UK/Euro Financial Market Daily Evening Briefing 13-07-2007

The FTSE 100 closed firmer Friday, but off session peaks which saw the index hit a new 7-year intra-day high, with financials putting in a strong performance amid hopes the long-running ABN Amro saga could be closer to a resolution.

By the close, the FTSE 100 index finished 21.4 points ahead at 6,716.7, having hit a high of 6,754.1 earlier in the session, while the FTSE 250 mid-cap index ended up 113.9 at 11,922.9.

Volume was average, with 2.6 bln shares having changed hands in 526,307 deals.

Across the pond, Wall Street extended its gains Friday as the Standard & Poor's 500 index and the Dow Jones industrials pushed further into record territory a day after a big rally. The Dow passed the 13,900 mark for the first time as component General Electric Co. jumped following its quarterly profit report.

Despite the advance, the technology-heavy Nasdaq composite index stalled. Also, declining issues outpaced advancers by about 8 to 7 on the New York Stock Exchange.

In late morning trading Friday, the Dow rose 41.29 to 13,903.02 after reaching a new trading high of 13,910.26. Solid quarterly results from GE sent the stock slightly above the 40 usd mark and to a five-year high.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index rose 3.50 to 1,551.20, and the Nasdaq composite index slipped 1.11 to 2,700.62.

In London, there was strength across most sectors but in contrast to yesterday, financials dominated the leaderboard.

Standard Chartered topped the index with Lloyds TSB also higher with sentiment driven in part by market rumours that Temasek, which already owns an 11.55 pct stake in Standard Chartered, is interested in buying both banks and combining them.

When it first acquired its Standard Chartered stake in March last year, Temasek downplayed takeover talk, stressing that it was supportive of Standard Chartered's management team.

Standard Chartered closed up 48 at 1690, with Lloyds up 6-1/2 at 566-1/2.

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And Barclays moved up 6 pence at 724-1/2 after some of the uncertainty surrounding the takeover battle for ABN Amro was lifted following the Dutch Supreme Court's ruling that ABN is allowed to sell its US unit LaSalle to Bank of America Corp without a shareholder vote.

The sale of LaSalle, structured as a side-deal to an agreed 65 bln eur offer for ABN from Barclays, had been challenged by some ABN shareholders.

The ruling is seen as a setback to the Royal Bank of Scotland-led consortium, as RBS had been keen to procure LaSalle itself. RBS finished 5-1/2 better at 640.

Shares in UK life insurers were generally higher in midmorning deals, with Aviva up 9 at 762, Old Mutual up 3.3 at 173, and Resolution up 2-1/2 at 640 after Morgan Stanley said there could be a powerful rally in the sector if, as its UK economist suspects, the Bank of England may be considering a year-end cut in interest rates.

Elsewhere, British Land took on 18 to 1,381 after saying it had made a good start to the financial year on good progress on developments and rental increases across the office sector, adding that it expects to report a further advance in net asset value (NAV) for the quarter to June 30.

Turning to the losers, the miners lost some of yesterday's sparkle following the M&A fever which gripped the sector.

Rio Tinto, a heavy faller yesterday after it announced the acquisition of Alcan, fell another 80 pence to 3,730 after ABN Amro downgraded the shares to 'hold' from 'buy'. And peers Lonmin slipped 72 pence to 4,278, and BHP Billiton lost 27 pence to 1,527.

Cadbury Schweppes was 8 pence lower at 659-1/2 ahead of a verdict from Birmingham Crown Court later today in relation to salmonella contamination in some of the confectionery giant's products last year.

The miners lost some of yesterday's sparkle following the M&A fever which gripped the sector.

Turning to the midcaps, Quintain Estates & Development was among the top gainers, jumping 32 pence to 887, after news that property investor Paul Kemsley has sold his 11.9 pct holding in the group to Uberior Ventures, HBOS's property investment arm, according to a report in the Financial Times.

The stake buy will likely cause speculation of a bid for Quintain, said the FT.

Shares in Aegis Group were up 6 pence at 142, after the media and marketing company won the media buying and planning account for Johnson & Johnson (J&J) worth about 440 mln usd in billings, with UBS reiterating its 'buy' rating and 170 pence target.

Britvic bucked the upbeat trend among the FTSE 250 issues, with shares down 10-1/4 pence, at 355-1/4, making it the worst-performing midcap stock, as Altium Securities initiated coverage with a 'reduce' recommendation and a target of 330 pence.

