UK/Euro Financial Market Daily Morning Briefing 30-06-2006

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London shares open higher on US rally, commodity prices lift miners

Leading shares opened firmer this morning, recovering from this weeks mixed trade as a Wall Street rally overnight lifted sentiment after the latest FOMC interest rate rise and with rampant commodity prices spurring mining stocks, dealers said.
   
At 8.42 am, the FTSE 100 was 39.3 points firmer at 5,830.8, with the broader markets also positive.
   
Early volume was moderate, with 295 mln shares exchanging hands in 32,038 deals.
   
Overnight on Wall Street, stocks ended higher as the Federal Reserve FOMC committee increased interest rates by a widely expected quarter point.
   
The FOMC indicated further tightening might be needed but fell short of suggesting another increase in interest rates in the next FOMC meeting on Aug 8.
   
The softening stance spurred gains in the markets after weeks of erratic gains and lacklustre volume as investors had fled the market on inflation worries.
   
At the US close, the Dow Jones Industrial Average rose by more than 215 points to 11,190.80, its biggest single-day jump in more than three years.
   
The Nasdaq Composite Index added 62.54 points to 2,174.38.
   
Overnight in Asia, Japan's main market, the Nikkei 225, closed up 384.03 points at 15,505.18 and the Hang Seng ended its morning session 370.65 points higher at 16,235.87.

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In London, mining stocks led the gainers board higher, with Xstrata adding 86 pence to 2,074, Kazakhmys 54 pence higher at 1,230, Vedanta climbing 52 pence to 1,388 while Antofagasta was 13-1/4 pence firmer at 428 and Anglo American rallied by 54 pence to 2,217.
   
Commodity prices continued their ascent in Asian trade, with gold prices trading at 603 usd per ounce after settling at 588.9 usd an ounce on NYMEX.
   
Silver prices reached 10.78 usd from its closing price of 10.333 an ounce, while crude-oil futures reached 73.74 usd per barrel, up 0.22 usd from its 73.52 usd closing price, where the price jumped by 1.33 usd.
   
Still among the gainers, Brambles Industries shares added 12-1/4 pence to 431-3/4 after announcing last night plans to sell its Cleanaway UK waste management business for 595 mln stg to France's Veolia Environnement.
   
Brambles chief executive David Turner said with the sale, the company's disposal of businesses deemed non-core is now essentially complete, and has generated total proceeds of 3.52 bln usd.
   
Shares in Drax Group edged 8 pence firmer at 832 after the UK power generator said it expects to declare a special dividend in the range of 75 to 80 pence a share.
   
The payment means surplus cash of between 305 and 326 mln stg will be returned to shareholders.
   
Otherwise, shares in second liner Cookson Group was 28-1/4 pence higher at 537-1/2, leading the mid-cap gainers, after saying it expects its results for the six months to June 30 to be significantly ahead of the corresponding period last year.
   
The materials science company said trading for May and June has been ahead of its previous expectations, particularly in its ceramics and electronics divisions which have benefited from recent restructuring.
   
As a result the company said it expects its first half trading profit from continuing operations to be not less than 70 mln stg, up from 57 mln stg in 2005.
   
In response, Merrill Lynch reiterated its 'neutral' stance, saying that divisionally, the most encouraging aspect was the growth.

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Buyers also came to second-liner Berkeley Group, 7 pence to the better at 1,204 after posting a positive set of full year results.
   
The housebuilder and urban regenerator said it is confident on the outlook for the current year as it posted a 6.2 pct rise in pretax profits to 165.1 mln stg for the year to April 30 from 155.5 mln stg a year earlier.
   
Shanks Group also gained, up 7-1/2 pence to 170-1/2 after acquiring the Dutch waste business Smink Beheer for net 63 mln eur.
   
IMI shares also benefited, adding 7-3/4 pence to 505-1/2 will after saying it expects its underlying profits before restructuring and amortisation, for the six months to June 30, to be around 84-87 mln stg, up from 69.6 mln stg for continuing businesses in 2005.
   
Over on the downside, Spirent Communications was the main casualty among mid-caps, down 0-3.4 pence to 38 after Goldman Sachs downgraded the stock to 'sell' from 'neutral' as the group is likely to disappoint investors in the coming year.
   
easyJet hit turbulence, with the shares shedding one penny at 384-1/4 after HSBC downgraded the stock to 'underweight' from 'neutral' by HSBC as the broker expects the outperformance in relation to Ryanair to reverse, noting that easyJet shares have outperformed Ryanair by 22 pct since the start of 2005 and now trade on a 33 pct premium to Ryanair.
   
Meanwhile, on the UK macro front, the market awaits the first quarter final GDP estimate, due at 9.30 BST as well as numbers from the June consumer confidence survey.

