UK/Euro Financial Market Daily Evening Briefing 17-07-2007

£159,906 Profit from TradeWin's bespoke share trading software.
Click here to find out more.

Leading shares closed weaker but off lows today as Wall Street tested new highs close to the 14,000 level as some better than expected US earnings news offset a mixed US PPI report, with inflation concerns paramount in London after above-forecast CPI numbers.

At the close, the FTSE 100 index was 38.6 points lower at 6,659.1, well above the session low of 6,628.1, having reversed from an opening peak of 6,698.5.

All the broader FTSE indices ended lower, with the FTSE 250 index the worst off, down 116.3 points at 11,801.5. Volume was below average, with 2.806 bln shares changing hands in 504,699 deals.

On Wall Street, by London's close, the DJIA was 48.00 points firmer at 13,999.0, while the S&P 500 index gained 3.80 points at 1,553.30, and the Nasdaq composite index added 11.49 points at 2,708.42.

Some better-than-expected earnings reports from US blue chips Coca-Cola, Johnson & Johnson, and Merrill Lynch offset a mixed PPI.

The June producer price index slipped 0.2 pct month-on-month, although the core figure, which excludes food and energy, rose 0.3 pct.

However without an increase in cars and light trucks, core PPI inflation would have increased a more moderate 0.1 pct.

UK June consumer price inflation, however, came in higher than expected today, fuelling worries of further UK interest rate rises.

The key annual CPI rate edged down to 2.4 pct in June from 2.5 pct in May, albeit against forecasts for a bigger drop to 2.3 pct.

On the corporate front in London, weakness in the heavyweight mining sector on the blue chips was a big drag on blue chip sentiment today.

Lonmin topped the FTSE fallers board, extended yesterday's losses with a 152 pence drop to 3,833 after Deutsche Bank and Goldman Sachs both cut their price targets and estimates for the group, to 3,790 pence from 3,880 and to 3,945 pence respectively, after the firm warned Monday of lower platinum sales and production.

You've probably heard about spread betting - but maybe the risks have put you off. The Finspreads Trading Academy, the most popular way into the world of spread betting, takes you through the whole subject from a keen amateur's point of view. So don't be startled by spread betting - get started. Click Here

NBP Investments offers a unique investment opportunity, high returns are projected. Visit us today.

Click Here

Elsewhere Speedy Hire shares took on 28 pence at 1,250 after the company reported a 30 pct increase in first-quarter revenue, partially helped by acquisitions.

And positive broker comment aided Dairy Crest shares, 14-1/2 pence higher at 706 as Panmure Gordon upgraded the stock to 'buy' from 'hold'.

Panmure noted that Dairy Crest is in the process of change, with a new management team and after making a major acquisition outside the UK.

But on the downside, Informa shares dropped 17-1/2 pence at 584-1/2 after the company announced that its CFO, Tony Foye is to step down after 20 years at the group.

Panmure Gordon said the surprise departure was negative since Foye had been instrumental in creating what it called "a 'roll-up' of disparate business-to-business assets".

UK Diary of Events

For a diary of key UK 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

LOW-RISK, AWARD-WINNING, INVESTMENT STRATEGY
 
£2,000 to over £80,000 Tax-Free

Click Here

The CAC-40 index finished down 26.39 points or 0.43 pct at 6,099.21. Among CAC-40 stocks, 11 closed higher, 3 were unchanged and 26 closed lower. On the Matif, July CAC-40 futures were trading at 6,087.00. On the broader indices, the SBF-80 index closed down 51.82 or 0.71 pct at 7,275.72 while the SBF-120 ended 20.93 or 0.47 pct lower at 4,443.74.

Among stocks seeing profit-taking, Suez dropped 0.46 eur or 1.11 pct to 41.16 as recent comments and press reports fuelled speculation that the GDF-Suez merger plan has reached a standstill.

On Friday, French prime minister Francois Fillon said there was "no urgency" to take a decision on the planned merger, after previously indicating that a decision would be taken mid-July.

Meanwhile, yesterday's edition of La Tribune cited unnamed sources as saying the government is to give Gaz de France up to six months to study different strategic options as a way out of the current stalemate in the planned tie-up with Suez.

Shares in GDF closed down 0.10 or 0.27 pct at 36.37, after shedding 1.43 pct yesterday.

Oil major Total also helped push the market lower, giving up 0.68 or 1.09 pct to end at 61.62. The stock reacted to a fall in crude prices as well as a downgrade from ING, which cut its recommendation to 'hold' from 'buy' in a review of the oil sector.

ING also lowered its recommendation on Statoil, Norsk Hydro, Repsol and BG Group to 'sell' from 'hold', explaining that all the downgrades were "essentially housekeeping based on current valuation and recent positive stock performances".

Another main blue chip faller was Schneider Electric, down 1.08 or 1.03 pct at 103.45, as it continued to give up gains from last week that followed a favourable EU court decision and broker upgrade.

EADS fell 0.25 or 1.04 pct to 23.87 following yesterday's announcement that Louis Gallois is to become sole chief executive officer of the group, with Thomas Enders as head of Airbus and Rudiger Groube as EADS chairman.

Shares initially rose in reaction to the news, before falling back as investors struggled to weigh up tyeh implications of the changes.

