UK/Euro Financial Market Daily Evening Briefing 17-09-2007

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London shares close lower; Northern Rock slumps; US down before rate decision

Leading London shares closed lower with Northern Rock plummeting 35 pct, Alliance & Leicester down 31 pct and the US unable to offer much support ahead of the US Federal Reserve's decision on interest rates tomorrow.
   
At the close, the FTSE 100 index was down 106.5 points at 6,182.8, having been as low as 6,168.0 earlier in the session. The FTSE 250 index closed 208.7 points lower at 10,745.3.
   
Volume was average with 3.2 bln shares having changed hands in 663,910 deals
   
In the US, the Dow Jones Industrial Average was down about 50 points at 13,392.5 as the London markets closed, with the market trading nervously before tomorrow's interest decision by the Federal Reserve.

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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FTSE 100 risers

Sage Group 250 up 6-3/4 Deutsche Bank reiterates 'buy' stance and 305 target 

Diageo 1,050 up 4 Bullish ING note, prefers company among spirit stocks

FTSE 100 fallers

Northern Rock 282-3/4 down 155-1/4 Merrill/Panmure downgrade; UBS cuts tgt; savers continue to withdraw cash

Alliance & Leicester 600 down 273 Merrill Lynch 'sell' from 'neutral'; Citigroup 'sell' from 'hold'

Barratt Developments 769 down 60-1/2  Alan Greenspan warns of possible downturn in UK house prices

Persimmon 946 down 70  Alan Greenspan warns of possible downturn in UK house prices

Royal Bank of Scotland 508-1/2 down 23  Northern Rock's financial crisis weighs on financials

HBOS 813 down 47  Northern Rock's financial crisis weighs on financials

Mitchells & Butlers 589-1/2 down 29-1/2  Lower post-hedge loss news; Panmure cuts target to 650p from 675

Morrison 267 down 12 SG 'sell' from 'buy' with 248 pence target; interims due Thursday

Hammerson 1,099 down 67 Merrill Lynch 'neutral' from 'buy'

Land Securities 1,575 down 94  Merrill Lynch 'neutral' from 'buy'

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FTSE 250 risers

Hikma Pharmaceuticals 425 up 19  Citigroup initiates coverage with 'buy' and 540 pence target

Northern Foods 97-1/2 up 3-3/4  Panmure 'buy' from 'hold' with target upped to 140 pence from 125

Colt Telecom 155-1/2 up 1-1/2   Blue Oar initiate coverage with 'buy'

Collins Stewart 165 up 2-3/4  Interims up 64 pct; 'positive' outlook

Tullett Prebon 393-1/2 up 6-1/4   With Collins Stewart  

Autonomy 888-1/2 up 6  Etalk offers hosted archiving

Premier Oil 1,015 up 19  Interims due Thursday

FTSE 250 fallers

Minerva 216-1/4 down 42-1/4  Merrill Lynch downgrades to 'sell' from 'buy'

Bradford & Bingley 279 down 50-3/4   Citigroup 'sell' from 'hold'

CLS Holdings 466 down 68-1/2  Pretax profit down 43.8 pct

Gyrus Group 398 down 35  Interims, 61 pct increase in restructuring charges; KBC repeats 'hold'

Grainger 426-3/4 down 34-1/2   Buys Tilt Estate from Wainford Holdings for 47.9 mln stg

Redrow 438 down 33  Alan Greenspan warns of possible downturn in UK house prices

Savills 386 down 22-3/4 Alan Greenspan warns of possible downturn in UK house prices

Travis Perkins 1,557 down 71   Chief operating officer buys 7,500 shares at 1,555 pence a share

Great Portland Estates 578-1/2 down 24  Merrill Lynch 'neutral' from 'buy'

Workspace 320-3/4 down 14-3/4  Merrill Lynch 'sell' from 'neutral'

Burren Energy 837 down 16  H1 net profit down 5 pct

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Paris shares close sharply down as credit concerns resurface

The CAC-40 index finished down 99.55 points or 1.80 pct at 5,439.37. Among CAC-40 stocks, 4 closed higher and 36 closed lower. On the Matif, September CAC-40 futures were trading at 5,480.00. On the broader indices, the SBF-80 index closed down 112.06 or 1.71 pct at 6,443.51, while the SBF-120 shed 71.97 or 1.79 pct finish at 3,959.24.
   
Schneider stocks took a battering in today's trade, finishing down 4.64 eur or 5.02 pct at 87.83.
   
Elsewhere, the main victims were in the banking, property and construction sectors, which have remained volatile since the start of the crisis. Among French banks, BNP Paribas closed down 1.77 or 2.40 pct at 71.95, Societe Generale ended 2.62 or 32.31 pct lower at 110.88, Credit Agricole fell 0.38 or 1.42 pct to 26.31, and Dexia tumbled 0.41 or 2.10 pct to 20.51.
   
The banking industry also suffered a further setback today as Citigroup lowered its price target on 33 European banks and cut its earnings estimates for them by an average of 4.3 pct for 2007 and 7.4 pct for 2008.
   
