UK/Euro Financial Market Daily Morning Briefing 29-09-2006

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London shares open firmer; Man Group climbs on 'very bullish' statement

UK leading shares opened positively following yesterdays strong gains, and after a session of record gains over on Wall Street, while Man Group led the blue-chips higher after a positive update. At 8.48 am, the FTSE 100 climbed 22.0 points to 5,993.3, inching closer to the 6,000 mark, with all the other indices also higher.
   
Across the Atlantic overnight, the Dow Jones Industrial Average reached a milestone yesterday in a nearly seven-year recovery from corporate upheaval, economic recession and terrorism, briefly trading above its record high close of 11,722.98 set on Jan 14, 2000.
   
US stocks closed only modestly higher amid a dearth of news that could motivate investors, but marking the market's fourth straight advance.
   
Today, investors will be eyeing more key economic data from the US, with consumer spending, core inflation reading and the Chicago PMI index all expected.
   
Over in Asia, the Nikkei ended today's session 102.73 points firmer at 16,127.58, while the Hang Sang ended its morning down 134.94 points at 17,395.63.
   
Back in London, Man Group topped the gainers board, up 19-3/4 pence at 463, a rally of more than 4.5 pct following what was described by one broker as a "very bullish" trading update.
   
The hedge-fund operator announced this morning that its interim profits are set to come in ahead of market expectations, fuelled by strong growth in assets under management and a robust performance from its brokerage business.
   
Man said group pretax profit for the six months to Sept 30 will be ahead of the current consensus analyst forecast of 691 mln usd. In the same period last year, Man had pretax profit of 576 mln usd.
   
In reaction, Credit Suisse reiterated its 'outperform' stance, and lifted its forecasts and raised its target to 500 pence from 467.
   
Bridgewell was also upbeat, reiterating its 'overweight' stance, noting that the group announced a "very bullish" trading update, with all revenue lines of the business ahead of expectations.

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The mining sector was again another major feature on the upside as copper prices firmed, ticking up 0.0065 usd per pound.
   
Antofagasta climbed 12-1.4 to 468, up 2.69 pct, while Xstrata was 55 pence stronger at 2,262, BHP Billiton firmed by 16 pence to 946, while Anglo American added 40 pence at 2,308 and Rio Tinto clocked up 38 pence to 2,548.
   
Elsewhere, positive broker comment spurred gains in Royal Bank of Scotland, up 23 pence at 1,835 after JP Morgan upgraded its stance to 'overweight' from 'neutral'.
   
The US broker upgraded RBoS to 'overweight' from 'neutral', arguing that the group has a more attractive, higher return business mix and lower market risk than its peers, with a compelling Investment Bank valuation.
   
JP Morgan however, reiterated its 'neutral' stance on Barclays and lowered its target to 630 pence from 700, citing lower earnings and divisional P/E based on assessment of less favourable product returns. Barclays ticked up 2-1/2 pence to 672.
   
Regarding insurers, M&A market talk spurred gains in Prudential, up 8-1/2 pence to 652 on expectations of predatory interest from France's AXA.
   
Meanwhile, shares in oil-guzzling stocks British Airways and Carnival advanced, 3-1/2 pence firmer at 438 and up 26 pence to 2,563, on easing crude prices.
   
Oil prices edged lower in a technical correction after having climbed to above 64 usd per barrel in New York overnight, triggered by fresh concerns over Iran's nuclear program and a possible supply cut by OPEC.
   
New Yorks main contract, light sweet crude for November delivery, was down 41 cents at 62.35 usd a barrel from 62.76 usd in US trade overnight. Earlier, it had moved above 64 usd for the first time since Sept 19.
   
In reaction, BG Group shed 6 pence at 654, while BP fell by a penny to 586 and Royal Dutch Shell also shed a penny at 1,812.
   
But Standard & Chartered was the main casualty so far, knocking out 20 pence at 1,377 after the Asia-focused bank announced it has agreed to buy Taiwan's Hsinchu International Bank for 1.2 bln usd, funded by an equity placing.
   
Hsinchu, Taiwan's seventh-largest private sector bank, had a market value of 861 mln usd yesterday. The deal, which is set to complete in November, is Standard Chartered's biggest acquisition since its 3.3 bln usd purchase of Korea First Bank in January 2005.

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Standard Chartered said the deal would allow it to capitalise on strong growth in trade and investment flows between Taiwan and the rest of Asia.
   
In the insurance sector, Royal & Sun Alliance fell back from yesterday's gains on news of a disposal, sliding by 1-3/4 pence to 149, while in focus after disposing of its troubled US unit.
   
On second line, Britvic shares were higher, up 12 pence at 232 after the second-biggest UK supplier of carbonated drinks, reported improved trading in the second-half and said it expects full-year results to be "towards the top end of the range of current market expectations".
   
The company said that in the 20 weeks to Sept 3 it achieved branded revenue growth of 0.4 pct compared with the same period last year, driven by stills growth of 7.5 pct, while carbonates were down 5.8 pct.
   
Elsewhere, an upgrade to 'buy' from 'neutral' by UBS spurred gains in specialist recruitment firm Michael Page, up 12 pence at 378 ahead of an expected third-quarter trading statement next week.

