UK/Euro Financial Market Daily Evening Briefing 02-01-2008

Trade Like a Pro and Earn More than £40,000+ Tax-Free per year Trading Shares. A MUST SEE. Click Here to find out more...

London shares close lower after Wall Street slide; A&L surges 16 pct

At the close, the FTSE 100 was down 40.2 points at 6,416.7, near the low for the session of 6,402.6, and compared with an earlier high of 6,512.3. The FTSE 250 index fell 7.1 points today to close at 10,650.7. Volume was below average with 1.36 bln shares having changed hands in 534,168 deals.

In the US, as London was closing, the Dow Jones Industrial Average was down 148.3 points at 13,116.5. The S&P 500 was down 15.5 at 1,452.85. The Nasdaq Composite was down 33.04 at 2,619.24. Manufacturing activity across the US contracted in December after 10 straight months of expansion, according to a key survey out today.

The Institute for Supply Management said its index of US manufacturing activity fell to 47.7 in December, down from the 50.8 reading in November. Analysts polled by Thomson's IFR Markets were looking for a slight increase from November to 50.9.

Jeremy Batstone-Carr, head of private client research at Charles Stanley, said: "There's no doubt the ISM data was the pivotal moment today, with such a magnitude of the fall (to 47.7). If the US isn't already in recession, it must be close to it. But we should be wary about reading too much into today's share movements, as volumes are low."

While manufacturing weakness may encourage the Federal Reserve to cut US interest rates, Batstone-Carr pointed to the part of the ISM survey showing that prices were still rising. "There may still be battle between the hawks, worried about inflation, and the doves in the Fed," he said.

The Fed is due to release of the minutes from its Dec 11 meeting later tonight. The meeting resulted in a quarter-point cut to both the federal funds rate and the discount rate.

Back in the UK, Alliance & Leicester was the standout riser, closing up 106 pence, or 16.4 pct, at 754, on reports that Spain's Banco Santander may yet re-open talks about a takeover. Banco Santander took over Abbey in 2004.

A report in this morning's Financial Times said the Spanish bank -- which broke off negotiations with A&L in mid-December due to a disagreement over price -- is not thought to have ruled out coming back with an improved offer. Santander has indicated it wants to expand in the UK and is close to completing its three-year integration of Abbey National. A&L has yet to make any comment.

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.

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

Among other risers on the the second line, Informa was encouraged by an upgrade at Panmure Gordon, with shares rising 15-1/2 to 477-1/4. This morning the broker raised its rating to 'buy' from 'hold' and moved its price target to 550 pence from 530. It feels too much bad news is priced in and the 11.5 times 2008 valuation looks compelling.

On the 250 downside, Ladbrokes fell 7-1/4 to 316. TurfTV, the racing television service owned by Alphameric and 31 UK racecourses, announced that said it signed a contract with Ladbrokes to show its content in the bookmaker's shops.

This was seen by some analysts as a victory over bookmakers, some of which had wanted to use their own TV system. William Hill was 25 lower at 499-1/2, amid speculation it will also sign up with Turf TV. Dresdner Kleinwort and Investec cut earnings estimates for bookies after the deal was announced.

UK Diary of Event:
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

Dealing, Self-select ISA, PEP and SIPP Dealing accounts. Standard flat £12.50 for online and phone trades. Frequent trader rate £6 per trade. No dealing fee on fund purchases. Extensive market data and news plus advanced charting, technical analysis and research publications. Click here for more information.

Paris shares close lower after disappointing US ISM index

The CAC-40 index finished 63.72 points or 1.14 pct lower at 5,550.36. Among CAC-40 stocks, 4 closed higher and 36 closed lower. On the Matif, January CAC-40 futures were trading at 5,569.50.

On the broader indices, the SBF-80 index closed down 52.74 points, or 0.83 pct at 6,293.65 and the SBF-120 ended down 44.44 points, or 1.09 pct at 4,015.90. The euro was quoted at 1.4741 usd compared to 1.4719 usd at the close on Monday.

In Paris, the CAC-40 had risen in the morning as New Year bargain hunting took hold, but shares followed Wall Street lower during the afternoon, after the publication of an ISM index that missed economists' forecasts. A near five-point drop in the new orders component hauled the ISM index lower to 47.7 in December.

The ISM said its index for US manufacturing activity fell to 47.7 in December, down from 50.8 in November, indicating the first contraction after 10-straight months of expansion. On the CAC-40, first among only a handful of risers by the end of the session was Air Liquide, which finished 0.59 or 0.58 pct higher at 102.38.

Alcatel-Lucent was up 0.01 or 0.20 pct at 4.96 by the close. The group's share benefited from the mood of bargain-hunting in the morning given that the telecoms equipment maker was the worst performing stock on the blue chip index in 2007.

Outside the CAC-40, ADP defied the afternoon's bearish momentum to finish 7.21 or 10.30 pct higher at 77.21 after Vinci confirmed a report in La Tribune that it has acquired a 3.3 pct stake in the airport operator. Shares in Vinci fell 2.15 or 4.24 pct to 48.50, making it the biggest faller on the CAC-40.

