UK/Euro Financial Market Daily Evening Briefing 15-11-2007

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By the close, the FTSE 100 index was down 72.5 points at 6,359.6, having drifted off an opening high of 6,465.4. The FTSE 250 index was down 169.3 at 10,901.6.
  
By the close, 2.3 bln shares had changed hands in 688,438 deals.  Over on Wall Street, US stocks fluctuated Thursday as investors grappled with concerns about the strength of consumer spending but were also cheered by data showing companies might be having an easier time obtaining financing for
short-term debt.
   
The Labor Department's Consumer Price Index rose 0.3 pct in October on high energy and foods costs, in line with September's increase and analysts' forecast. Investors are concerned that rising inflation -- especially due to higher fuel prices - could move consumers to cut back their overall spending and also prevent the Federal Reserve from lowering interest rates further in the coming months.
   
A short while ago, the DJIA was off 9.2 at 13,222.2 with the Nasdaq down 5.3 at 2638.2.  In the UK today, Experian headed the blue-chip casualty list, slumping 45-1/4 to 429-1/2, after the group said it anticipates a sales slowdown in the second half of the year. This after announcing a 16 pct increase in first-half
sales and soaring pretax profit set against a more challenging market backdrop in the US and the UK.
   
Barclays, which flip-flopped all morning between lows of 523-1/2 and a high of 569-1/2 pence, closed down 2 at 530-1/2 pence after announcing a lower than expected level of writedowns of 1.3 bln stg for its exposure to the US subprime mortgage market.
   
The bank also announced new writedowns and charges for October of 800 mln stg, which proved to be far less than pessimists had feared and which had fuelled last Friday's 9 pct slump.

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Peers favoured less well, with Royal Bank of Scotland -- which many say have a similar profile to Barclays -- closing off 18-1/2 pence at 448-1/2 pence. Ailing mortgage lender Northern Rock fell another 4.5 pence to 134.7 pence and Alliance & Leicester dropped back 21 pence 647 pence.
   
In other earnings news, SABMiller fell back 43 pence to 1,334, as investors looked past the brewing giant's first-half earnings which showed adjusted pretax profit increased 15 pct to 1.773 bln usd, to focus on its cautious outlook statement.
   
Oil stocks lagged as crude oil prices plunged after US inventory data showed a surprise increase in crude stocks, which stemmed three straight weeks of declines as imports finally started recovering.
   
Royal Dutch Shell slipped 10 pence to 1,933 and BP off 13-1/2 pence to 586. On the upside, Cable & Wireless added 3.6 pence to 184.4 amid talk that France Telecom was supposedly casting an acquisitive eye over the group, although few traders put much stock in the rumours.
   
Scottish & Newcastle gained 16-1/2 to 757 after Heineken and Carlsberg lifted their offer for the group to 750 pence. UK listed tobacco groups faired well ahead of Swiss peer Richemonts's first-half numbers due tomorrow which are expected to show a jump in profits. BAT gained 43 to 1801 and Imperial Tobacco added 46 to 2430.

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Kingfisher was up 0.7 pence at 183.1, after Morgan Stanley upgraded the company to 'overweight' from 'equal-weight' and repeated its 230 pence price target.
   
Turning to the midcaps, Ladbrokes posted heavy losses, down 35 at 344 after Europe's biggest bookmaker issued a mixed trading update with a below-target performance from the UK retail business, offset by strong high rollers' activity.
   
Minerva was off 15-1/2 pence at 179, as a hoped-for stakebuilding announcement failed to materialise. And Euromoney Institutional Investor pulled back early gains to fall 64-3/4 at 415 after reporting a higher full-year pretax profit on a 38 pct increase in sales, reflecting strong organic growth and successful integration of acquisitions.

UK Diary of Events:

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The CAC-40 index finished down 52.47 points or 0.93 pct at 5,561.13. Among CAC-40 stocks, 10 closed higher and 30 closed lower. On the Matif, November CAC-40 futures were trading at 5,520.00. The euro was at 1.4636 usd compared to 1.4634 usd at lunchtime.

Sanofi-Aventis led CAC-40 losses after L'Oreal announced it will sell part of its 10.5 pct stake in the pharmaceutical company. L'Oreal and Clarins both rose on the back of M&A speculation following the
announcement. L'Oreal made the biggest gains on the CAC-40, ending 1.91 or 2.14 pct higher at 91.36.
   
Clarins has been the focus of bid speculation since the death of its founder Jacques Courtin-Clarins in March this year, with L'Oreal, PPR and LVMH already cited as potential acquirers. Clarins, an "ideal target" for L'Oreal, Oddo Securities analysts said, was up 2.58 or 4.51 pct at 59.27 at the close.
       
The gains did not spill over to other luxury goods stocks. LVMH ended down 0.87 or 1.05 pct at 81.95 while PPR finished the session 3.06 or 2.45 pct weaker at 122.00.
   
Credit Agricole took a tumble after the publication of below-consensus third quarter earnings, with higher than expected losses linked to the subprime crisis. The French bank closed down 0.81 or 3.29 pct at 23.79.
   
Analysts polled by Thomson Financial News had put net profit for the period at 976 mln eur. Michelin lost 3.05 or 3.57 pct to close at 82.45. The group confirmed late yesterday that it is ending development on its PAX tyre system.
   
