UK/Euro Financial Market Daily Evening Briefing 03-07-2007

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UK blue chips closed firm today, reflecting a strong showing on Wall Street at the start of a new quarter and ahead of the Independence Day holiday, with investors shrugging of nerves ahead of Thursday's UK interest rate decision.
At the close, the FTSE 100 index was 49.2 points higher at 6,639.8, down from a session high of 6,645.3, while the FTSE 250 index was 213.3 points firmer at 11,747.6.

All the broader indices also ended higher.

Volume was solid, with 3.30 bln shares changing hands in 553,026 deals.

On Wall Street, by London's close, the DJIA was 31.5 points higher at 13,567, with the Nasdaq composite index was 7.55 points higher at 2,639.85, in a shortened day of trading before the Independence Day holiday.

Back in London, mining heavyweights helped buoy the blue chips, with Lonmin closing up 131 pence at 4,310, pushed higher by rebounding base-metal prices and amid rumours Xstrata, which was 46 pence ahead at 3,103-1/2, is preparing a bid for the group.

Also benefiting were their peers, with Vedanta Resources 23 pence higher at 1,656-1/2, Kazakhmys, which took on 14 pence to 1,295-1/2, and Anglo American which took on 64 pence to 3,175 with the demerger of its paper and packaging group Mondi -- with its shares trading at 475 pence -- completing today.

Elsewhere, shares in pub & restaurant group Greene King closed higher, up 76 pence at 1,036, after announcing results which met expectations, and saying it is "very encouraged" by initial reaction to the smoking ban surveying 5,000 consumers in 500 pubs on Sunday, with takings also up on the day the ban came into force across England.

Altium Securities upgraded its rating to 'add' from 'hold' and KBC Peel Hunt reiterated its 'buy' stance on Greene King, with its shares moving up 80 pence to 1,039, while its blue-chip peers benefited from the news.

Mitchells & Butler ended 8-1/2 pence firmer at 871-3/4, along with Punch Taverns which took on 42 pence to 1,261-1/2, and Enterprise Inns which was 13-1/2 pence stronger at 686-3/4.

Meanwhile, Rolls Royce ended 12 pence higher at 547-1/2, following the group's announcement that it had won orders across all areas of its businesses and it increased its global customer base significantly in the second quarter.

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Madrid

Shares close higher amid rebound; Cintra leads gains

Share prices closed higher, rebounding from recent weakness and buoyed by a positive session on Wall Street, with Cintra leading gains and heavyweight banks also helping lift the overall market.

The IBEX-35 index closed up 64.70 points at 14,869.4, after trading in a range of 14,854-14,917.

Equities opened higher after a firm close in the US, boosted by falling bond yields, and extended gains through the day.

Bargain hunting helped sustain market strength, which was further supported by a positive start on Wall Street ahead of the July 4 holiday.

Cintra led the gainers, rising 0.27 eur or 2.31 pct to 11.98 as its parent company, Ferrovial, rose 0.15 to 71.95, after a BAA source said it is studying the sale of its 'duty free' stores division, as part of a wider plan to dispose of non-core assets.

Amongst heavyweights, the banks helped support the market rebound, with BBVA rising 0.07 to 18.20 and Santander adding 0.13 to 13.77, while Telefonica slipped 0.06 to 16.44.

Banking peers were strong, with Banesto rising 0.22 to 16.99 and Sabadell adding 0.04 to 8.14, after ING upgraded both stocks to 'hold' from 'sell'.

Repsol YPF added 0.14 to 30.09, just breaching the key 30.0 eur technical resistance level.

Underperforming the broad market, Sogecable dropped 0.96 or 3.07 pct to 30.31, on concerns of a possible loss of football rights in its pay TV platform after a report that Mediapro is about to sign a deal with 21 football clubs for broadcasting rights.

Colonial fell 0.19 or 4.39 pct to 4.14, while other property issues moved higher, with Astroc adding 0.09 to 9.72 and Realia gaining 0.25 or 3.92 pct to 6.63, after UBS initiated coverage with a 'buy' recommendation and 8.10 eur per share price target, and after the realtor sold 5 pct of France's SIIC yesterday.

Realia's parent FCC rose 1.05 to 67.85.

Amongst mid and small caps, Avanzit rose 0.14 or 2.62 pct to 5.49, after its EGM has today approved the distribution of 18 pct of its Vertice 360 affiliate to its own shareholders.

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Share prices closed higher, led up by Novozymes on good prospects for selling enzymes to produce bioethanol for fuel, by Carlsberg following positive comments from peer and BBH partner Scottish & Newcastle, and by shipping stocks.

The OMXC20 index closed 7.17 points higher at 492.47 and the OMXCB Benchmark index rose 5.79 points to 475.61.

The OMXC All Share index closed 5.19 points higher at 482.44 on turnover of 4.79 bln dkr.

