UK/Euro Financial Market Daily Evening Briefing 03-08-2007

For trading strategies, tips, education, a trader's diary and more click here.

London shares close sharply lower, Wall St depressed by jobs, credit woes

London shares closed sharply lower, after US jobs data disappointed investors, and credit market worries resurfaced, enough to more than offset solid earnings from British Airways and Anglo American.
   
At the close, the FTSE 100 was down 76 points at 6,224.3, not far off the session low of 6,212.3, having been unable to build on opening gains which saw the index trade as high as 6,333.5.
   
The FTSE 250 was down 47.2 points at 11,185.8. Volume was solid with 2.658 bln shares having changed hands in 602,814 deals.
   
The US unemployment rate rose to its highest level in half a year as US employers added fewer workers to their payrolls last month than in any month in the past five months, the Labor Department said today. The economy added just 92,000 jobs in July, sharply below the 135,000 jobs economists had expected from the survey of employer payrolls.
   
The unemployment rate, taken from a separate survey of households, rose slightly to 4.6 pct from 4.5 pct in June. The jobless rate is now at its highest level since January. Data from the Institute of Supply Management on the US service sector also disappointed.
   
Credit concerns rose again after Standard & Poor's Ratings Services said it might downgrade the debt rating at Bear Stearns Cos because of the investment bank's exposure to the distressed mortgage and corporate buyout markets.
   
The stock at times fell to levels not seen since Nov 2005. The market also had to absorb the statement on Thursday from lender American Home Mortgage Investment Corp, which confirmed it has stopped taking mortgage applications and is laying off most of its 7,000 staffers.
   
The Dow Jones was 57.1 lower at 13,406.2 as London was closing, following two days of gains. But it had been down as much as 126.6 earlier in the session.
   
Jeremy Batstone-Carr, head of private client research at Charles Stanley, said: "Some investors have taken money off the table, due to the volatility we've had lately. The labour market numbers weren't that critical. Corporate earnings have been better than forecasts, and the fall in the stock markets creates some buying opportunities."
   
In London, insurers helped take the market lower. Standard Life was 10-1/2 pence weaker at 305-3/4 pence ahead of the group's update on Tuesday. Panmure Gordon cut its price target, saying it believes there is better value elsewhere in the sector even after recent falls.
   
Peer Old Mutual was also sharply lower, down 7.7 pence at 155.1 pence, making it the biggest blue chip loser.

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.

And Royal Bank of Scotland fell 16-1/2 pence to 575 as initial enthusiasm after the banking group's trading update gave way to concern about its sub-prime exposure as Panmure Gordon pointed out the group failed to update the market on this part of its business. Re-emerging rumours that consortium partner Fortis may have to pull out of the bid for ABN Amro also preyed on investors' minds.
   
Fortis shareholders will vote on the Belgo-Dutch banking group's fund-raising plans and the bid at Monday's Extraordinary General Meeting.
   
Oil stocks also underperformed with Brent futures trading at less than 75 usd a barrel, off recent highs. BG Group closed off 20 pence at 774. Vague talk of a bid for the gas exploration group failed to lift the shares as few gave any credence to the speculation. "We hear this rumour every Friday it seems," said one London based trader. Peers Royal Dutch Shell and BP were down 25 pence at 1,875 and 8-1/2 at 554-1/2 respectively.
   
In the real estate sector, Segro edged 13-1/2 lower to 519. Among mid caps, Capital & Regional was down 28-1/2 at 961-1/2, and Great Portland Estates fell 24-1/2 to 617-1/2. Credit Suisse has downgraded all three to 'underperform' from 'neutral'.
   
British Airways gave up earlier gains to close 1 pence lower at 402-3/4, having earlier risen to 426-1/2 as investors shrugged off news of hefty fines earlier in the week and focused on Q1 numbers which showed a pre-tax profit of 289 mln stg in April-June 2007 compared with a pre-tax profit of 191 mln stg in April-June last year.
   
The mining sector suffered the same fate. Anglo American fell 10 pence to 2,759, having been much higher earlier, after reporting a surge in first half operating profit and announced a further 4 bln usd in share buybacks on the back of continued strong cash flow.
   
It also announced its long-awaited decision to sell industrial metals business Tarmac as part of its ongoing restructuring programme.
   
