UK/Euro Financial Market Daily Evening Briefing 01-10-2007

Want quick and easy forex trading? Cantor Index delivers. Click here

London shares close up, shrugs off banking woes as Dow hits new record

The FTSE 100 closed firmer, shrugging off profit warnings from major investment banks, as Wall Street surpassed its intraday  record high of 14,022 to 14,056.1, amid hopes that economic data due for release this week will result in further rate cuts.
   
By the close, the FTSE 100 index was up 39.4 points at 6,506.2, having recovered from an opening low of 6,419.2 but below its session high of 6,514.5. Volume was moderate with 2.68 bln shares trading in 598,392 trades.
   
The broader indices also closed firmer with the FTSE 250 index finishing up 44.1 points at 11,081.5.
   
Turning to Wall Street, US stocks shot higher, sending the Dow Jones industrial average into record territory after a weaker than expected report on manufacturing raised hopes that the Federal Reserve will lower interest rates later this month.
   
The DJIA breached the psychologically significant 14,000 level, up 153.4 points, or 1.09 pct, at 14,048.3 as a trio of warnings from UBS, Credit Suisse and Citigroup gave way to hopes that things will return to normal in the fourth quarter.
   
A weaker than expected report on manufacturing in the US also raised hopes that the Federal Reserve will lower interest rates later this month.
   
In London today, investors looked past the profit warnings to focus on sectors either unaffected by recent credit concerns such as the miners, or those that seemed under-valued such as the house builders.
   
The view prevailing among traders was that any disappointing data emanating from the US this week was likely fuel pressure for further rate cuts, although Thursday's MPC meeting was considered unlikely to yield a similar cut.
   
As it was Tate & Lyle finished at the top of the leaderboard, recovering around a third of last week's slump on talk the sugar producer could entice a takeover offer. The shares ended up 37-3/4 at 440-1/4.

Use our professional platform to trade on margin and trade tax free. Speculate on Oil, Gold, Foreign Exchange, Worldwide Indices, Equities and Options. Go long or short on all our markets. Click here.

Elsewhere, firmer commodity prices boosted the mining sector with the sector further helped by target hikes by Credit Suisse for Kazakhmys and Vedanta which closed up 100 at 1,505 and 97 at 2,127 respectively.
   
Miners were lifted by higher copper prices, with metal traders overlooking weaker than expected US manufacturing data to focus on dollar weakness and a looming strike in Peru.
   
In addition, expectations demand will be strong in the fourth quarter also kept prices underpinned, although volumes were low with most players staying out of the market ahead of LME week.
   
Peers Antofagasta ticked up 40-1/2 to 748, Anglo American gained 71 to 3,360 and Xstrata rose 118 to 3,362.
   
On the downside, Northern Rock closed over 26 pct lower, or 47.1 pence at 132.1 amid fears the troubled lender may be sold off at a knockdown price.   

The Sunday Express reported at the weekend any Northern Rock sale is "doomed to failure," with large investors doubting that any deal can succeed, while Saturday's Financial Times reported brokers as saying a bid could come in at under 200 pence.
   
Sentiment was further knocked after Spanish businessman Jose Maria Ruiz-Mateos informed Northern Rock's advisors that he is no longer interested in acquiring a stake in the lender.
   
Northern Rock said last week that it had received an unspecified number of approaches, but that no talks over price had taken place.
   
This weekend, a UK newspaper reported that two US hedge funds, JC Flowers and Cerberus, had been cleared to start talks with Northern Rock by UK Treasury officials.
   
Elsewhere, WPP ended down 2 at 659 after Deutsche Bank lowered its price target to 850 pence from 900 and trimmed 2007 EPS forecasts.

You've probably heard about spread betting - but maybe the risks have put you off. The Finspreads Trading Academy, the most popular way into the world of spread betting, takes you through the whole subject from a keen amateur's point of view. So don't be startled by spread betting - get started. Click Here

Tesco also dipped 3-3/4 to 439-1/2 ahead of tomorrow's first-half results.
   
Turning to the midcaps, Biffa was the top riser, up 19-1/2 pence at 240-1/2 after revealing that it continued to see encouraging performances from its resource recovery and landfill & power generation divisions into the second quarter, with both divisions expected to show continued growth.
   
Elsewhere, Holidaybreak rallied 25 to 770 after investors gave its acquisition of NST the thumbs up with analysts saying it made strategic sense.
   
Finally, St Modwen ticked up 22 to 498 after reassuring investors by saying it continues to experience strong progress and remains confident of meeting its target of doubling net asset value per share every five years.

Diary of Events

For a diary of key financial and corporate events in the UK this week, click here

UK Small Cap Report

For a summary of today's trading on the FTSE 250 and the AIM, click here

..from an award winning developer.  High demand for apartments within a 30 minute commute of central London make this new off-plan development an exceptional opportunity. Just 5% initial investment required!  For more information click here.

Paris shares close higher as banking stocks rebound in afternoon trade

The CAC-40 index finished up 57.57 points or 1.01 pct at 5,773.26. Among the CAC-40 stocks, 38 closed higher and two closed lower. On the Matif, October CAC-40 futures were trading at 5,785.00.
   