Novozymes closed 34 dkr higher at 679. According to Nordea Bank, today's share price rise is partly due to the recent political decision to add bioethanol to Danish petrol and diesel from 2008, adding to the demand for the company's enzymes.

The reaction to the Danish decision underlines the view that international demand for bioethanol is expected to be a strong driver for growth among enzymes producers in the coming years, dealers said.

In addition, they noted another role for Novozymes' enzymes: making textiles. The Danish National Advanced Technology Foundation today awarded Novozymes 9 mln dkr for a research project to make textiles from biomass instead of oil, using enzymes. Novozymes is collaborating with the Technical University of Denmark in the three-year, 18 mln dkr project.

Danisco, which also produces enzymes, rose 2 to 415.

Carlsberg B was up 7 at 672. Scottish & Newcastle, which owns East European brewery joint venture Baltic Beverages Holding (BBH) together with the Danish brewer, said in a trading update it expects BBH to take further market shares in Russia. Dealers said the comments were also positive for Carlsberg.

AP Moller-Maersk A was 1,100 higher at 66,400 and the B-shares added 1,200 to 67,500. Cheuvreux lifted its target for the stock to 75,000 dkr from 67,000 on a reiterated 'outperform' stance, dealers said.

They added that overnight gains among Asian peers such as Neptune Orient Lines (NOL) and Hanjin Shipping have helped lift the stocks today.

DS Torm was up 3.5 at 213.5 and DS Norden added 12 to 374.

Novo Nordisk B rose 15 to 618 after the group's target was raised to 640 dkr from 615 dkr at Merrill Lynch, which has a 'buy' on the stock.

Genmab Goldman Sachs raised its target for the pharmaceutical company to 553 dkr from 535 dkr, on a repeated 'buy' recommendation.

Lundbeck rose 0.75 to 139.75 and ALK-Abello B added 18 to 1,171, while Coloplast fell 1.5 to 451.

Among other stocks traded today, FLSmidth was up 2.5 at 439.5, Vestas Wind Systems rose 2 to 369, William Demant Holding fell 1 to 550, GN Store Nord was unchanged at 65, Danske Bank added 2.75 to 231.25, Topdanmark shed 1 to 935 and TrygVesta was up 2 at 433.

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Shares in Amsterdam closed higher, tracking a higher Wall Street while Getronics provided the story of the day, surging on M&A speculation after it announced it has been approached by a US party for a possible takeover.

The AEX closed 3.20 points or 0.58 pct higher at 553.04, after trading in a range of 552.41-553.88.

Government bonds traded mixed while the euro stood at 1.3610 usd versus 1.3622 usd late yesterday.

News from mid- and smallcap companies ruled the day. Getronics shot up 19.36 pct to 6.72 eur after it said earlier in the day that it has been approached by a US party for a possible takeover. The announcement triggered speculation of more bidders possibly stepping in, causing investors to buy into the stock en masse.

Fellow ICT services provider LogicaCMG also benefited from the news, adding 2.21 pct to 2.31 eur.

Oce also surged, adding 10.18 pct to 15.80 eur after presenting better-than-expected earnings.

Another major gainer of the day was smallcap company Ten Cate, which surged 6.60 pct to 30.70 eur, benefiting from speculation that the company might benefit from an order for the US Army.

Among blue chips, Philips rose 2.65 pct to 32.52 eur while TomTom added 2.16 pct to 40.71 eur following several brokerage reports, including a price target hike at Merrill Lynch.

Ahold put on 1.83 pct to 9.45 eur after an upgrade to 'buy' at Dresdner Kleinwort.

TNT added 1.76 pct to 34.18 eur after renewed M&A speculation surrounding FedEx.

Numico added 1.11 pct to 39.97 eur, off highs earlier in the day following speculation that Danone may use money earned on the sale of its biscuits division to buy the Dutch company.

Financials traded mixed. ING added 1.17 pct to 32.99 eur, Aegon put on 0.82 pct to 14.67 pct, ABN Amro traded almost flat, adding 0.03 pct to 34.05 eur, and Fortis lost 0.10 pct to 31.42 eur.

Decliners were few. SBM Offshore dropped 0.30 pct to 29.44 eur, Akzo Nobel lost 0.72 pct to 63.51 and Heineken ended 1.63 pct lower at 42.80 eur.

Among midcap shares, Stork added 1.02 pct to 48.58 eur amid reports that shareholder Marel may be gearing up to offer a counterbid for Candover's 47 eur per share takeover bid on the engineering company.

BAM rose 0.99 pct to 21.32 eur and Nutreco added 0.98 pct to 54.83 eur.

Boskalis dropped 0.87 pct to 28.65 eur, Univar shed 1 pct to 38.71 eur, Aalberts lost 1.36 pct to 21.11 and Vopak lost 1.68 pct to 42.08 eur.

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