Analysts at CM-CIC Securities said "it is difficult to accurately estimate the impact of these reforms," although they added that they expected an improvement in the group's reactivity and future efficiency.

Outside the CAC-40, ADP finished down 2.03 or 2.30 pct at 86.12. The group last night reported a 3.9 pct rise in June passenger numbers at its two main airports, and a 4.4 pct in the six months to end-June.

On the upside, Vallourec added 2.1 or 0.92 pct to close at 229.75, as rumours resurfaced that ArcelorMittal -- down 0.27 or 0.56 pct at 48.06 -- may be mulling a 280 eur a share takeover bid for the maker of steel pipes.

..in St Lucia's UNESCO's World Heritage Site.  Superb buy to let opportunity in a breathtaking location with immediate income and dramatic capital appreciation.  For more information click here.

The DAX was down 67.48 points or 0.83 pct at 8,038.21, after trading between a low of 7,995.44 and a high of 8,090.01 today. The MDAX closed 88.99 points or 0.78 pct lower at 11,276.20. The TecDAX dropped 4.10 points or 0.43 pct to 958.02. DAX futures were down 45.50 points or 0.56 pct at 8,095.50, while bund futures lost 0.38 or 0.34 pct at 110.59.

Technology giant Siemens led blue chips lower, dropping 1.99 eur or 1.81 pct to 107.66. Linde followed, losing 1.63 eur or 1.79 pct to 89.42.

Car stocks were generally lower with BMW declining 0.83 eur or 1.67 pct to 48.96 and Volkswagen dropping 1.70 eur or 1.38 pct to 121.70.

MAN was 1.67 eur or 1.49 pct lower at 110.33 on what analysts called a largely unfounded rumour that the heavy truck manufacturer might cut its full-year targets.

"It really seems unlikely that MAN would slash its guidance after it reiterated several times recently that it expects record-setting sales this year," said a local trader.

Bucking today's trend, TUI jumped to the top of the index, adding 0.62 eur or 3.02 pct to 21.16, as rumours emerged Spanish hotel chain RIU is preparing a 30 eur/share offer for the German company. TUI declined to comment on the speculation.

Fresenius Medical Care was the second of today's three risers, adding 0.18 eur or 0.54 pct to 33.79. Meanwhile, BASF rose 0.23 eur or 0.23 pct to 99.45 after the company said it is "evaluating strategic options" for parts of its styrenics activities and has received an offer for parts of the unit.

Over on the MDAX, IKB Bank declined 1.14 eur or 4.30 pct to 25.36 as the day's sharpest faller.

Fresenius rose 2.85 eur or 4.81 pct to 62.05 at the other end after the medical specialist announced preliminary secondary endpoint data from a phase II/III study of its anti-cancer drug Removab that traders said was encouraging.

"The results were generally anticipated, but the data was very convincing," said analyst Karl-Heinz Scheunemann from Metzler Equity Research. "The study might result in giving Fresenius another attractive niche in anti-cancer medications and offers another treatment alternative to late stage cancer patients," he added.

On the TecDAX, Adva was today's best performer, rising 0.25 eur or 3.67 pct to 7.07, while AT + S lost 0.57 eur or 3.04 pct to 18.20 at the other end.

ADVFN Poker will match your first deposit up to $500. All you have to do is open an account with us, deposit money and play in our buzzing cash games or exciting tournaments. We will credit your bonus automatically! Play Now

The AEX closed 1.11 points or 0.20 pct lower at 560.79 after trading in a range of 558.05-561.56. Government bonds traded lower while the euro stood at 1.3783 usd versus 1.3782 usd late yesterday.

Reed Elsevier dropped 2.31 pct to 14.36 eur after the company said it has finalised the sale of its Education division for 4 bln usd. Analysts said that the selling price was already priced in by investors, but some investors may have had higher expectations.

Fortis dropped 1.73 pct to 30.08 eur after S&P lowered its outlook to 'negative' from 'stable' following the RBS consortium's revised takeover bid on ABN Amro. Fortis is part of the consortium together with Banco Santander and Royal Bank of Scotland. Moody's reaffirmed its credit ratings on the banks.

TomTom dropped 1.94 pct to 42.04 eur after Goldman Sachs removed the shares from its Conviction Buy list, but reiterated its 'buy' recommendation.

Aegon shed 0.91 pct to 14.20 eur amid news that the company is to combine all its sales organisations under the Aegon Bank brand.

Randstad ended 0.42 pct lower at 23.75 eur after news that it has won a payroll contract with Philips for an undisclosed sum.

ABN Amro ended 0.40 pct lower at 37 eur as investors await whether Barclays will come out with a raised bid on the Dutch bank, after the RBS consortium revised its bid, upping the cash component of the 38.40 per ABN Amro share to 93 pct from an earlier 79 pct. Barclays board member Frits Seegers today said that he is "confident" that Barclays will buy ABN Amro.

ASML led gainers, adding 1.58 pct to 21.20 eur after positive market comments from peer Novellus, and ahead of ASML's second-quarter earnings expected tomorrow morning.

Among midcap shares, Aalberts led decliners, shedding 2.08 pct to 21.18 eur, Crucell dropped 1.75 pct to 16.85 and USG People lost 1.04 pct to 33.45 eur. Ordina added 0.69 pct to 16.10 eur and Wessanen put on 1.36 pct to 12.67 eur, leading gainers.

ADVFN Services