And the fizz also came out of C&C Group's shares, which were down 1.65 eur to 8.45, as the soggy summer weather also hit the Magners cider producer, which warned in today's AGM that very poor weather in June and into July together with continued heavy price-led competition is likely to lead to a weak second quarter.

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UK 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 summmary of today's trading on the FTSE 250 and the AIM, click here

Shares close slightly higher on Wall St gains

Amsterdam shares closed slightly higher, affected by early Wall Street gains, with all eyes on ABN Amro after the Dutch Supreme Court okayed its sale of LaSalle.

The AEX closed up 0.79 point or 0.14 pct at 560.93, after opening at 563.47 and trading in a range of 560.87-563.98.

Government bonds were flat to mixed and the euro stood at 1.3786 usd against 1.3769 usd late yesterday.

Reed Elsevier led the AEX in high volume, rising 2.40 pct to 14.53 on rumours the company could soon be selling what is left of its education operations for a higher-than-expected price.

Unibail-Rodamco put on 1.81 pct to 189.89 and TomTom lifted 1.99 pct to 42.55 after a price target upgrade at UBS.

ASML was up 1.66 pct at 20.82 eur, boosted by Samsung's bullish second half forecast, while fellow tech stock Philips fell 1.76 pct to 32.41 ahead of its second quarter results expected monday.

All eyes were on on ABN Amro, up 1.47 pct at 35.85 eur, after the Dutch Supreme Court's ruled the bank may press on with its sale of LaSalle to Bank of America, which had been blocked by a lower court. The decision is seen as an indication that a takeover of ABN Amro by Barclays is more likely to succeed than rival efforts.

Fortis, part of a consortium interested in buying ABN Amro with LaSalle, went 0.55 pct higher to 31.22, while ING rose 0.83 pct at 32.92, and Aegon added 0.78 pct at 14.30.

Corio led midcappers, up 1.59 pct at 57.68, followed by Tele Atlas, adding 1.15 pct to 16.69.

Local issue Pharming rose 5.65 pct to 3.18 eur after the company announced that the production facilities used to manufacture its lead product Rhucin have been approved by the European Medicines Evaluation Agency (EMEA).

Oils were lower amid news the IEA trimmed down its global forecast for oil product demand growth. SBM Offshore fell 1.46 pct to 29.67 and Royal Dutch Shell slid 1.04 pct to 30.57. Fugro was the exception, turning higher midafternoon to close 0.24 pct higher at 50.52

Arcelor-Mittal lost 1.10 pct to 48.61 and Akzo Nobel slipped 0.95 pct to 63.47.

On the midcap index, Aalberts Industries went 1.29 pct lower to 21.45 and Stork lost 0.35 pct to 48.0 amid news Deutsche Bank reduced its stake in the company to just over 1 pct from over 11 pct.

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Share prices closed higher, extending yesterday's gains, and supported by another positive session for the Dow Jones, with Santander and FCC leading gainers, while Antena 3 moved lower amid profit taking.

The IBEX-35 index ended up 81.70 points at 15,023.5, after trading in a range of 14,981-15,082.

Equities opened higher, propelled by a record close on Dow Jones on the back of merger activity, and remained in the black over the rest of the morning.

The IBEX-35 index stayed in positive territory through the afternoon in thin trade, hanging on to the technical resistance line of 15,000 with little newsflow to propel it either up or down.

Santander rose 0.14 eur to 14.16 as analysts said they expect an RBS-led consortium -- including Santander and Fortis -- to press ahead with a revised offer for ABN excluding LaSalle.

Earlier, the Dutch Supreme Court decided to allow ABN's sale of its US unit, LaSalle.

Heavyweight peers were also higher, with BBVA rising 0.17 to 18.17 and Telefonica adding 0.11 to 17.07.

FCC climbed 1.80 or 2.63 pct to 70.20, after a report in El Confidencial said Russian businessman Roman Abramovich has approached Colonial chairman Luis Portillo for the property company's 15 pct stake in FCC.

Colonial slipped 0.02 to 4.08.

Leading the losers, Antena 3 fell 0.19 to 15.07 amid profit taking after yesterday's strong gains on M&A rumours.

Other session losers included selected utilities, with Gas Natural down 0.17 to 44.71, Endesa off 0.06 at 39.30, REE slipping 0.15 to 34.18 and Enagas down 0.16 to 17.86.

