UK/Euro Financial Market Daily Evening Briefing 13-11-2007

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At the close, the FTSE 100 index was up 24.5 points at 6,362, having recovered from a low of 6,279.7, and fallen from a high of 6,387.4, while the FTSE 250 index closed up 25.9 points at 10,920.2.
   
Volume was average, with 2.7 bln shares changing hands in 745,102 deals.  "I suspect some (of the FTSE's gains) are around a rumble going on that some of the writedowns in the UK banks have been overdone," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
   
"Otherwise, in terms of a bright spot in a sea of red, it's Vodafone, especially when you compare it with the 30 bln stg of write-down last year. There has also been positive news on the Dow Jones since it's opened, so for the moment, it's reasonably positive (on both sides of the Atlantic), but we've still got the potential credit crunch outcome looming," he said.
   
Meanwhile, Chris Hossain, head trader at Blue Index CFDs said, "We're still shorting. Yesterday E-Trade dropped by 58 pct. We had some good numbers from Vodafone today, but there's still not a consistent flow of good news," he said.
   
E-Trade Financial yesterday announced additional writedowns because of devalued assets linked to a rise in mortgage payment defaults. On Wall Street, by London's close, the Dow Jones Industrial Average climbed 180.7 points to 13,168.3, while the S&P 500 index rose 16.71 to 1,455.89, and the Nasdaq composite index took on 55.88 points to 2,640.01.
   
Turning to UK equities, at the finish, Vodafone led the gainers, rising 7.53 pct, or 13.7 pence, to hit its best level in six and a half years, at 195.7, after raising its full-year revenue and profit guidance, and reporting higher first-half revenue and adjusted operating profit bolstered by emerging market
growth.
   
Daily Mail & General Trust, meanwhile, ended up 31 pence at 592, boosted by positive broker sentiment.
Earlier, Merrill Lynch initiated coverage with a 'buy' rating and 680 pence target, noting that DMGT's current share price represents only a modest premium to UK newspaper peers, yet it generates 53 pct of profits from higher growth non-newspaper assets.
   
Financial stocks closed firmer, with Royal Bank of Scotland up 18 pence at 457-3/4, amid rumours that an investor has built a stake in the bank. Elsewhere in the sector, Barclays ended up 14 at 527, and Lloyds TSB took on 10 pence to 497-1/2.

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Retailers benefited from the read-across from Wal-Mart's numbers, with Morrison ending up 10-3/4 at 276-1/2, and Tesco closing 12 pence firmer at 482.  Meanwhile, in the non-food retail sector, DSG International closed up 5.9 pence at 120.8.
   
A broker upgrade helped boost shares in Unilever, which closed 44 pence ahead at 1,741, with Goldman Sachs lifting its rating to 'neutral' from 'sell', saying the company's third-quarter results demonstrated better-than-expected pricing power and strengthened confidence in the group's input cost recovery.
   
Among the casualties, mining stocks ended lower, weighed by a decline in copper prices.  Lonmin lost 78 pence to 3,077, Xstrata was down 66 pence at 3,250, Anglo American dropped 90 pence to 3,239, and midcap Hochschild Mining was down 20-1/2 pence to 442-3/4.
   
But heading the blue-chip loserboard was Rio Tinto, 268 pence weaker at 5,390, amid vague talk the group is preparing to bid for peer Anglo American, days after the group said it had rejected a three for one bid from the world's largest mining group BHP Billiton.
   
BHP ended down 16 pence at 1,591-1/2.  Energy stocks dropped, dragged down by a decline in oil prices further away from the much-hyped 100 usd after the International Energy Agency lowered its world oil demand growth forecast for this year and next, saying high prices had already hurt demand.

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Oil major Royal Dutch Shell finished down 39 pence at 1,938, while Tullow Oil closed down 14 pence at 613. Turning to the midcaps, shares in Paragon closed up 26-1/4 pence at 226-1/4,
after shares fell to year lows below 200 pence. "It looks like buyers started piling in around 200 pence," said a London based trader.
   
He pointed out recent market turmoil and concerns about the group's funding have dragged shares in the buy-to-let group close to lows last seen in 2003. Also ending higher was Babcock International, up 617-1/2 at 44, following a solid first-half trading update, in which pretax profit jumped by 48 pct on strong organic growth from its marine, defence services and network businesses.
 
Strong first-half earnings also provided the impetus for VT Group, up 46 pence at 631-1/2 at the close.
And shares in Emap pushed higher too, closing 16-1/2 pence ahead at 855, following the radio-to-magazines group's first-half 2008 results, and after a report that publishing giant Reed Elsevier has emerged as a surprise suitor for Emap's business publishing division.
   
Johnston Press shares benefited from Emap's results and reasonably encouraging advertising outlook, closing 21-1/2 pence ahead at 274.  Elsewhere, shares in Minerva ended 7 pence firmer at 165-1/2, bouncing after recent falls. On the downside, Invensys lost 16-1/2 pence to close at 309-1/2, after brokers cut their price targets on the stock.

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

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Paris shares close flat, erasing losses on US gains; telecoms shine

The CAC-40 index closed up 3.35 points at 5,538.91, reversing an intraday slide to 5,486.29. 22 CAC-40 stocks ended higher and 18 lower. On the Matif, November CAC-40 futures were trading at 5,549.85.
  
Telecoms stocks outperformed in European markets as strong results from the UK's Vodafone spread cheer throughout the sector. The stocks are also benefiting from their defensive profile in the current risk-averse environment.
   
In Paris, France Telecom rose 00.80 or 3.21 pct to 25.74, while Neuf Cegetel added 0.61 or 1.72 pct to 36.04. Vivendi, owner of mobile phone operator SFR, climbed 0.48 or 1.64 pct to 29.80. Vivendi is due to publish third-quarter earnings tomorrow.
   