But on the downside, EMAP shares slid, knocking off 19-1/2 pence at 744-1/2 with the market digesting an uninspiring trading update, prompting Bridgewell Securities to trim its stance on the stock to 'overweight' from 'buy'.
   
Earlier this morning, the UK media conglomerate EMAP blamed the prolonged downturn in Britain's advertising market for another fall in core revenues in the fiscal first half.
   
The owner of a stable of consumer magazines, including FHM and Closer, warned that turnover for the six months to the end of September would be down 2 pct year-on-year on an underlying basis.
   
Reacting to the numbers, Bridgewell Securities trimmed its full-year pretax estimates to 196 mln stg from 213.3 mln stg, with a 2008 EPS of 67 pence from 70.3 pence and downgrading its recommendation to 'overweight'.

UK Diary of Events

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US Summary

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AMSTERDAM - Market data at 10.15 am   

Major indices
   
AEX 485.49, up 2.95 points
AMX Midcap 587.84, up 1.39 point
Government bonds - flat to higher

Major gainers
   
BAM was up 3.32 pct to 14.0, still coasting on yesterday's news of an order from Berlin worth 103 mln eur, analysts said.
   
Boskalis Westminster went 2.32 pct higher to 50.65.
   
Buhrmann strengthened 1.36 pct to 11.95.
   
Imtech rose 1.28 pct to 41.0 after receiving an order worth 20 mln eur. SNS Securities reiterated its 'add' recommendation, while Delta Lloyd repeated its 'buy' rating and 50.0 eur price target.
   
Fortis lifted 1.07 pct to 32.14.
   
Akzo Nobel was up 1.04 pct to 48.69.
   
ASML put on 1.04 pct at 18.50 and Philips went 0.73 pct higher to 27.78.
   
Oce advanced 0.72 pct to 12.61 ahead of results expected Tuesday.
   
Major losers
   
Hunter Douglas fell 1.36 pct to 54.60.
   
TNT was down 1.32 pct to 29.87 after the company signed a final agreement to buy certain transport operations from Shanghai's Hoau Group. Analysts were split over the acquisition, with some regarding it as positive, while others expressed concern over the price.

Theodoor Gilissen put its rating under review following yesterday's EU ruling against the Dutch government over its golden shares stake in TNT, saying the ruling will fuel rumours of a takeover of TNT.
   
Vopak shed 0.88 pct to 30.52.
   
Endemol was off 0.98 pct to 15.23 following reports Italian television network Mediaset is ready to bid for the group, as cited by Endemol co-founder John de Mol. Telefonica has said it is ready to sell its 75 pct stake in Endemol if it receives an attractive offer.
   
SBM Offshore slid 0.37 pct to 21.27.

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FRANKFURT - Market data at 9.30 am 

Major indices:
   
DAX 30 - up 24.55 points or 0.41 pct at 6,013.71
MDAX - up 15.05 points or 0.18 pct at 8,519.15
TecDAX - up 1.87 points or 0.28 pct at 659.47
DAX future - up 18 points or 0.30 pct at 6,049.00

Major outperformers:
   
MAN, up 1.25 eur or 1.90 pct to 66.93, after the Man Group said it was on course to beat its H1 profit forecasts
   
Infineon Technologies, up 0.12 eur or 1.31 pct to 9.29
   
Bayer, up 0.59 eur or 1.49 pct to 40.32
   
BMW, up 1.52 eur or 1.25 pct to 42.26
   
Linde, up 0.93 eur or 1.26 pct to 74.60
   
Major underperformers:
   
Altana, down 0.14 eur or 0.32 pct to 44.08
   
ThyssenKrupp, down 0.02 eur 0.08 pct to 26.58. ThyssenKrupp said it is aiming to achieve a pretax profit of around 2.5 bln eur for the year to Sept 30 2007.
   
E.On, down 0.02 eur or 0.02 pct to 92.63
   
Allianz, down 0.03 eur or 0.02 pct to 136.52
   
Metro, up 0.03 eur 0.07 pct at 45.93. Metro was upgraded to 'outperform' from 'neutral' by Credit Suisse.

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PARIS - Market data at 10.05 am:

Major indices:
   
CAC-40 up 26.39 or 0.50 pct at 5,276.40
SBF-80 up 12.70 or 0.20 pct at 5,999.02
SBF-120 up 19.03 or 0.50 pct at 3,819.79

Volume: 510 mln eur
38 CAC-40 stocks up
2 CAC-40 stocks down

Major gainers:
   
Altran up 0.14 or 2.00 pct at 6.64
   
Gemalto up 0.26 or 1.53 pct at 17.26, M&A rumours fuel sector
  
Michelin up 0.80 or 1.39 pct at 58.25
   
Renault up 1.05 or 1.16 pct at 91.60

Major losers:
   
Havas down 0.22 or 5.71 pct at 3.63 as H1 earnings slump on recruitment expenses and as co warns more costs to come
   
Total down 0.10 at 51.85 on profit-taking among oil stocks   
   
Technip down 0.45 at 44.74 on profit-taking

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