UK/Euro Financial Market Daily Evening Briefing 13-03-2008

London shares close off lows; NY weak recovering, proposed rescue plan

At the close, the FTSE 100 index was down 84 points at 5,692.4, off a session low of 5,628.9, while the broader indices were also in the red, with the FTSE 250 index losing 187.9 points to 9,801.5.

Volume was light, with 2.47 bln shares changing hands in 786,346 deals.

Over in the US, Wall Street was off lows after House Financial Services Committee Chairman Barney Frank released a proposal to stem the significant rise in mortgage foreclosures.

The proposal would allow the Federal Housing Administration to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders.

Also helping the market was news by Standard & Poor's Ratings Services that the end of write-downs is now in sight for large financial institutions. At close, the Dow Jones Industrial Average was down 62.6 points at 12,046.4

Back with UK equities, the main blue-chip casualty came as a result of broker downgrades this morning. Wolseley dropped over 6 pct or 37 pence to 550, after both ABN Amro and Goldman Sachs cut their ratings on the plumbing and building supplies group to 'sell' from 'hold' and 'sell' from 'neutral' respectively.

Both brokers cited housing market weaknesses among other factors, and cut earnings estimates for the group. Elsewhere, with oil prices surging to new all-time highs, British Airways, which last week cut its 2008/09 operating margin guidance due to higher oil prices, was 12 pence lower at 230-1/2, while mid-cap no-frills airline easyJet lost 20-1/2 at 396.

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.

Turning to financials, after yesterday's solid share price performances and amid this morning's returning credit market fears after Carlyle Capital became the latest crunch victim, banks HBOS, Royal Bank of Scotland and Lloyds TSB all felt the pressure, sliding 16 to 562, 16-1/2 to 342-1/2, and 14 to 430, respectively.

London-based fund Carlyle Capital said late Wednesday it expects its creditors to seize all of the fund's remaining assets after unsuccessful negotiations to prevent its liquidation.

In other commodities, mining group Kazakhmys fell 35 pence to 1,744, chipping away at yesterday's 16 pct jump, after saying it has received no merger proposal from Eurasian Natural Resources. ENC announced Wednesday that it is in the early stages of evaluating a potential combination of its business with that of its major shareholder Kazakhmys.

Other copper manufacturers were also under the cosh, with Antofagasta 6 lower at 754 and Anglo American was down 43 at 3,130. However, Xstrata was 68 higher at 3,921 on ongoing bid talk that Brazilian mining giant Vale is near a deal at 4,200 pence and not 4,500 pence as was expected.

Elsewhere among the risers, defensive stocks continued to gain with Unilever and BAT 51 higher at 1,651 and 25 firmer at 1,958 respectively. Scottish & Southern Energy gained 36 at 1,456 after Morgan Stanley said that the group should benefit from yesterday's UK Budget and should enjoy a relief rally.

It was a similar story on the second line with Chemring standing out among the few gainers after announcing its US unit has won a flare contract from US Department of Defense. Investec reiterated its 'buy' advice in reaction. Chemring shares added 94 pence at 2,367.

  Our e-sipp was recently voted the ‘runaway winner' in the best SIPP service category. It offers investors some great incentives - there's no establishment charge, no contribution charge, no annual administration charge and no additional charge for phone dealing. Dealing commission starts from £9.95 - Apply here

Elsewhere, Sports Direct International was 6 higher at 114-1/2 after a trading statement in which the company said it is confident of meeting analysts' revised full-year EBITDA forecast of 148 mln stg, prompting Panmure Gordon to lift its target to 110 pence from 95 pence.

Among mid-cap casualties, Benfield tumbled over 11 pct, down 29 pence at 230-3/4, after the UK reinsurance broker reported a 7.4 pct decline in 2007 profit and said market conditions are challenging and volatile. The news prompted JM Finn to reiterate its 'sell' stance and Panmure Gordon also kept Benfield as a 'sell' with a target of 195 pence, while Merrill Lynch said it expects to cut estimates.

Meanwhile, Rank Group continued to feel the heat following yesterday's UK Budget, extending Wednesday's losses with a 8-1/4 pence fall to 83-1/4 today. The Bingo industry responded with "disbelief" to Alistair Darling's decision not to remove VAT from bingo charges, but rather to increase the tax burden for bingo through higher rates of amusement machine licence duty (AMLD).

