UK/Euro Financial Market Daily Morning Briefing 30-10-2007

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London shares lower in early trading, Imperial Tobacco down after results

UK blue chips slipped in early trading, giving up some of yesterday's gains, with Imperial Tobacco down on profit-taking after full-year results.
   
At 8.59 am, the FTSE 100 index was down 14.9 points to 6,691.1, with the FTSE 250 index losing 31.0 to 11,521.8.
   
Wall Street advanced yesterday as investors speculated that the Federal Reserve will cut interest rates this week, to boost the slow economy and lure more buyers into the troubled credit markets.
   
The Dow Jones Industrial Average closed up 63.56, or 0.46 pct, at 13,870.26. The Standard & Poor's 500 index rose 5.70, or 0.37 pct, to 1,540.98, while the Nasdaq composite index rose 13.25, or 0.47 pct, to 2,817.44.
   
The Nikkei closed down 47.07 points or 0.3 pct at 16,651.01, while Hong Kong's Hang Seng was up 39.02 points or 0.1 pct at 31,625.92 by midday.
   
Oil retreated in Asia after spiking to a historic high of over 93 usd yesterday. New York's main contract, light sweet crude for December delivery, was 84 cents lower in Asian trading at 92.69 usd a barrel. Brent North Sea crude for December delivery dropped 71 cents to 89.61 usd. It hit a record high of 93.80 usd Monday.
   
In London, Imperial Tobacco was one of the biggest fallers, down 33 pence at 2,410 after largely in-line full-year figures. Some dealers cited profit-taking, while others voiced concerns about its upcoming rights issue to help fund its Altadis acquisition.
   
Imperial reported full-year adjusted operating profit up 9 pct to 1.475 bln stg, with its full-year dividend raised by 12 pct to 69.5 pence.
   
Sector peer British American Tobacco also suffered, down 15 to 1,801, hindered by a downgrade at Goldman Sachs to neutral from buy this morning.    

Elsewhere, UK miners slipped into the red, extending declines in Australian deals, as investors took profits following yesterday's M&A-fuelled gains. 

Xstrata yesterday announced a bid for Jubilee Mines.

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Lonmin lost 60 to 3,336, BHP Billiton fell 25 to 1,843, Rio Tinto dropped 35 to 4,441 and Antofagasta lost 11 to 849-1/2. Lower metals prices also weighed.
   
On the upside, Schroders added 9 to 1,485 after it reported a 53 pct rise in third-quarter pretax profit to 98.1 mln stg from 64 mln stg a year earlier.
   
On the second line, Luminar was 15-1/2 lower at 617 in early trade on limited profit-taking after issuing interim results which broadly met analysts forecasts and which Altium described as encouraging.
   
Altium said it believes there are certainly more positives than negatives in this mornings results and believe that the shares deserve to go better and reiterated its 'buy' rating and 850 pence target.
   
Meanwhile, Misys fell 3-3/4 pence to 235-1/2 as investors appeared unimpressed by news the software company has entered into a partnership with India's HCL Technologies to jointly market its banking, and treasury and capital markets products in India, Singapore and Malaysia, enabling them to gain market share in the fast-growing economies.
   
On the 250 upside, St James's Place added 11 to 394-1/2 ahead of a Q3 figures due on Thursday, while the stock was pushed higher by a Panmure Gordon upgrade.
   
This morning, Panmure said it thinks the investment markets will be buoyant during the next 12 months and it anticipates strong growth from SJP. It has consequently raised its recommendation from 'hold' to 'buy' and maintains its price target of 470 pence.
   
Finally, in macro news due today, the Confederation of British Industry is set to show that activity on the UK's high streets is easing in the wake of higher interest rates and the recent credit crunch.
   
In its monthly distributive trades survey, the CBI is expected to reveal that a balance of +9 pct of retailers will report sales were higher in October than in the same period a year ago, down on September's +12 pct. The expected sales balance for November is expected to slip to +12 pct from +17 pct.