In reaction, UBS said the numbers came in above its forecast and reiterated its 'buy' rating and 3800 pence target. It also thought the decision to sell Tarmac was the right one as it did not believe the division belonged in a focused mining group.
   
And Rio Tinto closed 28 pence down at 3,307, having been in positive territory after ABN Amro upgraded the shares to 'buy' from 'hold'.
   
Royal & Sun Alliance bucked the negative insurance trend, rising 2.2 pence to 131.2 after JP Morgan raised its rating to 'overweight' from 'neutral' ahead of the firm's H1 results due next week and to reflect the 19 pct upside to its 155 pence target.

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

Elsewhere, Cable & Wireless was also among the handful of risers, up 0-1/2 pence at 170 after Morgan Stanley upgraded its rating to 'overweight' from 'equal-weight' on valuation grounds.

The broker cut its price target for the telecommunications company's shares to 205p from 210p but changed its rating because there is a 21 pct implied upside to its new price target, after a market correction that had gone too far, it said.
   
On the second line, Tomkins topped the mid-cap risers, up 17-1/4 at 249-1/4 following stronger than forecast first half results which prompted Cazenove to raise its rating to 'in-line' from 'underperform'.
   
Elsewhere, Inchcape rose 18-1/4 to 487-1/2 after Citigroup upgraded its stance to 'buy' from 'hold' on valuation grounds.
   
And Cookson Group was 28-1/2 higher at 753-1/2 after yesterday's strong interims as Merrill Lynch, Goldman Sachs and Citigroup all lifted their price targets to 850 pence from 815, to 830 from 800, and to 815 from 745, respectively. The trio repeated their 'buy' ratings.
   
Bridgewell Securities upped its stance to 'buy' from 'overweight'.
   
Northumbrian Water was 9-3/4 pence lower at 320-1/4, giving up some of the gain it enjoyed yesterday after its AGM statement.

UK Diary of Events

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

UK Small Cap Report

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

EXCLUSIVE LIMITED OFFER - Register now for your FREE
1-2-1 CONSULTATION with a Professional Trader Consultant - Click Here

Paris shares close broadly down as Wall Street's drop fuels profit-taking

Share prices closed broadly lower as profit-taking early in the day persisted amid Wall Street's decline on
disappointing US jobs data and renewed concerns about housing lenders.
   
The CAC-40 index finished down 84.18 points or 1.48 pct at 5,597.89. Of the shares in the CAC-40, 39 closed lower and 1 closed higher.
   
On the Matif, August CAC-40 futures were trading at 5,598.0. The euro was trading at 1.3793 usd, against 1.3669 late yesterday.
   
Recent large gainers bore the brunt of the profit-taking. Lafarge had the biggest percentage decline among blue chips, closing down 4.07 pct at 120.10 eur, after previously rising on strong first half results.
   
Alcatel-Lucent ended down 3.46 pct at 8.37 eur, and Accor closed 3.35 pct lower at 59.51 eur.
   
Air France-KLM finished 2.25 pct lower at 32.56. It said two of its regional airlines jointly placed a firm order for 20 Embraer planes. The cost was estimated at 1 bln usd.
   
Total closed 2.40 pct lower at 54.71. Oil prices dropped today from near-record prices after the weak US jobs report prompted fears that the oil market was overbought.
   
Aerospace company EADS, which confirmed it had finalised a Libyan missile contract, finished down 1.17 pct at 21.92 eur.
   
Air Liquide closed down 1.08 pct at 92.71 eur. It reiterated its full year guidance after posting a 15.9 pct rise in its first half net profit.
   
The only gainer among the blue chips was Pernod Ricard, which rose 0.29 pct to close at 154.20 eur.

..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 as banks hit by subprime woes, US data weighs

The DAX closed 98.46 points or 1.31 pct lower at 7,435.67, having traded between 7,419.84 and 7,566.64. The MDAX lost 153.98 points or 1.45 pct to 10,467.94 points, while the TecDAX was at 903.09 points, having declined 0.67 points or 0.07 pct. DAX futures were down 134.00 or 1.80 pct at 7,472.00, while bund futures were at 112.98, down 0.39 or 0.35 pct.