Bingo Association chief executive Paul Talboys yesterday described the decision as a "slap in the face for bingo players across the country".

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

Your investments may be primed to devastate your financial future. Find out for free if you're one of the thousands set to suffer from the crisis posed by today's 5 most dangerous stocks. Act now if you don't want to risk your security.  Click Here

Paris shares close down tracking US, Asia; Danone bucks trend

The CAC-40 index closed down 1.42 pct or 66.91 points at 4,630.19 and the SBF-120 was 1.49 pct or 50.82 points lower at 3,353.40. The euro was quoted at 1.5579 usd after hitting a fresh high of 1.5625 usd over the morning.

Among these, Credit Agricole was hardest hit, dropping 4.05 pct or 0.75 eur to 17.77, while BNP Paribas fell 2.69 pct or 1.60 eur to 57.94 and Axa lost 2.13 pct or 0.46 eur to close at 21.13. Scandal-hit Societe Generale gave up 1.56 pct or 1.11 eur to close at 70.00. Renault shed 3.26 pct or 2.16 eur to end at 64.04, and Peugeot fell 2.42 pct or 1.17 eur to 47.15, while Michelin slumped 2.68 pct or 1.72 eur to 62.46.

Defence and aerospace group EADS dropped 3.49 pct or 0.57 eur to 15.75, amid escalating concerns about the impact of the falling dollar on its profits. Morgan Stanley also cut its recommendation on the stock to 'equal weight' from 'overweight' and lowered its target to 19 eur from 25.

The broker said risks of further US dollar weakness, further delays on A400M, and growing risks to the aerospace delivery up-cycle are all likely to dissuade investors from putting fresh money in. Solid earnings from Lagardere and Casino failed to ease investors jitters, and both stocks were dragged down in the market sell-off.

Lagardere fell 1.14 pct or 0.55 eur to 47.58, after publishing in-line earnings and guidance last night after the close of the market. "The figures were boring, and the guidance was cautious," said a dealer at leading Paris brokerage. "Then you've got EADS dropping 5 pct today on dollar concerns, which is also weighing," he continued, noting that Lagardere still has 7.5 pct of EADS' capital and 12.5 pct in its balance sheet.

Casino fell 3.58 pct or 2.82 eur to 75.96 as investors shrugged off the supermarket group's full-year sales figures. Merrill Lynch called this morning's publication very strong, commenting "Casino has delivered in 2007 and the shares should go better."

Among the rare blue-chip risers, Danone held up well, rising 3.46 pct or 1.87 eur to 55.97 after Swiss peer Nestle raised its organic sales growth guidance for 2008. The Swiss food giant also said that its "outstanding" organic growth rate seen during the first two months of the year was due to price increases it made on finished goods to compensate for higher input costs, combined with pricing effects already in place at the end of last year.

52 luxury apartments and penthouses located on the best beach in the world. Member of Preferred Hotel Group with estimated 6% rental return and 15% appreciation in year one. Tax haven - no income taxes and no capital gains tax. From $439,000 with completion December 2008.  Click Here.

German shares close lower on fears about state of US economy 

The DAX ended down 98.81 points or 1.50 pct at 6,500.56 having traded in a 6,399.04-6,529.62 range. The MDAX eased 159.63 points or 1.81 pct to 8,647.10, while the TecDAX fell 14.40 points or 1.92 pct to 736.94. DAX futures were down 53.50 points or 0.82 pct at 6,505.50, while bund futures declined 0.02 points or 0.02 pct to 117.69.

The euro was trading at 1.5575 usd compared with 1.5592 in early afternoon London trading. Leading blue chips lower, Commerzbank fell 0.96 eur or 4.94 pct to 18.48, reversing yesterday's gains on an announcement from the US Federal Reserve of a 200 bln usd liquidity injection.

Continental plunged 2.72 eur or 4.79 pct to 54.04, after a report in Hannoversche Allgemeine Zeitung, citing company sources, said overhauling parts of its new VDO unit will be more difficult than the tyre maker had expected. Continental has identified larger-than-expected restructuring needs at its Powertrain unit, which it acquired as part of the former Siemens AG VDO unit, according to the newspaper.