One Paris dealer said the move was not surprising given Vinci has been steadily expanding its concessions business, which is "much less cyclical than construction". In a statement this morning, Vinci reiterated its "long-term interest in airport infrastructure". The group also said it does not intend to raise its stake in ADP further "unless there is a change in the government's position".

The French government owns 68.4 pct of ADP and there was speculation last year that it could privatise the company, which runs Paris' Charles de Gaulle and Orly airports, in order to boost public finances. Construction companies languished near the bottom of the CAC-40, with Bouygues closing 2.09 or 3.67 pct lower at 54.91 and Lafarge ending the session 3.60 or 2.89 pct down at 120.90.

Among automobile stocks, Peugeot closed 0.59 or 1.14 pct lower at 51.26. Renault was 1.27 or 1.31 lower at 95.74. The sector was in the spotlight thanks to the publication of new car sales data for December at midday.

The figures from constructors' association CCFA showed new car sales in France jumped 21.2 pct year-on-year in December, adjusted for calendar effects. The strong year-end allowed 2007 sales to increase 2.8 pct over the previous year on a comparable basis.

Registrations of Peugeot group cars rose 10.5 pct in December, while Renault saw new car sales rising 10.2 pct. Renault was also boosted by news that Korean unit Renault Samsung Motors posted record monthly sales last month.

..in St Lucia's UNESCO's World Heritage Site.  Superb buy to let opportunity in a breathtaking location with immediate income and dramatic capital appreciation.  For more information click here.

German shares close lower on Wall Street losses

The DAX closed 118.21 points or 1.47 pct lower at 7,949.11 points after trading between 7,925.11 and 8,100.64. The MDAX lost 156.36 points or 1.59 pct to 9,708.26 points, while the TecDAX was 3.68 points or 0.38 pct lower at 970.51 points.

DAX futures fell 121.50 points, or 1.49 pct, to 8,023.00, while bund futures rose 1.07 or 0.95 pct to 114.18.
The euro was trading at 1.4731 usd against 1.4706 usd in London afternoon trade. Leading blue chips lower, Deutsche Boerse dropped 7.21 eur or 5.24 pct at 128.63 on speculation it may buy a stake in the Taiwan Stock Exchange.

The Taiwan Stock Exchange on Monday told the Financial Times it is planning to sell up to 25 pct of its equity to strategic investors, including an investment bank and other exchanges, during or after an initial public offering in 2009. According to media reports, Deutsche Boerse is among exchanges with whom the Taiwan Stock Exchange is in talks.

Metro was down 2.03 eur or 3.53 pct at 55.41. TUI lost 0.65 eur or 3.40 pct to 18.48, after the travel giant said on Monday it would delay some excursions in trouble-hit Kenya until today and then decide whether or not to maintain them.

Foreign tourists travelling to Kenya were warned to take extra care after deadly post-electoral clashes there, while travel operators cancelled some local excursions, British officials said. Hypo Real Estate fell 1.10 eur or 3.05 pct to 35.00, while Daimler fell 1.82 eur or 2.74 pct to 64.68.

Leading large caps higher, Deutsche Postbank was one of four gainers, adding 0.59 eur or 0.97 pct to 61.34, after Klaus Zumwinkel, chief executive of Deutsche Post World Net, reiterated in an interview with Die Zeit the company is considering selling the bank during 2008.

Bayerische Motoren Werke jumped 0.38 eur or 0.90 pct at 42.73. The Times on Monday reported sales of the company's luxury Rolls-Royce cars for 2007 are expected to be up almost 25 pct from a year earlier, helped by demand for its new Phantom Drophead Coupe.

Infineon Technologies gained 0.06 eur or 0.74 pct to 8.13, as the Semiconductor Industry Association on Monday said global chip sales in November rose 2.3 pct to 23.1 bln usd, boosted by solid holiday sales consumer electronics such as flat screen TVs, portable music players and digital cameras.

Thyssenkrupp advanced 0.02 eur or 0.05 pct to 38.37. Over on the MDAX, Rheinmetall plunged 4.06 eur or 7.47 pct to 50.32. Techem rose 2.64 eur or 4.71 pct to 58.64, making it the best performer on the German mid caps index. TecDAX-listed Adva fell 0.31 eur or 9.06 pct to 3.11, still suffering from the lowering of its full-year guidance last week. At the other end, Singulus Technologies rose 0.44 eur or 6.31 pct to 7.41.

Trade Forex, Indices and Shares with zero commissions and 1% margin. Live dealing prices stream into GCI's state-of-the art trading software. Just click on a price to trade currencies, S&P 500, Dow Jones Industrials, DAX 30, Nikkei 225, IBM, Vodafone, Microsoft, and much more. To register for a free demo account Click Here

Closing Forex Rates -- UK
Sterling exchange rates:

ADVFN Services