Hypo Real Estate led blue-chip stocks down, closing 2.78 eur or 6.33 pct lower at 41.16 eur. MDAX-listed peer DEPFA, which is merging with Hypo Real Estate, slumped 0.71 eur or 8.25 pct to 18.46 eur.
   
Both Hypo and DEPFA said, however, that they will not be impacted by the current crisis in the sector. A DEPFA spokesman said that his bank has not invested in US sub-prime credit and Hypo Real Estate said its commercial real estate financing segment is also not involved in financing or credits in the subprime segment.
   
Allianz was also not spared the roller-coaster ride related to the subprime market. Its shares closed 2.81 eur or 1.79 pct lower at 153.79. Although the insurer released strong second-quarter figures today, it came also under pressure due to worries about its exposure to the subprime market, especially through its Dresdner Bank unit.
   
Allianz CFO Helmut Perlet said the company's total exposure to the US subprime loan market amounts to 1.7 bln eur but the company does not foresee any "alarming developments" for its operations due to the US subprime crisis.
   
Bucking today's negative trend, Volkswagen was up 1.63 eur or 1.18 pct at 139.23 eur, leading gainers.
   
Deutsche Post added 0.21 eur or 0.99 pct to 21.36 eur after the German postal giant posted second-quarter figures which beat analyst and market expectations.
   
"The figures are better than expected across the board," said a local trader. "On top of that, Deutsche Post confirmed its 2007 outlook and said it sees 2007 EBIT at least 3.6 bln eur. The stock was under pressure along with the whole market in the last few days. These good figures should help it recover,"
he added.
   
Lufthansa added 0.14 eur or 0.67 pct to 21.04 eur and Adidas rose 0.20 eur or 0.47 pct to 42.75 eur.
   
Over on the MDAX, Pfleider dropped 1.66 eur or 8.25 pct to 18.46 eur as the index's worst performer, while IKB rose 0.49 eur or 3.98 pct to 12.80 eur, rebounding from this week's heavy losses, which cut the company's market value by more than 40 pct in four days.
   
TecDAX-listed Morphosys was the worst performer on its index, down 2.18 eur or 5.47 pct to 37.64 eur, while Aixtron gained 0.43 eur or 8.01 pct to 5.80 eur.

ADVFN Poker will match your first deposit up to $500. All you have to do is open an account with us, deposit money and play in our buzzing cash games or exciting tournaments. We will credit your bonus automatically! Play Now

Amsterdam shares close lower; Corporate Express bucks trend
 
The AEX closed 6.24 points or 1.18 pct lower at 521.52 after opening at 528.13 and trading in a range of 520.10-528.36. Government bonds were mostly higher and the euro stood at 1.3746 usd versus 1.3683 usd late yesterday.
   
With the staffing sector under pressure throughout the day, Vedior closed 3.29 pct lower at 18.49 eur and Randstad closed 1.43 pct lower at 46.13. Midcap staffing company USG People shed 6.25 pct at 27.00.
   
ING was off by 2.05 pct at 30.07 and Hagemeyer slipped 2.09 pct at 3.73, while Royal Dutch Shell declined 1.82 pct to 27.45 amid news it will sell its minority stake in oil and gas producer RAG.
   
Reed Elsevier was off by 1.50 pct at 13.12 while Unilever fell 1.55 pct at 22.15, continuing to surrender early gains on the back of yesterday's earnings, an upgrade to 'buy' from 'hold' and multiple price target increases.
   
Fortis closed 0.38 pct lower at 28.48 eur while the market awaits the results of Monday's extraordinary shareholders meeting, at which the company's consortium bid for ABN Amro will be discussed. ABN Amro CEO Rijkman Groenink made the news this morning by encouraging Fortis shareholders to vote against the bid.
   
ABN Amro meanwhile closed 0.54 pct higher at 35.05 eur.
   
Among other decliners, Akzo Nobel lost 1.05 pct at 59.55 and TomTom dipped 1.12 pct at 47.81, surrendering early gains on the back of Nokia sales pointing to increased demand for navigation devices. Map maker and TomTom takeover target Tele Atlas closed 0.05 pct higher at 21.00.
   
Ahold gave up 1.10 pct at 9.02 after presenting an in-line trading update this morning and ASML closed 0.70 pct lower at 21.23 after profiting earlier from chip sales in Asia.
   
Closing Forex Rates

ADVFN Services