UK/Euro Financial Market Daily Evening Briefing 16-11-2007

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London shares close down, Alliance & Leicester drops; NY edges lower

At the close, the FTSE 100 index was down 68.4 points at 6,291.2, off a low of 6,283.9, while the FTSE 250 index was 135.4 points down at 10,766.20.
   
Volume was fair, with 2.211 bln shares changing hands in 667,949 deals. In the US, stocks fluctuated as lingering concerns about the health of consumer spending, the banking sector and the overall economy ate away an early  rally.
   
By the London close, the Dow Jones industrial average was down 2.20 points at 13,107.70, off a high of 13,193.40, Standard & Poor's 500 index lost 1.4 to 1,449.75 and the Nasdaq composite index gave away 15.17 to 2,603.34.
   
Back in London, financials suffered, with UK mortgage lender Alliance & Leicester sharply lower in afternoon trade amid fresh fears that the bank could face funding problems, with reassurance from the group doing little to stem the decline.
   
Analysts and traders said the decline partly reflected concerns that A&L, which funds about half its mortgage lending through borrowing on the wholesale markets, could be hit by yesterday's rise in the cost of borrowing from other banks.

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At the close, A&L shares were down 41 pence at 607.  Among other financials, on the day of the deadline for indicative proposals, Northern Rock shares were extremely volatile all day, and closed down 2.1 pence at 132.6. 

Banking sector peers were also down, HBOS lost 23-1/2 at 759-1/2 and Royal Bank of Scotland was 22 pence lower at 426-1/2. Kingfisher was down 9.5 at 173.6 after joint house broker UBS cut its dividend forecast in the wake of news earlier this month that Gerry Murphy is to step down as chief executive in February next year. 

British Airways slipped 13-3/4 to a 12-month low of 345-1/2, with the Times reporting it is facing a multi-million-pound compensation bill after failing to keep secret a deal in which it has agreed to pay passengers 430 stg each for cancelling their flights.
   
British Land slumped 22-1/2 to 889-1/2 amid ongoing concern that tightening credit markets will affect the building sector. Lehman Brothers cut its stance to 'equal-weight' from 'overweight' following first-half results yesterday which the broker took as being "as close to an NAV warning as the sector comes".
  
Food services group Compass was a major loser, down 13-3/4 at 290, with Evolution reiterating a 'sell' ahead of full-year figures later this month. Late in the day, Resolution, a specialist life insurer, said it has recommended a 720 pence per share offer from privately owned rival Pearl Assurance.

As part of the deal, Pearl will sell some of Resolution's assets to mutual life insurer Royal London for 1.267 bln stg. Resolution shares closed flat at 704-1/2.
   
On the upside, J Sainsbury led the retailers higher up 8-1/4 pence at 413-1/2 sector as shares rallied after recent failed bid talks.

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Morrison added 3-1/4 to 283-1/4 and Tesco was up 3 at 484-1/2. Miner Vedanta Resources topped the leaderboard, up 77 to 2,060, continuing its rise on the back of solid first-half results yesterday.
   
Oils were mostly on the up, benefiting from steadying crude prices and upbeat notes from Deutsche Bank on exploration and production and integrated oil companies.
   
The broker has increased EPS estimates and price targets for many oil plays after lifting its crude price forecasts.
   
BP was up 1 pence at 587. Among E&P groups, Cairn added 30 to 2,297. Venture Production, upped to 'buy' from 'hold' in Deutsche Bank's note, added 33 pence to 772.
   
Defensives were mostly higher thanks to sector rotation, with bullish comment on Centrica helping lift the shares 7 to 356. Credit Suisse repeated its 'outperform' stance.
       
Also among the midcap risers, Wood Group added 1-1/4 to 407-3/4 after it announced the acquisition of IMV Corporation, prompting Credit Suisse to keep its 'outperform' rating on the stock and 480 pence target price.
  
Among the 250 fallers, easyJet lost 34-1/2 to 595-1/2 as Collins Stewart advised clients to take profits ahead of the budget airline's preliminary results on Monday.
   
Finally, Premier Farnell was off 5-1/2 pence at 144-3/4, after Credit Suisse downgraded the company to 'underperform' from 'neutral' while cutting its target to 134 pence from 175 citing a weakening manufacturing environment and its substantial exposure to US markets.

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 

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Paris shares close down amid fears on economy, financial stocks; Dexia plunges

The CAC-40 index finished down 37.50 points or 0.67 pct at 5,523.63. Among CAC 40 stocks, 13 closed higher and 27 closed lower. On the Matif, November CAC-40 futures were trading at 5,543.5.
   
On the broader indices, the SBF-80 index closed down 119.98 or 1.85 pct at 6,360.31 and the SBF-120 ended 33.82 or 0.84 pct lower at 4,004.98. The euro was at 1.4634 usd compared to 1.4636 usd late yesterday.

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German shares close slightly lower, led down by Infineon

The DAX was down 54.77 points, or 0.71 pct, at 7,612.26 after trading between a high of 7,655.96 and a low of 7,564.66.
   
The MDAX fell 103.85 points, or 1.06 pct, at 9,671.87 while the TecDAX retreated 28.50 points, or 2.94 pct, at 940.02. DAX futures won 22.00 points, or 0.30 pct, at 7,653.00 while bund futures retreated 0.16 points, or 0.14 pct, at 114.42.
   
The euro was trading at 1.4639 usd against 1.4633 usd in London early afternoon trade.
   
Hypo Real Estate was down 1.31 eur or 3.46 pct at 36.52 as traders pointed to continued pressure on financial stocks, with UK bank Northern Rock in focus, as today is the deadline for proposals regarding the future of the ailing mortgage bank.

