UK/Euro Financial Market Daily Morning Briefing 28-03-2006

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London shares remain higher in early deals with miners back in favour

Leading shares remained higher in early deals with the miners making a comeback from yesterday's falls and with hedge fund manager Man Group the main riser following target price upgrades, dealers said.
   
By 9.10 am, the FTSE 100 index was up 18.7 points at 5,990.9, staying marginally bellow the 6,000 barrier, with the wider indices also in the blue.
   
Overnight on Wall Street US stocks closed mixed, after a wary session spent awaiting a Federal Reserve decision on interest rates expected later today at 8.15 pm, as modest strength in the technology sector allowed the Nasdaq Composite Index to end a bit higher.
   
The DJIA closed down 29.86 points at 11,250.11. The Nasdaq Composite added 2.76 points to 2,315.58.
   
The central focus of today's session will once again be the Federal Open Market Committee, the Fed's interest-rate-setting body, which began a two-day policy meeting yesterday. The FOMC is widely expected to lift its key short-term rate by a quarter percentage point to 4.75 pct.
   
In Asia the Nikkei 225 Stock Average closed up 40.14 points or 0.2 pct at 16,690.24, its high for the day. It was the index's highest close since Feb 7 when it ended at 16,720.99.
   
In Hong Kong the Hang Seng ended the morning up 54.77 points at 15,870.64.
   
London blue chips remained positive in early deals with shares in Man Group trading up 50 at 2,401, making it the top riser.
   
The increase followed Deutsche Bank raising its target price to 2,620 pence from 2,260 pence, while Credit Suisse upped its target price to 2,450 pence from 2,200 pence.

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Deutsche Bank said the positive outlook for asset raising should drive growth, noting the recent launch of Man IP-220 is an important potential indicator of both demand for high margin structured product and of Man's distribution strength.
   
Cadbury Schweppes was also in favour, improved by 5 at 579, following a target price increase by UBS to 625 pence from 610.
   
Among the blue chip miners Rio Tinto was better by 18 at 2,841, BHP Billiton firmed 5 pence to 1,019-1/2, Xstrata was up 1 at 1,839 while Antofagasta gained 15 pence at 2,084.
   
On the downside Standard Chartered dipped 37 pence to 1,487 as Singaporean investment group Temasek's acquisition of a stake in the Far Eastern bank dashed perennial bid hopes.
   
Standard Chartered confirmed this morning that Temasek Holdings has become its largest shareholder after buying an 11.55 pct stake in the group held by Singapore's Khoo family.
   
Elsewhere ITV eased 1-1/2 pence to 127 after being downgraded to 'hold' from 'buy' with an increased target price of 130 pence by Deutsche Bank.
   
It noted that a critical factor regarding the recent bid activity is the prospective CEO's ability to increase audience share.
   
The reason for an increase in the target price, up from 125, is the recent bid offer of in the region of 130 pence per share -- spearheaded by ex-BBC director general, Greg Dyke.
   
There was a lack of interest in Compass Group, down 1 at 236, after it said it expects to deliver first-half results in line with expectations after witnessing good levels of new business and contract retention.
   
In a statement, Compass said the bulk of restructuring costs associated with its plan to slice 50 mln stg off annual overheads will be incurred in the first half, with the benefits weighted towards the following six months.

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On the second tier, traders were keen on Dana Petroleum, up 61 at 1,070-1/2, following full year results which were ahead of expectation prompting Merrill Lynch to reaffirm its 'buy' rating, dealers said.
   
Dana reported that net profit for the year to December 2005 rose 406 pct to 64.2 mln stg, while pretax profit grew 232 pct to 107.8 mln stg. Turnover climbed 51 pct to 165.6 mln stg.
    
Property Group Brixton was also a sweet spot, improving 4-1/2 pence to 530-1/2.
   
The firm reported a 64.8 pct rise in full year pretax profits to 288.9 mln stg and said investor interest in the commercial property sector remains strong.
   
Brixton said adjusted net asset value per share had climbed by 24.7 pct to 484 pence while net rental income lifted 15.8 pct to 98.1 mln stg.
   
The news, coupled with the recent REITS legislation , helped push blue chip property companies higher.
   