Vallourec benefited from the upward revision of its second half sales guidance yesterday after the market closed. The group said it expects sales growth of "more than 10 pct" on a same-structure basis, compared to guidance for growth of 7-10 pct given in July. The stock closed 3.41 or 1.79 pct higher at
194.10.
   
And Bouygues was up at the close, gaining 0.76 or 1.25 pct to 61.67 after third quarter sales beat forecasts. Cheuvreux analysts adopted a 'buy' stance on Bouygues in the wake of the sales publication, citing the better-than-expected sales and positive surprises in both the telecoms and construction divisions.
   
Suez, which published 9 month sales and earnings in line with expectations this morning, rose 0.17 or 0.38 pct to close at 45.18. Gaz de France closed up 0.42 or 1.11 pct at 38.34 and fellow energy stock EDF ended the session 1.18 or 1.47 pct higher at 81.25.

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The DAX was down 116.0 points or 1.49 pct at 7667.03 after trading between 7635.69 and 7,803.87. The MDAX fell 236.70 points or 2.36 pct at 9,775.72 while the TecDAX retreated 19.74 points or 2.00 pct at 968.52 DAX futures lost 103.00 points or 1.32 pct at 7,700.00 while bund futures rose 0.02 or 0.11 pct higher at 114.33.
   
The euro was trading at 1.4633 usd against 1.4619 usd in London early afternoon trade. TUI led the blue chip lower, losing 1.04 eur or 4.98 pct at 19.86, followed closely by MAN down 5.06 or 4.50 pct at 107.38.

Dealers said MAN was under pressure on the back of reports that the US truck market is not expected to recover before the first quarter next year. Infineon, the star performer yesterday, fell on the back of negative broker notes including a downgrade to hold' from 'buy' at ABN Amro.
   
On the upside, Deutsche Telekom gained 0.06 or 0.41 pct at 14.77. Traders said that the telco's shares found support from comments made by EU telecommunication commissioner Viviane Reding.

She told German news agency DPA that the German federal government is supporting the aims of the European Commission to regulate the telecom market and that the EU is not planning to reduce the roles of governmental controllers or break up Deutsche Telekom.
   
Volkswagen added 0.29 or 0.17 pct at 173.13. The company said group unit sales in October totaled 528,500, up 11.2 pct compared with the same month last year. January-October unit sales were up 8.5 pct at 5.14 mln, it said.
   
Deutsche Post was unchanged at 22.44 after treading mostly in positive terrain for most of the day. JP Morgan had raised its price target to 29.60 eur per share from 28.70 while maintaining its 'overweight' stance saying it sees the mail carrier making some progress to a long-term recovery.
   
On the mid-caps MDAX index, Krones fell 4.04 or 6.90 pct to 54.50 while Wincor Nixdorf added 0.60 or 0.99 pct at 61.00. Lanxess lost 1.35 eur or 4.46 pct at 28.94 after Merrill Lynch lowered its price target on the stock to 47 eur per shares from 48 and Credit Suisse initiated coverage with a 'neutral' rating.

ADVA was the biggest loser on the TecDAX, easing 0.37 or 6.78 pct at 5.09. GPC Biotech was up 0.08 or 2.57 pct at 3.19.

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The AEX dropped 5.54 points or 1.08 pct to 506.78, after trading in a range of 504.96-513.Government bonds traded higher, while the euro stood at 1.4636 usd versus 1.4673 usd.
   
Heineken fell 2.68 pct to 45.10 eur, off earlier lows after it and Carlsberg raised their joint takeover bid on Scottish & Newcastle. Traders in Amsterdam said Heineken investors do not seem to be pleased as they think the new bid price may be too costly for Heineken.
   
Randstad led decliners, shedding 3.10 pct to 31.87 eur, while Unibail-Rodamco dropped 3.09 pct to 148.90 eur and Vedior lost 3.04 pct to 13.41 eur. Oil-related shares lost as oil prices receded. SBM Offshore dropped 2.73 pct to 26.36 eur and Royal Dutch Shell lost 0.98 pct to 27.35 eur.
   
Most financials also dropped. ING lost 1.51 pct to 27.35 eur and Aegon shed 0.54 pct to 12.93 eur. Fortis was the only gainer, adding 1.03 pct to 18.55 eur. Gainers were few. TNT added 0.43 pct to 28.29 eur, Wolters Kluwer put on 0.79 pct to 21.68 and TomTom rose 3.48 pct to 56.75 eur amid unsubstantiated rumours that it is in talks with rival Garmin to split up Tele Atlas after a successful takeover of the latter company.
   
Among midcap shares, Van der Moolen fell 11.99 pct to 3.23 eur after third quarter earnings and the decision to close its specialist activities in the US. Crucell shed 7.14 pct to 11.97 eur and Boskalis dropped 5.84 pct to 38.56 eur after the company spent 120 mln eur to expand its capacity. Tele Atlas dropped 4.18 pct to 32.10 eur.
   
BAM shed 2.11 pct to 15.76 eur after it settled a dispute with the German government, costing BAM 55 mln eur. SNS Reaal dropped 0.64 pct to 15.55 eur after an in-line trading update. Binckbank added 0.33 pct to 15.35 eur and Wessanen put on 0.63 pct to 11.10 eur.

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