The Faraj List of Exploding Stocks Part 3.04 (FAR3)

LONDON (AFX) - UK blue chips are expected to return in a sombre mood
following the long Christmas holiday break, with the benefits of a strong rally
overnight on Wall Street likely to be offset by the impact of the south-east
Asia tsunamis, particularly on insurers and tour operators, dealers said.
Spread bettor IG Index expects the FTSE 100 index to open around 8 points
higher this morning.
The UK blue chip index closed 10.4 points firmer on Christmas Eve at
4,798.1.
Overnight on Wall Street, the DJIA managed to recoup all of Monday's 50.99
point drop, closing 78.41 points firmer at 10,854.54 -- its highest level since
June 2001 -- helped by better-than-expected December consumer confidence data.
The Nasdaq composite index, meanwhile, ended 22.97 points higher at 2,177.19
-- also a June 2001 peak -- rallying strongly after Monday's 6.40 point decline.
In Asia today, the mood was mixed as the Tokyo and Hong Kong stock markets
went in different directions following yesterday's rally away from the knee-jerk
falls recorded on Monday in the face of the tsunami disaster.
The Nikkei 225 index closed 42.57 points lower at 11,381.56, while at midday
the Hang Seng was 73.84 points firmer at 14,270.79.
Trading in London is sure to be fairly thin this morning as many traders
happily extend their Christmas break into the New Year holidays.
And although most commentators expect the FTSE 100 index to easily breach
the 4,800 level and end the year at its best levels for 2004, the Asian tsunamis
are likely to put a dampener on the mood first thing.
Insurers, reinsurers and Lloyd?s underwriters are sure to be unnerved by
concerns over the costs of the disaster in south east Asia which has so far
claimed almost 60,000 lives and devastated coastal areas and islands across the
Indian Ocean.
However, global insurance firms should see limited financial impact from the
destruction wrought by the weekend tsunamis as major economic centres in the
region, notably Singapore, were spared and the affected areas are relatively
poor, the Wall Street Journal reported yesterday.
A spokesman for Lloyd's of London was quoted as saying initial estimates
showed that the exposure of underwriters is limited to "holiday resorts,
personal accident, travel insurance and marine risks".
Both Munich Re and Swiss Re have so far said it is too soon to provide
estimates of the costs involved.
But tour operators such as First Choice and My Travel -- which only saw its
crucial restructuring plans rubber-stamped by shareholders at an EGM on
Christmas Eve -- are likely to suffer as the number of tourists killed by the
tsunamis continue to climb, and the costs involved in repatriation mounts up.
Germany?s TUI said yesterday it expects to incur a low one-digit million
euro cost linked with the tsunami catastrophes.
Away from the tsunami impacts, retailers are also expected to be a major
focus over the next few sessions as investors try to assess whether the
disastrous pre-Christmas sales period forecast on the high street will be
rescued by the New Year sales which started on Boxing Day.
Although few trading updates are expected from retailers until well in to
the new year, prior to Christmas the FSA reportedly told the sector to issue a
statement as soon as possible if it feels the news is likely to materially
disappoint.
Among individual stocks likely to be active after the holiday break, drugs
giant AstraZeneca could find some badly needed support after press reports the
under-pressure firm is set to receive full approval from Japan for its
cholesterol-lowering product, Crestor.
Meanwhile the Independent on Sunday suggested that AstraZeneca?s chief
executive Sir Tom McKillop could be forced to quit before the end of next month
if he cannot restore confidence following the blow to the group this month by
the publication of a patient study indicating that its lung cancer treatment,
Iressa, had no significant life-prolonging effects.
Elsewhere investment group Singer & Friedlander could see renewed
speculative support after yesterday?s Daily Telegraph reported that Icelandic
firm Kaupthing -- which has built-up a significant stake in the firm -- is set
for a 1 bln stg spending spree in the UK next year.
Meanwhile condoms to surgical gloves group SSL could be active after the FT
suggested the firm is likely to re-emerge as a bid candidate in the new year,
with due diligence work already being undertaken on behalf of a corporate
client.
And contractor Jarvis should extend the strong gains it made on Christmas
Eve after agreeing to sell its stake in the London underground maintenance
consortium Tube Lines to Spain's Grupo Ferrovial for 146.8 mln stg, and
revealing that its 'core' lenders have agreed to refinance its debt.
Jarvis shares soared 21 pct higher on Christmas Eve as press reports had
suggested the group was looking to sell the Tube Lines stake for little more
than 100 mln stg.
However the contractor also warned that despite the deal it is still
teetering on the brink of collapse and said it is considering the need for a
number of provisions and write offs ahead of the publication of its interim
results to be announced by the end of this year -- possibly as early as today.
Otherwise the corporate news diary is almost empty today, with Acquisitor
holding its AGM, and Cater Barnard an EGM.
And house builders will remain in focus after the latest Hometrack survey,
released on Monday, showed UK house prices fell for the sixth month running in
December.
The property website found that prices fell 0.8 pct in December, pushing the
average property price down to 163,500 stg from a peak of 167,700 stg in June.
Over the year, Hometrack said house prices increased by just 1.30 pct,
despite the 2.5 pct cumulative drop since July.
Hometrack reiterated its view that house prices will continue to fall in the
first few months of 2005 by up to 3 pct, before recovering in the second half.
The UK economic data due for release this shortened trading week will also
reflect on the housing market, with November?s BBA mortgage lending data due
today, and the latest Nationwide house prices report scheduled for tomorrow.
Across the Atlantic the latest US existing home sales numbers will be the
main macro focus today.
jmh/ak