Hammerson was up 6 pence at 1,254, British Land improved 10 at 1,250, while Great Portland firmed 6-3/4 to 481-1/4.
   
Among the losers, shares in Emap were 30-1/2 pence lower at 894-1/2, as the group's in-line trading update was outweighed by a cautious outlook.
   
The publisher and radio group said it is trading in line with expectations and expects full-year revenues to rise by 8 pct, helped by a 5 pct increase in underlying sales from consumer magazine advertising.
   
Expro was also out of favour with punters, down 21-1/2 at 725-1/2, after it said trading in the second half to March 2006 is in line with expectations.
   
Expro will publish full-year results on May 31.

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Diary of Events

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PARIS - Market data at 08.47 GMT

Major indices:
   
CAC-40 up 9.63 points at 5,172.07
SBF-80 up 10.85 at 6,017.15
SBF-120 up 7.07 at 3,757.86

11 CAC-40 stocks up
25 CAC-40 stocks down
4 unchanged

Major gainers:
   
Thomson, up 0.24 eur or 1.5 pct at 16.42 and extending yesterday's 5.6 pct
surge as rumours of a takeover bid led by US investment banks eclipsed a credit
rating downgrade from Standard and Poor's.
   
Clarins, up 1.10 or 2.2 pct at 52.30 after an upgrade to 'buy' from
'neutral' at Deutsche Bank, dealers said.
   
AGF, up 1.05 at 97.50 and trading at a fresh all-time high.

Major losers:
   
Vinci, down 0.15 at 82.90 after the company announced its expected 2.53 bln
eur share capital increase, which will finance its full takeover of motorway
operator ASF.
   
France Telecom, down 0.13 or 0.7 pct at 18.86, leading declines among blue
chips.

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FRANKFURT - Market data at 08.31 GMT

Major indices:
   
DAX 30 - 5,921.20, up 8.94 points or 0.15 pct
MDAX - 8,677.23, up 20.40 points or 0.24 pct
TecDAX - 734.40, up 2.27 points or 0.31 pct
DAX future - 5,958.00, down 1.50 points or 0.03 pct

Major gainers:
   
Adidas-Salomon, up 1.32 eur or 0.80 pct at 166.01
   
MAN, up 0.41 eur or 0.76 pct at 54.50
   
Henkel, up 0.68 eur or 0.72 pct at 94.73, as HB Fuller Co said that it has agreed to buy Henkel's insulating glass sealant business
   
Lufthansa, up 0.10 eur or 0.70 pct at 14.39
   
Fresenius Medical Care, up 0.66 eur or 0.68 pct at 97.31
   
Major losers:
   
Altana, down 0.43 eur or 0.85 pct at 50.00
   
Deutsche Bank, down 0.58 eur or 0.62 pct at 93.42, after JP Morgan downgraded its stance on the issue to 'underweight' from 'neutral'
   
Deutsche Telekom, down 0.08 eur or 0.57 pct at 13.94
   
RWE and E.ON, down 0.30 eur or 0.43 pct at 69.58 and 0.28 eur or 0.31 pct at 90.86 respectively, as UBS cut its stance on both stocks to 'neutral' from 'buy', arguing that their current share prices now reflect its price scenario for Central European power prices.

Amsterdam

AMSTERDAM - Market data at 09.35 GMT

Major indices:

AEX index             471.24, up 1.48 point
AMX Midcap index      630.83, down 1.03 point
Government bonds      lower

Major gainers:
   
Numico advanced 1.54 pct at 36.31
   
Philips added 1.25 pct at 28.26 as Petercam issued an upbeat research report, repeating a 'buy' recommendation and raising its price target to 36 eur from 33
   
Royal Dutch Shell put on 0.78 pct at 25.81, SBM Offshore firmed 0.5 pct at 80.55
   
Oce gained 0.86 pct at 15.27
   
Galapagos jumped 4.93 pct to 9.79 after the Belgian genomics-based drug discovery company announced a new three-year collaboration with Roche

Major losers:
   
Ahold gave up 0.56 pct at 7.16 ahead of tomorrow's fourth-quarter results
   
DSM lost 0.88 pct at 39.32
   
Vedior was down 0.63 pct at 15.88
   
Nutreco slipped 1.72 pct at 47.51

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