UK/Euro Financial Market Daily Morning Briefing 30-08-2006

London shares open slightly higher after Wall St comeback, Corus slips

Leading shares remained higher in early deals, encouraged by last night's late comeback by Wall Street, although disappointing results from Corus limited gains somewhat, dealers said.
   
By 9.10 am, the FTSE 100 index was up 10.0 points at 5,898.3, while the broader indices were also higher at the open.
   
Volume remained below par however, with 108.9 mln shares changing hands in 16,201 deals.
   
US stocks rallied in the final hour of trading last night after spending much of the session in negative territory, with slightly hawkish minutes from the latest Federal Reserve meeting compounding the market's earlier disappointment over the Conference Board's consumer confidence index, traders noted.
   
Even though nearly all the Fed members voted to leave the funds rate alone in August, many thought the decision to do so "was a close call" and that another rate increase "could well be needed" to fend off inflation, the minutes said.
   
The DJIA closed 17.93 points higher at 11,369.94, while the Nasdaq ended the day up 11.60 points at 2,172.30.
   
Overnight in Asia, the Nikkei 225 index closed 18.54 points lower at 15,872.02, while the Hang Seng was up 80.74 points at 17,164.02 by midday.
   
Oil prices rose slightly in early electronic deals, although remained under 70 usd a barrel after weakening Tropical Storm Ernesto skirted US oil production facilities in the Gulf of Mexico, dealers said.
   
New York's main contract, light sweet crude for delivery in October, was up 0.28 usd to 69.99 usd a barrel from its close of 69.71 usd in the US overnight.
   
In the UK, the market began to stir after its summer slumber, with a handful of companies due to report earnings this morning.

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Corus slipped over 2 pct in early deals after the steel group posted a worse-than-expected 32 pct fall in first-half pretax profit and cautioned that higher raw material costs and reduced steel production would largely offset improved selling prices during the second half.
   
In response, Merrill Lynch reiterated its 'neutral' stance and said it expects to lower its full-year forecasts. Corus shares were down 8 pence at 392-1/2.
   
On the upside, Enterprise Inns added 24 pence to 1,018 after bullish comments from Deutsche Bank.
   
The German owned broker reiterated its 'buy' stance and increased its price target on the leisure group to 1,200 pence per share from 1,060.
   
Back among the fallers, Drax shares remained under pressure, hit by the continuing protest at the group's power station in Yorkshire, while a target cut from Morgan Stanley also hit sentiment.
   
The US broker lowered its target to 745 pence from 865, although said it continues to prefer the stock to British Energy, up 0-1/2 pence at 671-1/2.
   
Elsewhere, Pearson was also under pressure, down 3-1/2 pence to 737, after Panmure Gordon downgraded its recommendation to 'sell' from 'hold' on valuation grounds.
   
In a note to clients, the broker also cut its price target on the owner of the Financial Times to 690 pence from 735 pence, saying its preferred publishers are Reed Elsevier and Emap.
   
On the second line, shares in Filtrona topped the midcap leaderboard in early deals, up 19 pence at 288, after the group reported better-than-expected first-half results and said it is confident of "satisfactory progress" in the second half.
  
In reaction, Citigroup repeated its 'buy' advice on the stock and said the interim results were around 4 pct better than the broker's forecasts.

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Shares in Johnston Press were also in demand, adding 8 pence to 390-1/2, after the media group's interim results revealed a 3 pct dip in pretax profits but showed no further deterioration in the advertising revenues climate.
   
Responding to the update, Bridgewell Securities reiterated its 'neutral' recommendation on the media group, saying these results show no further deterioration, which will provide solace to some.
   
Elsewhere, upbeat comment from Lehman Brothers boosted Helphire and JD Wetherspoon, up 8-1/2 pence to 391-1/4 and 8-3/4 pence to 449-3/4 respectively.
   
The US broker assumed coverage on Helphire with an 'overweight' stance and 443 pence target, while JD Wetherspoon was upgraded to 'overweight' from 'underweight'.
   
LogicaCMG however, slipped back after uninspiring interims.
   
The Anglo-Dutch IT company, which last week announced an 882 mln stg offer to buy Swedish rival WM-data, said revenue in the six months to June 30 rose to 1.24 bln stg, slightly ahead of the 1.23 bln consensus forecast, and from 891.7 mln a year earlier.
   
Merrill Lynch repeated its 'buy' recommendation.
   
Away from earnings, news and books group WH Smith today split into two separately quoted companies -- new WH Smith, the retail business, and Smiths News, the news distribution operation.
   
