UK/Euro Financial Market Daily Evening Briefing 03-10-2007

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London shares close higher; financials gain; Wall Street trims losses

UK blue chips closed higher, with financials boosted by hopes of a rescue bid for Northern Rock and with Wall Street recovering most of the ground it lost earlier in its session.
   
At the close, the FTSE 100 index was up 34.8 points at 6,535.2, having reached a high of 6,542.8 late in the morning, and having maintained positive territory for most of the day.
   
The FTSE 250 index closed up 128.8 points at 11,360.2.
   
In the US, the Dow Jones Industrial Average was down about 20 points at 14,027 as the London markets were closing.

FTSE 100 risers

Northern Rock 151.80 up 16.20  JC FLowers bid hopes

Alliance & Leicester 880 up 58  Financials rally on possible Northern Rock bid; own share buying

Old Mutual 168 up 7.60 Plans 350 mln stg share buyback

Taylor Wimpey 300-3/4 up 12  Merrill Lynch reiterates 'buy'

British Airways 424-3/4 up 15-3/4   6.6 pct increase in premium traffic

Barratt Developments 807 up 26  Housebuilders rally; Merrill Lynch stays 'buy'

Persimmon 1,085 up 34  Merrill Lynch reiterates 'buy'

Barclays 640 up 19   Financials rally on possible Northern Rock bid

Royal Bank of Scotland 554 up 15-1/2  Reportedly makes third attempt to sell its hotel properties

Yell Group 448 up 11-3/4    Merrill Lynch 'buy' with 560 pence target

Friends Provident 171.70 up 3.80 Rumours Zurich to bid 220p

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FTSE 100 fallers

Vodafone 171.10 down 4.40   New Zealand unit's revenues reportedly constrained by new mobile regulations

Home Retail 398-1/4 down 9-1/4   With Kingfisher; talk of broker downgrading

Royal & Sun Alliance 153.10 down 2.70 JP Morgan 'neutral' from 'overweight' with 165p target & estimates cut

Royal Dutch Shell 1,955 down 25  Non-exec director named new non-exec director of British American Tobacco

Kingfisher 194 down 2.10   Profit-taking after Dresdner Kleinwort caution

BP 557 down 2-1/2  Oil price slips

British Sky Broadcasting 686 down 1-1/2  ITV stake sale threat

   
FTSE 250 risers

Bovis Homes 726-1/2 up 34  Positive UK housebuilders note from Merrill Lynch

Cookson Group 830 up 35-1/2   Bid for Foseco; Landsbanki/Evolution reiterate 'buy'

Victrex 701 up 28  Upgraded to 'equal-weight' vs 'underweight' by Morgan Stanley

Marston's 364-3/4 up 26    Trading update tomorrow

Bodycote 272 up 17    Sector consolidation hopes

Bellway 1,120 up 39    Merrill Lynch reiterates 'buy'

Redrow 430 up 7-1/4   Merrill Lynch reiterates 'buy'

Premier Farnell 173 up 6   Seymour Pierce targets 185p; to buy Hynetic's India distribution business

De La Rue 789 up 21-1/2     Citigroup 'buy' with 10 stg target

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FTSE 250 fallers

Sports Direct International 133-3/4 down 4-3/4   Ups stake in Umbro to 13.14 pct

Findel 673 down 17   Profit-taking after yesterday's positive update

CSR 662 down 16    ABN Amro cuts target to 935 pence from 1,015 & cuts estimates

Meggitt 317-1/2 down 7   Goldman Sachs 'neutral' from 'buy' with target cut to 335 pence from 365

Dana Petroleum 1,137 down 35   Goldman Sachs removes from Conviction Buy list

Michael Page 437 down 1/2    Trading update tomorrow

Paragon Group 306-1/2 down 5-1/4   KBC Peel Hunt 'reduce'

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

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Paris shares close flat as tech gainers offset by Lagardere losses

The CAC-40 index finished up 6.91 points or 0.12 pct at 5,806.18. Among the CAC40 stocks, 23 closed higher and 16 closed lower. On the Matif, October CAC-40 futures were trading at 5,812.50
   
The euro was trading at 1.4143 usd, compared with 1.4175 usd at mid-day.
   
Lagardere suffered heavy losses after Le Figaro reported that French regulator AMF had supplied the Paris public prosecutor with a document detailing claims of widespread insider trading by shareholders and executives of EADS.
   
The regulator claimed that both DaimlerChrysler and Lagardere, which each announced it was selling a 7.56 pct stake in April 2006, demonstrated an anticipation that a drop in the shares was imminent. Lagardere closed down 3.35 eur or 5.42 pct at 58.45, while EADS finished 0.17 eur or 0.78 pct lower at 21.71.
   
A local dealer said the report raises fears of a hefty fine for the group and above all is a major blow to CEO Arnaud Lagardere's reputation.
   
Corporate IT specialist Capgemini was among the CAC-40's strongest gainers, after shares in sector peer Business Objects rose on talk that a bid may be made soon for the business intelligence software publisher, with SAP, Microsoft, IBM and Hewlett-Packard all viewed as potential suitors. Capgemini closed up 1.06 eur or 1.33 pct at 46.60.
   
Tech sector peer Alcatel-Lucent led Paris' blue-chip gainers, closing up 0.17 eur or 2.37 pct at 7.35 after the telecommunications equipment maker's board said late Tuesday that it backs the management of Pat Russo and Serge Tchuruk.
   
The French daily La Tribune, citing people close to the matter, said Tuesday the name of former French Finance Minister Thierry Breton has been floated as a possible replacement for Russo, but US board members would oppose the French taking control of the company.
   
