UK/Euro Financial Market Daily Evening Briefing 11-01-2008

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; utilities fall; NY down on writedown worries

At the close, the FTSE 100 index was down 20.7 points at 6,202.0, off a low of 6,147. Over the week, the index lost 146.5 points. The FTSE 250 index fell 29.2 points today to close at 9,829.8, but was down 435.5 on the week.

Volume was solid, with 2.9 bln shares having changed hands in 955,285 deals. The start of the US earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. The nation's biggest financial institutions will report results next week, including Merrill Lynch & Co, Citigroup Inc and JPMorgan Chase & Co.

Adding to investors' unease, Merrill Lynch might take a 15 bln usd hit from its exposure to soured subprime mortgage investments, according to a report in The Wall Street Journal. The nation's largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.

Also, the US trade deficit in November surged to the highest level in 14 months, reflecting record foreign crude oil prices.

The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 pct, to 63.1 bln usd. The imbalance was much larger than the 60 bln usd that had been expected.

As the London markets were closing, the Dow Jones Industrial Average was down 124.3 at 12,728.8. Broader stock indicators also declined. The Standard & Poor's 500 index was down 4.7 at 1,415,65, and the Nasdaq composite index was 18.62 at 2,469.9.

Turning to London blue chips, utilities and other traditional safe-haven food and drinks and household goods sectors were in the doldrums following earnings concerns and as brokers downgraded.

Utility stocks accounted for three of the top four fallers. International Power was the biggest casualty, falling 23-1/4 pence to close at 434-1/2. British Energy was down 25 pence at 557, and Scottish & Southern Energy was 66 pence down at 1,613. National Grid fell 27 pence to close at 836 pence.

Prior to today, utilities had bucked the downward trend of the market of recent weeks and analysts say they were beginning to look expensive, compared with other shares. Meanwhile, rumours circulated that drinks giant Diageo's next update will show weakening demand and Cadbury-Schweppes is set to issue a profit warning.

Diageo was off 30 at 1,021 and Cadbury-Schweppes closed 18 lower at 587-1/2. Unilever was the second-biggest faller, closing 90 down at 1,729, after Morgan Stanley downgraded the group to 'underweight' from 'equal-weight'.

In a note to clients, the broker noted that short-term concerns include potential volume impact from recent price increases and input-cost-related margin pressure, particularly in the first half of 2008. A broker downgrade also sent Sage Group lower, down 2-1/4 at 210-1/4, with JP Morgan cutting its stance to 'neutral' from 'overweight', citing a tougher macro environment and stiffer competition.

Jet engine maker Rolls-Royce fell 11 to close at 514, after it said it plans to cut up to 2,300 jobs at its plants in the UK, Germany, US and elsewhere as part of ongoing efforts to improve efficiency and competitiveness.

Turning to the risers, shares in British Airways were in demand, up 16-1/2 at 284-1/2 as traders reported rehashed talk that Middle Eastern peer Emirates was considering a bid although some pointed out that a note on the airline sector from SG Securities was more likely to be behind the share move.

SG Securities initiated on the group with a 'hold' stance with a target of 300 pence. Douglas McNeill, transport analyst of Blue Oar Securities, said: Taking control of BA would pose regulatory problems for Emirates. But the stock is under-valued and well backed by assets that are tangible, portable, and marketable. Throw in the prestige brand, and you have a combination that could easily give rise to the Gulfs next strategic investment in a major Western company."

Blue Oar retained its 'buy' recommendation on BA, with a target of 430 pence. However, housebuilder Persimmon was the top riser, up 46-1/2 at 691-1/2 after a reassuring update from midcap rival Bovis Homes. Persimmon shares had closed at a 12-month low on Thursday, with its market value below 2 bln stg, after its own update on Wednesday failed to impress. Bovis Homes rose 55 today to close at 545.

A broker upgrade helped to push BT Group up 3-1/2 to 280-1/4, with ING raising its recommendation to 'buy' from 'hold' and increasing its price target to 335 pence from 315. The broker believes the impact on BT's share price from eroding broadband revenue has been overdone. And, Icap gained 12 to 675-1/2 as Goldman Sachs started the group as 'neutral'.

Apply for an account today and you could get £75 (€100) free* There has simply never been a better time to spread bet than with paddypowertrader.com. paddypowertrader offers you the ability to trade 1000's of markets worldwide with some of the tightest spreads around. Click Here.

The broker said the group's visible growth, margin expansion and zero balance sheet risk are attractive qualities given current market conditions, although it sees only modest upside in the stock.

In M&A news, Scottish & Newcastle rose 10 to 734-1/2 after the Times reported that the group is expected to signal its intention to make a knock-out offer for Carlsberg's half share in their Russian joint venture, BBH.

Turning to the second line, Premier Foods was the biggest faller, down 30-1/2, or 18.7 pct, at 140-1/2, after rumours of a possible rights issue, and following yesterday's gloomy update.