Iberdrola put on 0.31 to 40.47 after Credit Suisse hiked its price target to 42 eur per share from 32 eur, and Union Fenosa rose 0.30 to 40.90.

Bankinter rose 0.75 to 66.65 and Banco Popular gained 0.04 to 13.59, ahead of first half results due next week.

Banco Pastor rose 0.05 to 15.27, though off earlier highs of 15.45, after JP Morgan initiated coverage with 'neutral' and a 16.0 eur price target.

Among other medium caps Vueling soared 0.81 or 3.45 pct to 24.31 after reporting that the number of passengers it transported in June increased 78.7 pct to 529,537.

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German shares closed higher, but off an earlier record high of 8,151.57, with BASF leading gains following upbeat broker comments, and as Wall Street was pushed higher, with the Dow Jones Industrials exceeding 13,900 points for the first time ever.

The DAX closed 39.34 points or 0.49 pct higher at 8,092.77 points, after trading between 8,065.11 and 8,151.57 points.

The MDAX was 2.74 points or 0.02 pct lower at 11,356.44 points, while the TecDAX gained 3.16 points or 0.33 pct higher at 966.98 points.

DAX futures were down 30.50 or 0.37 pct at 8,151 .00, while bund futures added 0.18 or 0.16 pct to 110.37.

The euro was trading at 1.3786 usd, against 1.3770 usd in midday trade.

Supported by a strong German economy and recent solid company figures, the DAX set its new record high six weeks after breaking above the 8,000 point mark.

Many experts said they see no real reason why the upward momentum should not continue and see the DAX easily crossing the 9,000 mark within the next 12 months.

Stephan Soellner, trader at Deutsche Postbank said that crossing the psychologically-important record-high barrier should increase investor confidence and push the DAX even higher.

Others however take a more guarded view on the DAX's recent gains and pointed to high oil prices, rising interest rates and subprime problems in the US banking sector, which could cap the blue-chip index's growth.

Shares in BASF led blue-ships higher, gaining 1.82 eur or 1.87 pct to 98.93 eur, after UBS raised its price target to 105 eur per share from 92 and reiterated its 'neutral' rating to take into account higher oil price assumptions and its own increased industrial production forecasts.

Financial stocks were also a bright feature, with Hypo Real Estate advancing 0.86 eur or 1.74 pct to 50.34 eur and Deutsche Bank advancing 1.56 eur or 1.47 pct to 107.47 eur, rallying from recent losses caused by pressure on the financial sector.

Allianz was 2.08 eur or 1.22 pct higher at 173.03 eur after UBS reiterated its 'buy' stance on the insurer and its 217 eur per share price target saying that the company is well positioned to penetrate the Russian, Indian and other markets.

SAP rose 0.39 eur or 1.04 pct to 37.85 eur, with some traders pointing to a positive broker note from Dresdner Kleinwort and others saying that persistent rumours that the software manufacturer might raise its guidance were continuing to buoy the shares.

SAP is scheduled to release its second-quater figures on July 19.

Utilities E.ON and RWE were up 1.11 eur or 0.90 pct at 124.54 eur and 0.70 eur or 0.86 pct at 81.85 eur, respectively.

At the other end, Fresenius Medical Care lost 0.59 eur or 1.75 pct to 33.21 eur as the sharpest decliner.

Shares in Lufthansa were 0.17 eur or 0.82 pct lower at 20.56 eur as the airline's profits are seen being hit by a strong euro and high oil prices.

DaimlerChrysler eased 0.59 eur or 0.85 pct to 68.75 eur.

Over on the MDAX, MLP advanced 0.82 eur or 5.40 pct to 16.00 eur on persistent rumours that AXA might be thinking about bidding for the financial service provider, while analysts discarded the speculation as unfounded.

MTU Aero Engines added 0.62 eur or 1.29 pct to 48.70 eur after Deutsche Bank raised its price target to 55 eur per share from 51 and reiterated its 'buy' rating.

At the other end of the index, Deutz slumped 0.31 eur or 3.13 pct to 9.60 eur.

Over on the TecDAX, GPC Biotech added 1.54 eur or 7.23 pct to 22.85 eur after Goldman Sachs placed the stock on its 'conviction buy list.'

At the other end, Bechtle shed 0.83 eur or 2.97 pct to 27.14 eur.

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