Russo was reportedly told by the board to come up with an emergency restructuring plan by late October, after Alcatel-Lucent issued its third profit warning since its creation from the merger of Alcatel and Lucent last year.
   
However, the board's statement talked of "mischaracterized interpretations and erroneous speculations," while admitting that it is "clearly disappointed in the most recent changes in the company's outlook".
   
Air France-KLM rose sharply, adding 0.41 eur or 1.46 pct to 28.41. Dutch brokerage Petercam upgraded the group to 'add' from 'hold', saying the airline is showing a much better performance in the second quarter compared to the first.
   
Construction and construction-related stocks added to recent gains, with investors encouraged by a rally in homebuilders in the US market yesterday.
   
Lafarge rose 2.57 eur or 2.29 pct to 115.00, while window glass-maker Saint Gobain gained 0.39 eur or 0.51 pct to 77.10.

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German shares close flat in quiet holiday trade

The DAX closed 8.51 points or 0.11 pct higher at 7,955.30 after trading between 7,928.56 and 7,964 today. The MDAX was up 59.64 points or 0.57 pct at 10,570.20, while the TecDAX added 1.87 points or 0.19 pct to 987.67. DAX futures were down 7.00 points or 0.09 pct at 8,032.00, while bund futures declined 0.21 points or 0.19 pct to 112.59.
  
MAN was today's top large cap performer, adding 4.18 eur or 3.85 pct to 112.80, as rumours resurfaced for a second day in a row that Volkswagen is increasing its bid for the German truck maker to 120-125 eur per share.
   
Deutsche Bank followed after chief executive Josef Ackermann disclosed preliminary key third-quarter figures and confirmed the bank's target of achieving underlying pretax profit of 8.4 bln eur next year.
   
Deutsche Bank expects third-quarter net profit to exceed 1.4 bln eur as positive tax effects boost the bottom line and its 'stable' operations help offset the impact of recent turbulence in credit markets.
   
Third-quarter pretax profit will come in at about 1.2 bln eur, despite charges of 2.2 bln eur due to the crisis of the financial markets.
   
Investors are relieved that the "worst-case scenario" has not materialised, one trader noted and pointed to the bank's confirmation of its target as a positive factor.
   
Other banking stocks also rose on the news, with Commerzbank adding 0.36 eur or 1.22 pct to 29.88, while Hypo Real Estate gained 0.50 eur or 1.17 pct to 43.30.
   
Deutsche Boerse was also higher, up 1.57 eur or 1.59 pct at 100.31 and ThyssenKrupp rose 0.57 eur or 1.27 pct to 45.50.
   
At the other end, Henkel fell 0.77 eur or 2.16 pct to 34.95 as today's worst performer. Fresenius Medical Care followed, dropping 0.55 eur or 1.48 pct to 36.50. BMW declined 0.44 eur or 0.95 pct to 45.76 as RWE lost 0.67 eur or 0.76 pct to 87.16.
   
Over on the MDAX, MTU Aero Engines rose to the top, gaining 2.31 eur or 5.49 pct to 44.41, after Goldman Sachs added the stock to its "Pan-Europe Conviction Buy List". At the bottom of the index, Patrizia Immobilien lost 0.20 eur or 1.82 pct to 10.80.
   
TecDAX-listed Draegerwerk rose 1.27 eur or 1.89 pct to 68.30, while Wirecard dropped 0.27 eur 2.69 pct to 9.76.

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Amsterdam shares close lower on negative Wall Street; TomTom falls

The AEX closed 2.40 points or 0.44 pct lower at 540.53 after opening at 543.47 and trading in the range 539.03 - 543.85. Government bonds traded higher while the euro stood at 1.4161 usd versus 1.4159 usd late yesterday.
   
TomTom led blue-chip decliners, sliding 5.92 pct to 51.02 eur, on concerns that it may have to go head-to-head with competitor Garmin or other players in a bidding war over map maker Tele Atlas. TomTom launched its 21.25 eur-per-share offer for Tele Atlas today.
   
Brewer Heineken fell 2.13 pct to 44.13 eur, while staffing company Vedior slid 1.70 pct to 16.22 pct. Peer Randstad outperformed the market, gaining 4.15 pct to 42.20 eur as brokerage Chevreux upgraded the issue to 'value selection' from 'outperform' while lowering its target to 53 eur from 60 to create upside. Midcap peer USG People dropped 0.23 pct to 21.80 eur.
   
Fortis slipped 1.46 pct to 20.92 eur. As the market closed, the EU announced that clearance of Fortis' purchase of ABN Amro's assets is conditional on it giving up ABN's Dutch factoring unit and part of its commercial banking business in the Netherlands. ABN Amro closed flat, down 0.03 pct at 37.49 eur, while ING rose 0.66 pct 31.95 eur.
   
Crucell fell 0.56 pct to 14.21 eur after saying its Phase I clinical evaluation study of an anti-rabies cocktail using Crucell technology is showing "continued progress".
   
Boskalis Westminster fell 0.38 pct to 36.85 eur as Dutch stock markets regulator AFM has "special interest" in the sharp rise in the share price of Boskalis in recent days, newspaper De Telegraaf reported.
   
Hagemeyer led gainers, putting on 5.73 pct to 3.32 eur, on ongoing rumours of an imminent takeover approach.
   
Akzo Nobel closed flat at 59.52 eur after saying it divested its share in the automotive passenger car coatings activities of Turkey's Kemipol to Kansai Paint.

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