Peer Commerzbank dropped 0.55 eur or 2.09 pct at 25.73, while Deutsche Bank lost 1.29 eur or 1.51 pct at 84.06.
   
Recent pressure continued for shares in Continental as the tyre and autoparts specialist dropped 2.34 eur or 2.51 pct at 91.92.
   
Deutsche Post shares fell 0.27 eur or 1.20 pct at 22.17, reversing earlier gains, after US Peer FedEx Corp lowered its earnings expectations for the fiscal second quarter and full year, citing soaring fuel costs and a troubled U.S. freight market.
   
Bucking today's negative trend, Deutsche Boerse was 3.05 eur or 2.65 pct higher at 117.98.
   
Deutsche Postbank added 1.50 eur or 2.93 pct at 52.69, to lead a group of 10 advancers, after Bear Stearns started Germany's largest retail bank with an 'outperform' rating and a 63.5 eur target, seeing the bank as "under the radar" in so far as the credit crunch is concerned.
   
German retailers and consumer goods stock also saw advances after several brokerages talked of increased domestic personal spending forecasts which could benefit the companies.
   
Metro shares were 1.77 eur or 2.84 pct higher at 63.19.

Shares in Henkel added 0.22 eur or 0.58 pct at 38.30 after the household goods company announced it will be raising its prices on adhesives, sealants and surface treatment products in response to continuing rising raw material costs.
  
 In addition, the trader pointed to projected strong domestic spending levels as a driver for the share.     RWE gained 1.86 eur or 2.13 pct at 89.16, after the utility's defensive qualities churned up demand.
   

Shares in TUI rebounded from severe losses yesterday, gaining 0.15 eur or
0.76 pct at 20.01.     Over on the MDAX, KUKA led decliners, losing 2.21 eur or 7.42 pct at 27.59 as traders spoke of vague rumours of a large placement.
   

IKB Deutsche Industriebank was down 0.76 eur or 5.80 pct at 12.35 after a report in the Frankfurter Allgemeine Zeitung said the bank is facing further potential losses of around 300 mln eur, citing banking sources.
   
At the other end of the mid-cap index, Krones added 1.92 eur or 3.52 pct at 56.42.

TecDAX-listed Tele Atlas was 2.88 eur or 8.97 pct lower at 29.34 as the index's worst performer after Garmin withdrew from the bidding war for the Dutch digital mapmaker, thwarting hopes that TomTom would need to raise its bid.
   
At the other end of the index, QSC outpaced a group of four advancers, up 0.11 eur or 4.38 pct at 2.65.

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Amsterdam shares close sharply down on negative Wall St; TomTom soars

The AEX closed down 6.70 points or 1.32 pct at 500.08, after opening at 500.81 and reaching a late afternoon low of 496.92. A problem at NYSE Euronext led to the opening level being disclosed only at midday. Government bonds traded higher while the euro stood at 1.4642 usd versus 1.4636 usd late yesterday.
   
TomTom was the exception of the day, soaring almost 6 pct to 60.15 after Garmin dropped its bid for Tele Atlas, paving a smooth path for TomTom. Tele Atlas closed down 8.63 pct to 29.27. Other gainers on the AEX included Hagemeyer, 0.65 pct higher to 4.63, Unilever, lifting 0.92 pct to 24.22 and Wolters Kluwer, putting on 0.92 pct to 21.88.
   
The AEX was broadly in the red, with staffing companies still taking the brunt after Adecco received a statement of objections alleging violations of competition rules.  Vedior closed down 5.37 pct to 12.69 with SNS Securities saying the company's French unit Vedior France will also likely get such a statement, with negative sentiment passing on to all peers active in France.

Randstad was off 4.24 pct to 30.52. Midcapper USG People was 2.35 pct lower to 17.48, a bit heartened by reports saying the issue will move up to the AEX next year. Corporate Express was another strong decliner, sliding 5.01 pct to 6.45 amid concerns regarding US retail sales, which would affect Corporate Express, a local trader said.
   
Among techs, ASML was off 1.54 pct to 22.35 and Philips lost 3.34 pct to 28.10. Midcapper Oce weakened 4.69 pct to 12.19 and LogicaCMG was 3.61 pct lower to 1.87. Fortis weakened 2.86 pct to 18.02 after Dexia released third-quarter results below analyst expectations and failed to reassure concerned investors about the sector's sub-prime exposure.
   
Among other financials, Aegon lost 2.32 pct to 12.63 and ING slipped 2.43 pct to 26.15.
   
Royal Dutch Shell was off 0.33 pct to 27.26 after staying in positive territory most of the day following remarks given by Algerian Energy Minister Chakib Khelil at the OPEC summit, that oil prices would remain at current levels until the end of the first quarter of next year, but would not breach 100 usd. Also, Shell's spin-off Avantium postponed its IPO due to bad market conditions.
   
Ahold was still outperforming the market, down 0.30 pct to 9.88 after the company appointed John Rishton as its new CEO and Kimberly Ross as the new CFO. Heineken was off 0.22 pct to 45.0 eur, also outperforming the general market after it and Carlsberg urged Scottish & Newcastle shareholders to consider their
raised offer for the UK brewer and tell management to cooperate with the due diligence process. The consortium stressed that their bid's pre-conditions were not "extensive", as charged by S&N, and that their offer would unlock value for S&N shareholders.
   
On the midcap, Crucell was down, falling 5.93 pct to 11.26, after it and DSM Biologics signed a PER.C6 license agreement with Daiichi Sankyo. Crucell declined to provide any financial details surrounding the deal.
   
Midcap gainers included Corio, up 0.81 pct to 53.76 on reports the issue will be included in the AEX at the next re-weighting. Heijmans added 0.79 at 24.28, Stork put on 0.22 pct to 45.10 and Wessanen, lifted 0.45 pct to 11.15.

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