Sector peer Northern Foods also fell, closing 5 pence lower at 81. This morning it announced it has completed the acquisition, from Baxters Food Group Ltd, of Baxters' chilled soup manufacturing plant and fixed assets in Grimsby for an undisclosed cash sum.

In broker news, IMI fell 21-3/4 to close at 334-1/2 as Goldman Sachs cut to 'sell'. VT Group was also under pressure, falling 20-1/2 to 687-1/2, following news of a UK ministry of defence (MoD) contract delay.

Earlier, the Financial Times reported that delays to a 4 bln stg MoD contract for two new aircraft carriers could affect a possible joint venture, under which BAE and VT Group plan to put their shipyards together. BAE, a FTSE 100 constituent, fell 4-1/2 to 489.

Among FTSE 250 risers, Northern Rock gained 2 to 87-1/4, after the group said it had sold a mortgage portfolio to JP Morgan at a 2.25 pct premium to its book value.

In broker generated news, Ferrexpo was 9 higher at 221 as Deutsche Bank upgraded the group to 'buy' from 'hold' as part of a review of the mining sector.

And, Tullet Prebon was up 20-1/2 at 470 as Goldman Sachs initiated the group with a 'buy' and 600 pence price 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

Debenhams was up 5-3/4 at 67-3/4. The group is expected to report weak Christmas sales on Tuesday, but Milestone Resources Group has raised its stake in the department store company to 8.39 pct.

Milestone is owned by Dubai-based retailer Landmark, and may make a bid for Debenhams. Another possibility is a bid from Iceland's Baugur, which already owns 13.5 pct.

Hochschild Mining was the biggest riser, up 50-1/4 at 413, bouncing after a recent profit warning.

And finally, budget airline Easyjet added 22-1/4 to 459-3/4 given a boost by a bullish note from SG Securities on European airlines this morning.

The broker initiated coverage with 'buy' and target of 625 pence as it believes it offers significant potential through growing ancillary revenues and cost efficiencies.

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

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 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.

Paris shares end lower, in line with US; consumer stocks fall sharply

The CAC-40 index finished down 29.02 points or 0.54 pct at 5,371.41. Among CAC-40 stocks, 21 closed higher and 19 closed lower. On the Matif, January CAC-40 futures were trading at 5,368.

On the broader indices, the SBF-80 index closed down 10.97 or 0.19 pct at 5,700.98 and the SBF-120 ended 19.12 or 0.49 pct lower at 3,853.03.

The euro was quoted at 1.4797 usd compared to 1.4738 usd late yesterday. Today's fall meant the CAC-40 ended the week 75.38 points or 1.38 pct down on last Friday's close of 5,446.79.

In Paris, Pernod Ricard shed 6.23 eur or 4.10 pct to 145.67, while Remy Cointreau gave up 1.97 or 4.32 pct to 43.59.

L'Oreal ended the session as the heaviest bluechip faller, down 4.55 or 4.97 pct at 86.95, while cosmetics peer Clarins dropped 2.73 or 5.15 pct to 50.27.

Outside the consumer goods sectors, STMicroelectronics was also hit by a broker downgrade, shedding 0.22 or 2.59 pct to 8.27. In the property sector, Klepierre also plunged 2.10 or 6.46 pct to 30.43 after a downgrade to 'neutral' from 'outperform' at Exane BNP Paribas.

Suez fell 2.18 or 4.49 pct to 46.41, Gaz de France dropped 1.64 or 3.87 pct to 40.75, and Veolia Environnement shed 2.08 or 3.29 pct to 61.20.

Oil major Total also helped push the market lower as it extended losses in line with falling crude prices. The shares finished down 0.72 or 1.25 pct at 57.03.

On the upside, Alstom climbed 6.14 or 5.03 pct to 128.17, rebounding from a heavy fall yesterday with the help of an upgrade from Goldman Sachs and talk of a major contract to sell high speed trains to Italy.

Peugeot benefited from a broker upgrade, rising 2.04 or 4.34 pct to 49.00. Dexia added 0.59 or 3.30 pct to 18.45, BNP Paribas rose 1.69 or 2.38 pct to 72.68, and Credit Agricole climbed 0.51 or 2.32 pct to 22.46.

In 2007 the majority of our clients made profits on their investments in excess of 30%. Our average return on investment was 42% and many of our products achieved more than 100% capital growth.

Fine Wine is a lucrative, tax-free market that consistently outperforms other markets. For a free information pack click here.

German shares close slightly higher as upbeat statements offset US losses

The DAX edged 4.86 points or 0.06 pct higher to 7,717.95, having traded between 7,675.45 points and 7,746.47 points in today's session.

The MDAX gained 38.48 points or 0.44 pct to 8,748.41 points, while the TecDAX was up 3.12 points or 0.36 pct at 872.81 points.

DAX futures fell 50.00 points or 0.64 pct to 7,781.50, while bund futures were 0.11 points or 0.10 pct higher at 115.24 points. The euro was trading at 1.4796 usd, compared with 1.4785 usd in London afternoon trade.