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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AMSTERDAM - Market data at 10.14 am

Major indices
   
AEX                 436.43, up 4.23 points
AMX Midcap          581.08, up 5.51 points
Government bonds    mainly flat

Major gainers
   
Van der Moolen was up 2.55 pct to 5.62 eur, ABN Amro advanced 1.43 pct at 21.26 and ING rose 1.30 pct to 30.35.
   
On the AEX, Buhrmann added to recent gains, 1.99 pct higher to 11.29.
   
SBM Offshore lifted 1.83 pct to 20.63 and Royal Dutch Shell added 0.84 pct at 26.27.
   
Getronics lifted 2.19 pct to 8.41 after the tech group sold its Austrian, Czech, Slovak and Polish operations for an undisclosed amount.
   
Philips put on 1.52 pct to 24.02.
   
Stork added 1.54 pct at 42.23 after the Dutch parliament yesterday approved the procurement of 'Boxer' armed multipurpose vehicles, SNS Securities said. ING said the fall of the Dutch government could have an impact on the Joint Strike Fighter (JSF), as decisions are postponed until a new cabinet is settled.
   
Fugro was up 1.06 pct to 33.46 after the company ordered a new seismic ship with a total investment of over 100 mln eur.
   
Akzo Nobel was 0.87 pct higher to 41.74 after the chemical company sold its offices in Sweden for 30 mln eur.
    
Vopak put on 0.70 pct to 27.28 after the company said it will develop a second oil terminal in Port of Amsterdam, with construction scheduled to start in mid-2007. Petercam reiterated its 'buy' recommendation and 36.50 eur price target. ING repeated its 'hold' rating and 9.1 eur price goal.
   
Unilever strengthened 0.34 pct to 17.48 after an upgrade to 'buy' from 'hold' from SNS Securities.
  
Draka edged 0.07 pct higher to 14.20 after price target upgrades from Rabo Securities and Kempen.

Major losers
   
Ordina fell 0.94 pct to 17.90.
   
Reed Elsevier shed 0.52 pct to 11.57.
   
Numico was 0.23 pct lower to 34.93 after the group said it will sell its baby food ops in India to Wockhardt for an undisclosed amount and after naming Flemming Morgan the president of its Clinical Nutrition Division.

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PARIS - Market data at 10.25 am:

Major indices:
   
CAC-40 up 43.48 points or 0.89 pct 4,923.86
SBF-80 up 72.76 points or 1.30 pct at 5,648.65
SBF-120 up 31.72 points or 0.85 at 3,566.72

Volume: 1.30 bln eur
35 CAC-40 stocks up
4 CAC-40 stocks down
Arcelor has been withdrawn from index pending results of Mittal Steel takeover offer.

Major gainers:
   
Cap Gemini, up 1.14 eur or 2.61 pct at 44.89, after large gains by the NASDAQ index of US tech stocks. 
   
Credit Agricole, up 0.63 eur or 2.17 pct at 29.66
   
Schneider Electric, up 1.70 eur or 2.18 pct at 2.18

Major losers:
   
Pernod Ricard, down 2.00 eur or 1.27 pct at 155.00, after a downgrade to 'underperform' at Credit Suisse.
   
Sanofi-Aventis, down 0.45 eur or 0.45 pct at 98.55, after adding prescription warnings to its antibiotic Ketek.
   
Vivendi, down 0.05 eur or 0.15 eur at 27.17, after press reports that it is weighing bids for two music publishing companies, worth 3 bln eur combined.

Most active stocks:
   
Axa, 108.5 mln euros of volume, up 0.22 at 25.51
  
Total, 83.3 mln eur, up 0.60 at 50.80
   
BNP Paribas, 61.1 mln eur, up 0.55 at 74.10

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FRANKFURT - Market data at 10.11 am
   
Major indices:
  
DAX 30 - 5,632.87, up 51.20 points or 0.92 pct
MDAX - 7,847.48, up 122.12 points or 1.58 pct
TecDAX - 650.61, up 15.11 points or 2.38 pct
DAX future - 5,668.50, down 31.50 points or 0.55 pct

Major gainers:
   
MAN, up 2.54 eur or 4.61 pct at 57.68, following solid figures on European truck demand yesterday and as MAN at the same time said it has reached an agreement with the UK's Ministry of Defence to deliver a further 2,077 trucks with a value of 300 mln eur
   
Bayer, up 1.33 eur or 3.87 pct at 35.71, as the market cheered news it is selling its Diagnostics unit to Siemens for 4.2 bln eur, which will help it finance its 17 bln eur acquisition of Schering
   
Hypo Real Estate, up 1.29 eur or 2.77 pct at 47.91
   
Continental, up 1.57 eur or 2.01 pct at 79.56
   
Deutsche Boerse, up 1.47 eur or 1.39 pct at 107.37, as Borsa Italiana last night said it should decide next week on opening negotiations with Euronext and Deutsche Boerse on an alliance
   
Major losers:
   
Altana, down 0.07 eur or 0.16 pct at 43.21

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