Banking stocks rallied in the afternoon, helping lift the blue-chip index rebound from losses earlier in the day sparked by Swiss peer UBS's announcement of a larger-than-feared US sub-prime market exposure, which will result in a surprise 600-800 mln sfr third quarter pre-tax loss.
   
Former Federal Reserve chairman Alan Greenspan's comments that the global credit crisis triggered in August might be coming to an end helped ease investors fears and lift banking stocks in the afternoon.
   
"Is this ... credit crisis about to be over? Possibly," Greenspan told a conference on the world economy here. Greenspan pointed to the re-emergence of trading in risky bonds in the US as a sign that the global credit squeeze was easing.
   
BNP Paribas closed up 1.23 eur or 1.60 pct at 77.97, and Credit Agricole gained 0.40 or 1.48 pct to 27.45, while Societe Generale rose 1.52 or 1.29 pct to 119.20.
   
Air France-KLM led Paris' blue-chip gainers, closing up 1.67 eur or 6.48 pct at 27.44 following reports that it is targeting a 49 pct stake in Spanish air carrier Iberia.
   
Unconfirmed reports this morning that Air France is focusing on Iberia rather than Alitalia were positively-received by investors, with one Paris dealer calling the news "pretty reassuring," as "the market had largely perceived a buy of Alitalia as negative."
   
Goldman, meanwhile, added Air France to its 'conviction buy' list, noting that the power and protection of the airline's network is not being recognised.
   
Among other risers, Renault climbed 4.46 eur or 4.39 pct to 106.08 after Credit Suisse re-started coverage of the stock with an 'outperform' rating. In a note published this morning, the broker said that a strong commitment to 2009 targets through performance incentives and dividend hike is likely to support investor confidence in Renault's core 6 pct margin goal.
   
Alstom rose 3.86 eur or 2.71 pct to 146.43 after it received a contract worth 190 mln eur to supply parts for a hydroelectric power station in Vietnam.
   
Suez rose 0.49 eur or 1.19 pct to 41.79. The French power utility and water and waste management outfit said it and Spanish partner La Caixa would launch a bid valued at up to 2.1 bln eur for the outstanding stake in Barcelona water company AGBAR that the companies do not already own.
   
Electricite de France rose 0.87 eur or 1.17 pct to 75.02. The French electricity giant declined to confirm a report in Les Echos that the company will reduce its headcount by up to 6,000 by 2010 by replacing only one in every two retiring employees.
   
EDF chairman Pierre Gadonneix also told a conference in Madrid that EDF plans to build its first nuclear plant in the US in 2015. Gadonneix also said EDF is ready to rekindle an agreement with Enel SpA for the Italian utility to take a stake in France's European Pressurized Water Reactor nuclear project.
   
Alcatel-Lucent shed 0.18 eur or 2.5 pct to 7.02, hit by profit-taking after last week's strong gains. However, the share is still up 9.7 pct over the past five days, boosted by hopes of deeper restructuring at the group and an imminent departure of CEO Patricia Russo.
   
Additional reports this morning that chairman Serge Tchuruk might be forced out were welcomed by investors. According to one analyst, Tchuruk is widely seen as more of a problem than CEO Russo, due to a poor communication policy, and his departure would leave Russo free to manage the group.

TradeWin: a bespoke share trading package with a proven profitable track record.

• Ideal for both new and experienced traders
• No complex charts to read and only taking 10 minutes per day to run.
• £4,578 average profit/month tax-free so far in 2007.
This is your chance to make trading really pay. Click Here.

German shares close higher as US data fans rate hopes, financials recover

The DAX closed 60.91 points or 0.77 pct higher at 7,922.42, having traded between 7,831.40 - 7,922.42 in the session. The MDAX lost 5.70 points or 0.06 pct to 10,329.04 eur, while the TecDAX was up 13.07 points or 1.35 pct at 979.13. DAX futures were up 61.00 or 0.77 pct at 7,994.50, while bund futures advanced 0.23 or 0.20 pct to 112.77.
  
Leading blue chips higher, TUI rose 1.05 eur or 5.57 pct to 19.89 eur after US investor Guy Wyser-Pratte said over the weekend in a interview with the Frankfurter Allgemeine Zeitung that he is considering raising his 1 pct stake in the company and signalled that he may support its break up.
   
"After Wyser-Pratt bought a 1 pct stake in TUI on Friday, speculation has once again heated up over a possible split up of the company," said Zafer Ruezgar, an analyst at Independent Research.
   
"Success will be dependent on how many shareholders Wyser-Pratt will be able win over to his plan. The US investor will have difficulty winning over some, including those shareholders who are friendly to the current CEO, Michael Frenzel, and who see the company finally just before the beginning of a positive operating trend."
   
Hypo Real Estate gained 2.22 eur or 5.57 pct to 42.10 eur as traders said the bank's shares passed a key resistance level at 40.20 eur per share. In other news, the company's merger with Depfa Bank is now expected to close tomorrow, earlier than the Oct 4 date originally planned.
   