Leading blue-chip stocks higher, MAN AG rose 3.19 eur or 3.48 pct to 94.84 eur as the truck maker was boosted by the release of positive sales figures by some of Germany's biggest carmakers this week.

Lufthansa gained 0.48 eur or 2.89 pct 17.08 eur after the company's chief financial officer, Stephan Gemkow, affirmed the company expects to have posted 1.3 bln eur operating profit in 2007.

Deutsche Boerse advanced 3.18 eur or 2.65 pct to 123.27 eur, after the company said it will move staff from its location in Frankfurt-Hausen, Germany to the neighbouring town of Eschborn, which will result in a "significant" reduction in its trade tax burden and building occupancy costs.

Deutsche Boerse also said it expects to achieve a tax rate of under 30 pct this year, compared with the previous estimate of 31-33 pct.

Metro gained 1.02 eur or 1.88 pct to 55.29 eur, still benefiting from yesterday's strong trading statement saying that sales rose 8.3 pct to 19.9 bln eur, helped by growth outside its German home market. Excluding acquisitions, sales rose 7.7 pct in the three months through December, the company said in a statement.

Among the biggest decliners on the index, Infineon dropped 0.22 eur or 3.15 pct to 6.77 eur, hurt by a broker downgrade of the European semiconductor sector, poor results at Austria Microsystems, weak memory chip prices and fears a global economic slowdown will curb demand.

Earlier this morning, Credit Suisse downgraded the chip sector to 'marketweight' from 'overweight.' The brokerage said monthly integrated circuit unit growth is expected to peak in the first quarter of 2008, and noted that the sector has historically not performed well when IC unit growth peaks.

Henkel KGaA lost 1.24 eur or 3.45 pct to 34.74 eur. Utilities were down, with EON retreating 4.80 eur or 3.14 pct to 148.00, offsetting yesterday's gains.

Peer RWE declined 1.58 eur or 1.60 pct to 97.21, on news that electricity wholesaler MVM won a tender for a 10.54 pct stake in Hungarian electricity distributors Elmu.

Adidas dropped 0.63 eur or 1.39 pct to 44.80 eur, continuing yesterday's trend. Over on the MDAX, SGL Carbon led German mid-caps higher, adding 2.79 eur or 9.29 pct to 32.82 eur, after CEO Robert Koehler upgraded his full-year 2008 sales growth target to 10-15 pct from above 5 pct.

Arques, meanwhile, fell 1.39 eur or 7.22 pct at 17.86 eur. Earlier this week, the company's former Arquana subsidiary filed for insolvency.

TecDAX-listed Pfeiffer Vacuum gained 2.47 eur or 4.77 pct to 54.25 eur, while Singulus slumped 0.65 eur or 6.70 pct to 9.05 eur.

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

Amsterdam shares close down on negative Wall St, Unilever still leads

The AEX closed 2.27 points or 0.47 pct lower at 481.83 after opening at 494.54, reaching an early high of 483.83 and a midday low of 479.83.

Government bonds traded mainly higher and the euro stood at 1.4796 usd versus 1.4663 usd late yesterday. Unilever lost 5.04 pct to 22.63.

Brewer Heineken was down 3.71 pct to 40.75 eur amid speculation it will return together with Carlsberg with a higher proposal for Scottish & Newcastle.

Oils were mixed, with Royal Dutch Shell off 1.60 pct to 27.75 and midcapper Fugro fell 2.55 pct to 49.65 after Petercam cut its target to 67.75 eur from 69.20.

SBM Offshore meanwhile rose 2.23 pct to 20.20 as industry website Upstream Online reported that it and Modec Inc are in a head-to-head battle that could see them share the floating production, storage and offloading (FPSO) vessel contracts from BP in Angola.

Other decliners on the AEX included TomTom, down 1.50 pct to 40.01, KPN, 1.31 pct lower to 12.81, and ASML, off 1.29 pct to 18.36.

Fellow tech related issue ASMI was off 0.73 pct at 13.52 eur amid news the CEO will carefully review a new call to break-up the company by activist hedgefunds, sources said. Oce closed down 2.60 pct to 10.50 ahead of results on Monday and pressured by US peer IKON's profit warning, analysts said.

Nutreco slipped 3.28 pct to 42.50 eur amid news it will acquire the fish feed production facilities of Marine Net in Japan.

Akzo Nobel was the top AEX gainer, putting on 1.73 pct to 49.96. Financials were up, with ING up 1.57 pct to 25.85, Fortis rising 0.70 pct to 17.22 and Aegon strengthening 1.69 pct at 11.45.

ArcelorMittal put on 0.75 pct to 45.65 after initially falling on new of an explosion at an ArcelorMittal Kazakhstan coal mine killed at least 7 people.

On the midcap, Heijmans gained 3.01 pct to 24.67 as it was upped to 'add' from 'hold' at Petercam and Aalberts Industries was up 2.00 pct at 11.71.

Closing Forex Rates -- UK

Sterling exchange rates:

ADVFN Services