Bank stocks rebounded in the late morning after trading down over the earlier part of the day, as investors took advantage of recent lows to build positions. French banks are widely considered to be less exposed than their US counterparts to the current credit crisis.
   
Dexia gained 0.28 or 1.46 pct to 19.42, Societe Generale added 0.84 or 0.82 pct to 103.13 and Credit Agricole rose 0.36 or 1.50 pct to 24.43. BNP Paribas was up 0.99 or 1.39 pct at 72.35, adding to yesterday's gains of over 4 pct.
   
The banking group also benefited from a positive note from Lehman Brothers this morning, which highlighted BNP's lower relative exposure to US sub-prime CDOs.
      
Elsewhere amomng financials, Axa added 0.06 to 27.58, reversing earlier losses after the group reaffirmed its EPS targets up to 2012 and and reassured investors about its exposure to the subprime market.
       
Elsewhere, Air France-KLM shares soared 1.54 or 6.80 pct to 24.18, buoyed by news that the group is to apply a 10 eur fuel surcharge to long-haul Air France flights to offset the rising price of oil.
   
The move follows a similar announcement from KLM yesterday, which said it was adding a 2 eur surcharge to European flights and a 10 eur charge to intercontinental journeys. Traders also pointed to the fall-off in oil prices which may be providing support, and highlighted that Air France-KLM shares are bouncing back from year lows.
   
On the downside, energy stocks remained under pressure, reflecting overnight trends on Wall Street, as oil prices extend their retreat from recent highs.
   
Total weighed heavily on the CAC-40 index, dropping 1.46 or 2.63 pct to 54.10, while EDF shed 1.21 or 1.49 pct to 80.12 and Gaz de France fell 0.22 or 0.58 pct to 59.87.
   
Elsewhere, investors continued to look for profit-taking opportunities in the current climate of uncertainty, prompting losses of 7.00 or 3.61 pct for Vallourec, which ended down at 186.65. The share closed up 2.14 pct yesterday, on speculation of a takeover by Russian billionaire Alisher Usmanov.
   
Alstom shares were also the focus of profit-taking, dropping 2.24 or 1.55 pct to 142.68.

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German shares close lower dragged down by automotives, industrials

The DAX closed down 29.28 points or 0.38 pct at 7,777.56 after trading between 7,752.24 and 7,791.50. The MDAX eased 102.93 points or 1.03 pct to 9,887.21 while the TecDAX was down 35.30 points or 3.51 pct at 969.48. DAX futures added 60.00 points or 0.77 pct to 7,812.00 while bund futures slipped 0.42 points or 0.37 pct to 114.27 points.
  
Traders said sentiment was dampened by the sub-consensus ZEW indicator for economic expectations in Germany, which dropped to -32.5 points in November from -18.1 in October. Analysts polled by Thomson Financial News have forecast a decline to -20 points.
   
Economists said the ZEW decline to its lower level for almost 15 years suggests the German growth outlook is deteriorating sharply as a reslt of concerns over the US economic slowdown and the strength of the euro.
   
On the Frankfurt bourse, truckmaker and industrial conglomerate MAN was the top loser, edging down 4.32 eur or 3.69 pct to 112.69.
   
Automotive supplier Continental followed suit with a loss of 3.11 or 3.14 pct to 95.96, Volkswagen pared 4.93 or 2.78 pct to 172.47 while Daimler dipped down 1.97 or 2.73 pct to 70.14. ThyssenKrupp was the third top loser, falling 1.18 or 2.80 pct to 40.98.
   
On the upside, Fresenius Medical Care added 1.11 or 3.14 pct to 36.50.
   
Deutsche Postbank rose 1.33 or 2.58 pct to 52.91. Merrill Lynch upgraded its stance on shares in Deutsche Postbank to 'buy' from 'neutral' and pegged its price target at 61 eur per share as the brokerage said the bank is a 'safe haven' in a sector expected to see ongoing uncertainties.
   
Hypo Real Estate, second biggest gainer, was up 0.94 or 2.61 pct at 36.90 with dealers pointing to vague rumours that Belgian-based Dexia might be considering making a bid for the the commercial property lender. Commerzbank was 0.51 eur or 1.91 pct higher at 27.28.
   
EON fell 0.49 or 0.36 pct to 134.61 on some profittaking after shares rose on the back of largely in-line third quarter results.
   
Over on the MDAX, Gea Group lost 1.99 or 8.15 pct to 22.43 on speculations it might issue a profit warning after peer Alfa Laval AB reported lower order intake figures. Gea Group had reiterated its full-year guidance and announced that its October order intake numbers were good.
   
Bilfinger Berger fell 2.96 or 5.13 pct to 54.76 after third-quarter figures came in slightly lower than expectations.
   
Fraport was the biggest gainer, adding 2.87 or 5.33 pct to 56.67 on better-than-expected quarterly results. Celesio, up 1.74 or 4.81 pct at 37.95, reported nine-month earnings figures that were largely in line with expectations, prompting WestLb to up its stance on the shares to 'buy' from 'hold'.
   
Over on the TexDAX, Solon fell 11.54 or 12.93 pct to 77.72 while Bechtle gained 1.59 or 5.16 pct to 32.41.

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AMSTERDAM - Shares in Amsterdam closed off its earlier lows as Wall Street opened higher, but ASML and oil-related shares kept the index in the red.
   
The AEX closed 0.83 points or 0.16 pct lower at 507.49 after trading in a range of 504-509.51. Government bonds traded lower while the euro stood at 1.4590 usd versus 1.4530 usd late yesterday.

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