Infineon fell 0.17 eur or 3.59 pct to 4.56. Shares in BMW declined 1.20 eur or 3.55 pct to 32.60, as the group's full-year earnings per share disappointed, after results were released ahead of schedule. Deutsche Postbank retreated 2.11 eur or 3.40 pct to 59.90, as Unicredit's German unit HypoVereinsbank is not interested in acquiring Deutsche Postbank AG, unit head Wolfgang Sprissler said.

Bucking the trend, TUI led the DAX as one of four decliner, adding 0.40 eur or 2.43 pct to 16.87. Traders pointed to a newswire report that Neptune Orient Lines Ltd (NOL) is renewing its efforts to buy TUI's Hapag-Lloyd shipping unit, for which it could offer 6-7 bln usd.

Traders also pointed to speculation that TUI's shareholders Riu Hotels und S-Group are ready to vote in favour of splitting up the group. MAN AG rose 1.38 eur or 1.52 pct to 92.42. Shares in Bayer increased 0.35 eur or 0.73 pct to 48.45, still boosted by rumours that US peer Merck & Co and Japanese Nitto Denko were mulling a takeover of the German chemicals and pharma giant.

Volkswagen gained 0.49 eur or 0.31 pct to 156.10, after the company said unit sales in the January-February period rose to 952,000, up 10.5 pct from the same two months of last year. It said it is now aiming for a double-digit return on investment in the medium term after reaching 9 pct last year and expects to achieve this goal by continuing to manage its costs and investments.

Over on the MDAX, MTU Aero Engines plummeted 2.94 eur or 10.33 pct to 25.52, after the aircraft engine manufacturer's full-year earnings and outlook disappointed some market participants. K&S, at the other side, climbed 8.99 eur or 4.91 pct to 192.00.

TecDAX-listed Nordex shed 1.14 eur or 4.72 pct to 23.02. At the other end, Aixtron climbed 0.57 eur or 7.32 pct to 8.36 eur, after the German semiconductor company presented a solid set of full-year earnings results and an upbeat outlook for 2008, which prompted WestLB to upgrade the stock to 'add' from 'hold'.

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.

Amsterdam shares close lower on credit crisis worry; Unilever bucks trend

The AEX closed down 5.26 points, or 1.20 pct, at 434.55, after opening at 432.73, and trading in the range 428.02-435.35. Government bonds traded higher, while the euro stood at 1.5584 usd, versus 1.5499 usd late yesterday.

Navigation stock TomTom found itself in the cellar again as it shed 3.65 pct at 27.75 eur, while takeover target Tele Atlas fell 3.62 pct at 26.43.

Financials also traded lower, led down by Fortis, which lost 3.47 pct at 14.76 eur as Dutch-listed Carlyle Capital sparked renewed credit crisis fears as it said it expects its creditors to seize all of the fund's remaining assets.

Carlyle Capital shares plunged 87.50 pct at 0.35 eur in heavy trading of the stock. The stock had been priced at about 12 eur on March 4 before a massive sell-off in recent days. Midcap financial SNS Reaal led midcap stocks down, losing 4.45 pct at 12.66.

Back on the AEX, TNT fell 3.23 pct at 23.97 eur, while tech stock ASML closed down 2.91 pct at 15.00 eur. Midcap biotech Crucell stock fell 3.93 pct at 8.80 eur in profit taking after yesterday's sharp gains.

Small cap stock Macintosh fell 1.16 pct at 18.78 eur as investors worried about the fact it failed to give a concrete guidance for 2008 as it reported slightly-better-than-expected full-year 2007 earnings.

Among gainers, Unilever rose 2.89 pct at 21.02 eur as Swiss peer Nestle said it expects 2008 organic sales growth to beat its long-term target of between 5-6 pct. Publisher Wolters Kluwer gained 1.53 pct at 17.97 eur. Nutreco led midcap gainers, closing 1.71 pct higher at 48.86 eur. Hunter Douglas shares surged 16.25 pct at 42.94 eur after the company said it will buy out minority shareholders.

Closing Forex Rates -- UK
Sterling exchange rates:

ADVFN Services