Among construction stocks Lafarge gave up 3.85 or 3.54 pct to close at 104.77, Saint-Gobain fell 1.90 or 2.66 pct to 69.61, and Ciments Francais shed 4.24 or 3.15 pct to 130.50. Eiffage suffered heavy losses, falling 3.03 or 4.05 pct to 71.87.
   
In the property sector, Klepierre fell 0.97 or 2.59 pct to 36.43, Kaufman & Broad fell 1.06 or 2.45 pct to 42.17, Unibail-Rodamco finished down 5.19 or 2.99 pct at 168.33 and Nexity plunged 2.77 or 6.56 pct to 39.47.
   
Elsewhere, the nervous atmosphere prompted a wave of profit-taking, with recent strong gainers registering sharp losses.
   
Among the main bluechip fallers, Alstom finished down 6.19 or 4.32 pct at 137.13, pulling back from last week's M&A fuelled rally. ArcelorMittal also finished down 1.23 or 2.50 pct at 47.93, after rising sharply last week as investors sought out defensive stocks.
   
Alcatel-Lucent plunged further, shedding 0.34 or 5.23 pct to close at 6.16, as UBS downgraded the telecoms equipment maker to 'neutral' from 'buy' with a price target cut to 7 eur from 12 eur, citing Alcatel-Lucent's profit warning issued last week.
   
Sanofi-Aventis tumbled 1.42 or 2.31 pct to 60.08 as a raft of medium-term projects was offset by disappointment with an expected four-year delay in gaining approval for anti-obesity drug Acomplia in the US.
   
People were expecting them to come back fighting (over Acomplia in the US)," one Paris-based dealer noted, adding that the four-year delay seems "rather a lot" to investors.
   
Among the few risers in Paris, Business Objects surged 1.46 or 4.69 pct to 32.56 after French daily Le Figaro on Saturday cited an unnamed source as saying the company has appointed Goldman Sachs to find a buyer. The paper added that five potential buyers have expressed an interest in the group, with SAP the favourite.
   
CM-CIC's analysts said the report "is absolutely no surprise and can be viewed as particularly credible".    

Societe Generale said business intelligence activity makes Business Objects a target. It said a 45 eur per share bid was a credible, high estimate, valuing the group at 7.7 times estimated 2008 sales.

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Shares close lower as pressure on financial stocks weighs

Shares closed slightly lower as financial stocks continued to decline in thef aftermath of the Northern Rock debacle and with investors increasingly cautious ahead of tomorrow's interest rate decision by the US Federal Reserve.
   
The DAX closed down 17.89 points or 0.24 pct at 7,479.85, having traded between in a range of 7,433.23-7,530.81.
   
The MDAX fell 158.41 points or 1.59 pct to 9,832.00, while the TecDAX retreated 16.22 points or 1.80 pct to 886.70.
   
DAX futures were down 37.50 points or 0.50 pct at 7,482.00, while bund futures advanced 0.15 points or 0.13 pct to 114.23.
   
The euro traded at 1.3863 usd, compared to 1.3866 usd in afternoon London trade.
   
Traders said nervousness over the US Federal Reserve Open Market Committee's decision on interest rates tomorrow was keeping many investors out of the market.
   
The FOMC is expected by many to lower rates by 0.25 percentage points, with some hoping for a drop of 0.50 percentage points to ease liquidity problems in the financial sector.
   
On the German large-cap index, financial stocks were again under pressure on the back of funding woes at UK mortgage lender Northern Rock.
   
Hypo Real Estate dropped 1.46 eur or 3.89 pct to 36.03 to lead decliners after Citigroup cut its rating on the bank to 'sell' from 'hold' in an estimate update for 38 major European banks.
   
Deutsche Bank was similarly downgraded by Citigroup and lost 1.84 eur or 2.05 pct to 88.13. Peer Deutsche Postbank was down 1.49 eur or 3.00 pct at 48.14, while Commerzbank lost 0.31 eur or 1.14 pct to 26.92.
   
Heavy truck manufacturer MAN was down 2.57 eur or 2.5 pct at 100.10 after a media report said it, Volkswagen AG and Scania AB had failed to agree on an alliance of their truck businesses.
       
Volkswagen shares were 0.92 eur or 0.61 pct lower at 151.01.
   
On the upside, Deutsche Boerse led gainers on the DAX, closing 2.19 eur or 2.73 pct higher at 82.37, boosted by today's announcement it plans to buy back 300 mln eur of its shares by the end of the year and will implement a cost-cutting programme that will save an estimated 100 mln eur a year after 2010 for the German stock market operator.
   
Utility RWE AG closed 1.24 eur or 1.50 pct higher at 83.78.
   
Peer EON AG advanced 0.91 eur or 0.72 pct at 126.73 after the company presented details of its planned 4.1 bln eur acquisition of roughly 70 pct in Russian state-owned electricity company OGK-4.
   
Bayer gained 0.46 eur or 0.82 pct to 56.57 on a positive note from Deutsche Bank.
   
Peer Fresenius Medical Care added 0.53 eur or 1.43 oct to 37.63.
   