Current investors in the group will receive one new share in each company for each existing share.

UK Diary of Events

For a list 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 9.41 am:

Major indices:
   
CAC-40 up 11.03 points at 5,171.35
SBF-80 up 3.73 at 5,780.55
SBF-120 up 6.44 at 3,736.47

Volume: 305 mln eur
28 CAC-40 stocks up
8 CAC-40 stocks down
3 unchanged
Arcelor has been removed from benchmark following takeover by Mittal Steel, no replacement yet.

Major gainers:
   
EADS, up 0.48 eur or 2.1 pct at 23.46 and extending gains on a report that Russia's state-owned Vneshtorgbank has acquired nearly 5 pct of the company, which many investors expect could raise EADS' business prospects in the country.
   
Alcatel, up 0.19 or 2 pct at 9.80. Following a call by advisory firm Proxinvest to vote against the proposed merger with Lucent, investors now speculate the terms of the deal could be revised in Alcatel's favour, dealers said.

Major losers:
   
TF1, down 0.90 or 3.5 pct at 25.02 and reversing gains seen over previous sessions after the broadcaster posted better first half earnings than expected, but warned of a renewed downturn in advertising spending in August.
   
Scor, down 0.12 or 6 pct to 1.89, hit by profit-taking after posting first half net of 102 mln eur, broadly in line with forecasts.
   
EDF, down 0.47 or 1 pct at 44.69 after Les Echos reported that the government may allow business clients to benefit from electricity price caps, a move destined to garner voter support ahead of next year's presidential elections.

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German shares AFX at a glance outlook

Forthcoming Events
   
Today
   
Freenet.de AGM
   
HSH Nordbank H1 results news conference (10.00 am)
   
Deutsche Bank Real Estate AGM
   
Federal Network Agency press conference on the regulation of the electricity, gas and mobile phone markets, Bonn (10.30 am)

Tomorrow
   
July retail sales (8.00 am)
   
Aug jobless (10.00 am)
   
Bankgesellschaft Berlin H1 results
   
Deutsche Boerse press event on data quality, Frankfurt (12.00 noon)
   
Bayer AG CEO Werner Wenning speaks at Frankfurt Business Journalism Press Club (6.30 pm)
   
German Banking in Transition Conference with speeches from Deutsche Bank AG CEO Josef Ackermann, Unicredito Italiano SpA CEO Alessandro Profumo, Deutsche Boerse's Reto Francioni, Deutsche Postbank's Wulf von Schimmelmann and German finance minister Peer Steinbrueck (day one of two)
   
IFA consumer electronics trade fair in Berlin. Press conferences include O2 Germany, Fujitsu Siemens Computers, Deutsche Telekom, LG Electronics, Loewe, Sharp, Philips, Grundig Intermedia, Blu-ray Disc Association, Panasonic, Harman Multimedia (day one of six)

Macro-Economic/Political News
   
German July wholesale sales down 0.9 pct from June, up 4.7 pct yr on yr

Market News/Sentiment
   
Postbank in focus on takeover speculation as reports state RBOS, Unicredito interested in bid, WestLB downgrades to 'hold' from 'add'
   
Air Berlin upped to 'overweight' vs 'equal-weight' at Morgan Stanley
   
IVG Immobilien, Corio cut to 'underweight' from 'neutral' by JP Morgan

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AMSTERDAM - Market data at 10.29 am
  
Major indices
   
AEX                 469.55, up 1.78 points        
AMX Midcap          577.76, down 1.68 points
Government bonds    Flat to higher

Major gainers
   
TNT lead gainers, putting on 1.49 pct to 29.26 eur
   
Hunter Douglas led second-liners, adding 1.77 pct to 54.60 eur
   
ASML added 1.37 pct to 17.01 eur
   
TomTom gained 0.67 pct to 33.20 eur after announcing new products
   
Akzo Nobel edged up 0.18 pct to 45.08 eur after announcing a bird flu development agreement with the US Center for Disease Control
   
Local issue Euronext was 1.48 pct higher to 68.70 eur as strong August volumes offset initial second-quarter earnings disappointment

Major losers
   
Corus fell 3.02 pct to 5.78 eur after reporting worse-than-expected first-half earnings
   
LogicaCMG shed 0.84 pct to 2.36 eur after the company reported first-half earnings largely in-line with expectations
   
Vedior edged 0.14 pct lower to 14.17 eur
   
Wolters Kluwer dropped 0.26 pct to 19.17 eur
   
Hagemeyer shed 1.23 pct to 4 eur

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