Deutsche Postbank added 2.29 eur or 4.45 pct to 53.78 eur, outperforming banking shares after UBS raised its stance to 'buy' from 'neutral', leaving its price target of 63 eur per share unchanged and saying that it has largely underperformed the Eurobanks sector by 12 pct.
   
UBS said Postbank, in common with almost all the banks at present, faces some difficulties but still expects it to reach its 2008 pre-tax profit target of 1.22 bln eur, despite issues such as high competition, a stretched capital base, mortgage margin pressure and difficult treasury conditions.
   
Other financial stocks recovered from earlier lows following a profit warning from Swiss banking giant UBS AG and later in the day by one from Citigroup. Deutsche Bank closed 0.80 eur or 0.89 pct higher at 91.18 eur and Commerzbank was up 0.55 eur or 1.94 pct at 28.94 eur.
   
Insurance giant Allianz was still underperforming, edging up 0.10 eur or 0.06 pct to 163.95 eur as investors speculated that its banking unit Dresdner Bank may be strongly impacted by the sub-prime crisis.
   
Lufthansa shares gained 0.45 eur or 2.23 pct to 20.62 eur after Goldman Sachs restarted the German flag carrier with a 'neutral' rating.
   
Siemens shares added 1.58 eur or 1.64 pct to 98.00 eur after a report from Wirschaftswoche over the weekend said that the electronics giant is considering selling stakes in non-core businesses such as Osram, Nokia Siemens Networks and Bosch Siemens Hausgeraete.
   
At the bottom of the DAX index, Merck KGaA slumped 1.60 eur or 1.89 pct to 83.00 eur after Morgan Stanley cut its price target on the stock to 111 eur from 121 eur, saying that it is lowering its EPS estimate following a "poorly communicated" lowering of the company's liquid crystal operations' EBIT margin guidance from 52 pct to somewhere in the "40s".
       
Over on the MDAX, MLP added 1.06 eur or 11.32 pct to 10.42 eur after Citigroup upgraded it to 'buy' from 'hold', but cut its price target to 13.00 eur from 15.80, with the broker saying that risks hanging over the stock are more than priced in.
   
TecDAX-listed Tele Atlas gained 1.30 eur or 6.37 pct to 21.70 eur, leading its index higher, while Solon AG lost 2.50 eur or 3.14 pct to 77.00 eur.

Have your ISAs, PEPs, Unit Trusts or OEICs checked. Moneyspider will provide a unique performance rating for each of your funds, plus their rank and a current valuation in a single FREE report which is online and updated daily For more click here

Amsterdam shares close higher, boosted by Wall Street; TomTom soars

The AEX closed 4.59 points or 0.85 pct higher at 545.57 after opening at 538.41 and trading in a range of 537.51-545.85. Government bonds were higher and the euro stood at 1.4238 usd versus 1.4229 usd late last week.
   
TomTom closed 4.20 pct higher at 56.80 eur, off an intraday high of 59.24 amid M&A speculation fuelled by Nokia's agreement to buy navigation software maker Navteq.
   
Dutch midcap mapmaker Tele Atlas -- which TomTom has agreed to acquire for 21.25 eur per share -- surged 7.13 pct at 21.80 amid talk of a possible rival takeover approach from TomTom competitor Garmin, traders said.
   
Staffing stock Randstad was the second top gainer on the AEX, putting on 4.19 pct at 39.50 after Credit Suisse raised the issue to 'outperform' in its sector review, while peer Vedior gained 2.85 pct at 15.87. Midcapper USG People rose 3.65 pct at 20.72.
   
Akzo Nobel put on 3.79 pct at 59.99 after it raised its synergies estimates to 2.5 bln eur following the acquisition of Imperial Chemical Industries PLC (ICI), analysts said.
   
Chemicals group peer DSM rose 3.49 pct at 39.17 as Exane BNP-Paribas upped its price target on the issue to 48 eur from 45, while reiterating its 'buy' rating.
   
Blue-chip financials traded higher, led up by ING which put on 1.54 pct at 31.61 as it said the works council has given a positive recommendation to the planned merger of its Postbank and ING Bank operations in the Netherlands.
   
ABN Amro gained 1.11 pct at 37.32, Aegon rose 0.60 pct at 13.51 and Fortis gained 0.63 pct at 20.26 after it sold its 11.4 pct stake in Kas Bank as it continued to raise funds for its takeover bid on ABN Amro.
   
Fortis' partner in its ABN Amro bid, Royal Bank of Scotland also said today it has made moves towards the financing of the takeover offer.
   
Midcap Dutch financial SNS Reaal closed 0.88 pct higher at 16.03 as it completed the acquisition of FBS Bankiers.
   
Heineken rose 0.50 pct at 46.25, while local issue peer Grolsch slumped 4.44 pct at 24.95 after catering industry group Koninklijke Horeca Nederland (KHN) said it will sue Heineken, Grolsch and non-listed peer Bavaria for alleged price-fixing in the 1990s.
   
Closing Forex Rates

ADVFN Services