On the MDAX, Krones AG lost 3.05 eur or 5.4 pct to 53.4 at the bottom, while Fraport was the top gainer, adding 0.70 eur or 1.45 pct to 48.93 after Citigroup upgraded its stance to 'buy' from 'hold' in a review of the European airport sector.
   
TecDAX-listed Morphosys was the worst performer on its index, dropping 4.24 eur or 9.41 pct to 40.84, and AT+S Austria gained 0.10 eur or 0.58 pct to 17.25 at the other end.

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Shares close lower, tracking Wall St; Heineken bucks the trend

Amsterdam shares closed lower, tracking a negative Wall Street with global markets anxiously awaiting tomorrow's US Federal Reserve meeting with hopes for an interest rate cut, while Heineken bucked the trend and outperformed.
   
The AEX closed 5.37 points or 1.02 pct lower at 522.99, after opening at 527.51 and trading in a range of 521.71-527.51.
   
Government bonds were broadly higher and the euro stood at 1.3866 usd versus 1.3876 usd late yesterday.
   
Among major decliners, Randstad closed 3.68 pct lower at 35.36 eur while staffing peer Vedior lost 2.50 pct at 14.86 and midcap staffer USG People declined 1.44 pct at 19.80.
   
Corporate Express shed 3.49 pct at 7.46 after its price target was cut to 12 eur from 14 at Rabo Securities, while Hagemeyer slipped 2.72 pct at 2.86 and Unibail-Rodamco declined 2.99 pct to 168.33.
   
Fortis fell 1.91 pct to 25.17 while analysts noted that the consortium it shares with the Royal Bank of Scotland and Santander in the takeover battle for ABN Amro is now seen as the most likely to succeed.
   
With the Dutch finance minister scheduled to give a declaration on whether or not the government objects to a consortium takeover sometime today, ABN Amro was among the handful of gainers, rising 0.31 pct to 35.11 while among financial peers, Aegon was off by 1.29 at 13.05 and ING declined 0.97 pct at 29.70 amid weakness in the sector and reports it has made a bid for a 24.9 pct stake in Thailand's TMB Bank.
   
The oil sector also declined, with Royal Dutch Shell losing 1.09 pct at 29.12 and SBM Offshore slipping 1.09 pct to 26.25 eur while midcap sector peer Fugro fell 1.36 pct to 52.20.
   
Among other blue-chip decliners, Philips fell 1.02 pct to 30.37 and TomTom slipped 0.30 pct to 52.49 amid rumours the company is preparing to enter the handset market, rumours an ABN Amro analyst met with scepticism.
   
Reed Elsevier lost 1.05 pct at 13.16 eur, off earlier highs that followed an upgrade to 'buy' from 'hold' at Citigroup, while DSM was down 1.13 pct at 35.80 following reports in The Economic Times the company is planning to spend more than 100 mln usd by 2010 on acquisitions and alliances in India.
   
DSM peer Akzo Nobel also closed lower, losing 1.69 pct at 54.70. The company was in the news earlier today as the EU's second highest court rejected its case against the European Commission on the issue of legal privilege for in-house company lawyers.
   
Heineken led the handful of gainers, closing 1.73 pct higher at 45.95. Earlier, the share was given a price target upgrade to 58 eur from 53 at ING.
   
Ahold also outperformed, gaining 0.20 pct at 10.11 while KPN was flat at 12.00 eur.
   
Builder BAM led decliners, falling 3.96 pct to 18.17 eur while making news with a contract for a fire brigade and ambulance centre in The Hague.
   
Construction peer Heijmans was off by 2.99 pct at 31.43 and dredging group Boskalis was down 3.56 pct at 30.09
   
Stork slipped 3.84 pct to 44.85 after Candover Investments withdrew its 47 eur per share offer for the group and Stork said talks with largest shareholder Marel will continue. Analysts said those talks could lead to a new offer from either Candover or Marel itself.
   
Wereldhave was off by 2.33 pct at 81.23, not helped by an upgrade to 'hold' from 'sell' at ABN AMRO, while real estate peer Corio gave up 2.44 pct at 52.75.
   
Chemicals group Univar led midcap gainers, adding 0.23 pct at 53.07 while printer and photo copier manufacturer Oce rose 0.13 pct at 15.10 and map maker Tele Atlas was 0.05 pct higher at 20.51.
   
IT group Getronics was flat at 6.19 eur.
   
Among local issues in the news, Pharming closed 0.38 pct higher at 2.63 eur following reports the pharmaceutical company is in talks to sell its Lactoferrin unit, which analysts said could enable the group to focus more investment on lead product Rhucin.
   
Pharmaceutical distributor OPG Group meanwhile outperformed in afternoon trade and closed 4.31 pct higher at 23.21 after announcing that multi-party talks have resulted in a pricing agreement for outpatient pharmaceuticals between the government, insurers, and the pharmaceutical sector. The agreement will result in a 17 pct dip in operating profits for OPG's Dutch pharmacies unit in 2008 but traders said the market had expected worse.
   
Wegener closed 0.06 pct higher at 17.56 eur. Earlier, ING said in a note that potential buyer Mecom's increased stake of over 50 pct of Wegener makes the success of its takeover offer for the whole company more likely.

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