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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

Milan

MILAN - Market data at 10.00 am:

Main indices:
   
Mibtel at 31,334, up 0.11 pct
   
S&P/Mib at 40,207, up 0.10 pct

Main S&P/Mib gainers
   
Fiat up 1.74 pct at 22.21, recovering after yesterday's weakness
   
Pirelli up 0.98 pct at 0.88. Yesterday the group bought a 12.4 pct stake in Avanex that was previously held by Alcatel-Lucent, in the first transaction after selling its Telecom Italia holding last week.   
   
Eni up 0.83 pct at 25.53 as Citigroup upgraded the stock to 'buy' from 'hold' and raised the target to 28 eur from 27, citing the share's 20 pct discount to the oil sector, which the broker sees as unwarranted considering the premium yield
   
Tenaris up 0.71 pct at 18.49
   
Fastweb up 0.68 pct at 32.53
   
Main S&P/Mib losers
   
Generali down 1.54 pct at 32.60 eur as JP Morgan cut its rating to 'neutral' from 'overweight' on valuation grounds but left the target unchanged at 32.8 eur
   
Fondiaria-SAI down 1.18 pct at 32.60
   
Telecom Italia down 1.06 pct at 2.155 with investors waiting for news on its management changes. According to reports, representatives of Mediobanca and Intesa Sanpaolo, leading members of Telco, which last week bought a controlling stake in the group, are meeting today to discuss possible candidates
   
Bulgari down 0.77 pct at 10.85
   
Seat Pagine Gialle down 0.65 pct at 0.399

Other stocks in the news
   
Banca Popolare di Milano up 0.41 pct at 10.68 ahead of the meeting of its strategic committee that should decide on candidates for a partnership. Reports say the bank has narrowed its options to Credit Mutuel or Banca Popolare dell'Emilia Romagna 

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MADRID - Market data at 10.30 am

IBEX-35 index   15,772.5, up 33.5 points         

Major gainers:
   
Heavyweight banks, with Santander up 0.18 eur at 14.81, BBVA up 0.06 at 17.06.
   
BME, up 0.38 at 49.93, bolstered by ongoing bid speculation and solid nine month results.
   
Antena 3, up 0.11 at 12.51, after reporting in line nine month results.
   
Amid small-mid caps, Grifols up 0.71 or 4.01 pct at 18.40 on positive investor sentiment.

Major losers:
   
Telefonica, down 0.07 at 22.84 and Repsol YPF off 0.07 at 27.26, underperforming their heavyweight banking peers.
   
Acerinox, down 0.23 at 20.00, extending yesterday's losses.
   
Ence, down 0.22 or 2.48 pct at 8.65, depressed by a weak set of nine month results.

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LISBON - Market data at 9.40 am:

PSI-20 index: up 73.86 points at 13,057.41.
   
Major gainers:
   
PT, up 0.46 eur, or 5.23 pct, at 9.26, surging in volatile trade after Euronext Lisbon adjusted its share price to 8.80 eur to reflect the 2 bln eur decrease in its valuation from the spin-off of its 58 pct stake in PT Multimedia effective as from today.
   
Yesterday, PT shares closed at 10.53 eur, before the adjustment.
   
Sonaecom, up 0.07, or 1.83 pct, at 3.89, as BCP analysts praised the company's positive results for the nine months to September, highlighting performances at the Optimus mobile and Sonaecom Fixed divisions.
   
Sonae, up 0.03, or 1.52 pct, at 2.01, tracking gains in Sonaecom, in which it has a 50.1 pct stake.
   
Major fallers:
   
Banco BPI, down 0.04 at 6.28, extending yesterday's losses on expectations it will have to raise its one-for-two share swap bid for BCP. After the close today BCP is expected to announce its response to BPI merger proposal.
   
Cimpor, down 0.10, or 1.57 pct, at 6.26, retreating from yesterday's strong gains on revived speculation regarding control of the company as traders said a new entity resulting from a possible merger of BCP and BPI could sell BCP's 10 pct stake in the cementmaker, with Teixeira Duarte tipped as a possible buyer.

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