markets is in line with expectations.
   
Broker comment also provided a spur, with Quintain Estates up 18 pence at 620-1/2 as the property group was upgraded to "buy" from "neutral" with significantly increased net asset value forecasts at Merrill Lynch.
   
Group 4 Securicor added 3 pence to 165 after it was upgraded to "buy" from "hold" at Deutsche Bank. The broker said the recent share price weakness provided a buying opportunity.
   
On the downside, Filtrona fell 6-1/2 pence to 278 after the group said it expects its first-half results will be lower than expected.
   
Meanwhile, Wall Street ended the week lower as a decline in big ticket factory goods did little to calm investor jitters.
   
The DJIA closed down 30.02 points at 10,989.09, the S&P 500 lost 1.10 points at 1,244.50 and the Nasdaq fell 1.51 points to 2,121.47.
   
This week, fears over growth and inflation will continue to hang over the markets before the US Federal Reserve's rate decision on Thursday, with investors braced for another quarter-point increase.
   
In Asia, the Nikkei 225 finished 28.36 points higher at 15,152.40, while the Hang Seng Index ended the morning up 19.4 at 15,828.21.
   
Still in Asia, oil prices paused for breath after strong gains last week with New York's main contract, light sweet crude for delivery in August, down 0.09 usd at 70.78 usd per barrel.

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 Friday's close of trade, click here

An opportunity to purchase shares in an established lottery provider operating in the £53bn Gaming Market.  Limited shares available on a first come first served basis click here

PARIS - Market data at 9.55 am:

Major indices:
   
CAC-40 up 7.44 points or 0.15 pct at 4,825.07
SBF-80 up 26.13 points or 0.47 pct at 5,532.05
SBF-120 up 6.56 points or 0.19 pct at 3,498.55

Volume: 345 mln eur
18 CAC-40 stocks up
18 CAC-40 stocks down
3 CAC-40 stocks unchanged
Arcelor temporarily suspended from CAC-40

Major gainers:
   
EADS, up 0.46 eur or 2.09 pct at 22.48, as the French government presses for a quick resolution to the company's management turmoil.
   
Vinci, up 0.60 eur or 0.77 pct at 78.40
   
Danone, up 0.70 eur or 0.73 pct at 96.15

Major losers:
   
Accor, down 0.39 eur or 0.83 pct at 46.54
   
Schneider Electric, down 0.60 eur or 0.76 pct at 77.95
   
Gaz de France, down 0.15 eur or 0.58 pct at 25.58

TheWrongPrice.com can help you make informed investment decisions, advising you when best  to buy and sell shares to maximise the return on investment.

Since its inception in 2000, TheWrongprice.com team has consistently proven their ability to identify smart investment opportunities. Our recommendations have outperformed FTSE100 by a record 78.1%. Click here for a special subscription offer. 

AMSTERDAM - market data at 10.22 am
   
Major indices

AEX                 428.22, down 0.92 points
AMX Midcap          570.09, up 2.15 points
Government bonds    Mixed

Major gainers
   
Hagemeyer gained 1.44 pct to 3.52 eur
   
Philips added 0.67 pct to 23.95 eur
   
DSM added 0.66 pct to 31.81 eur
   
Crucell gained 2.77 pct to 15.95 eur
   
Fugro added 2.53 pct to 32.42 eur after ING raised sales estimates
   
Univar put on 2.42 pct to 35.53 eur
   
Getronics lifted 0.59 pct to 8.56 eur

Major losers
   
TomTom shed 2.57 pct to 29.18 eur
   
TNT lost 1.46 pct to 27.03 eur
   
Akzo Nobel dropped 0.95 pct to 40.81 eur
   
Heineken shed 0.80 pct to 32.35 eur
   
Royal Dutch Shell dipped 0.63 pct to 25.29 eur
   
Corio lost 1.03 pct to 45.98 eur
   
Mittal Steel shed 1.30 pct to 24.99 eur, reversing earlier gains after Arcelor merger deal

For World Cup bets go to BlueSq - Free £25 bet
Click Here

ADVFN Services