UK/Euro Financial Market Daily Evening Briefing 21-12-2007

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This is the last Evening Euro Markets Bulletin to be sent by ADVFN until Wednesday 2nd January, when they will resume as normal.

ADVFN would like to wish everyone a Merry Christmas and a Happy New Year.

London

London shares end higher on final full session before Xmas; NY jumps

At the close, the FTSE 100 was 88.5 points higher at 6,434.1, albeit below the late afternoon peak of 6,451.8. All the broader FTSE indices closed higher with the FTSE 250 index up 134.4 points at 10,531.8 aided by bid news for Emap. Volume was solid, with 3.149 bln shares changing hands in 624,959 deals.

James Hughes, Market Analyst at CMC Markets pointed out that "recent support hardly constitutes a Santa rally, but these late gains will be welcome, although just how sustainable they will prove to be in next week's thin trade remains to be seen."

The festive cheer was reflected in early deals on Wall Street, with the DJIA taking on 160.50 points at 13,406.10, the S&P 500 index up 17.00 points at 1,477.10, and the Nasdaq composite index ahead 33.13 points to 2,673.99.

US stocks jumped as tech issues moved higher once again, with the sector lifted by better-than-expected results from Blackberry-maker Research in Motion, while Merrill Lynch also provided a focus amid talk the firm might have lined up a big cash infusion from a Singapore fund.

And investors shrugged aside news that the Fed's preferred inflation measure -- the year-on-year core personal consumption expenditures deflator -- rose to 2.2 pct in November above the Fed's comfort level of 1 pct to 2 pct.

Meanwhile the final reading for the Michigan consumer sentiment index rose to 75.5 in late December from a reading of 74.5 in early December. Economists polled by Thomson's IFR Markets had expected a late December reading of 74.5.

In London, stronger gold and copper prices helped boost the mining sector and underpin blue chip gains - Antofagasta added 31 pence at 714-1/2, while Kazakhmys was 51 pence stronger at 1,347, and Anglo American was up 129 pence at 3,013.

Meanwhile Rio Tinto shares added 148 pence at 5,278, with BHP Billiton ahead 47 pence at 1,540 as the Takeover Panel announced that BHP must make their proposed bid for Rio by February 6.

Oil majors were also in demand supported by a steady oil price and hikes in target prices by Citigroup today in a review of the sector - Royal Dutch Shell took on 21 pence at 2,072, BG Group was up 8 pence at 1,103, and BP gained 4-1/2 pence at 616.

Away from commodities, SABMiller was the top FTSE 100 gainer, up 90 pence at 1,406 aided by seasonal support and news that it has now signed a definitive transaction agreement with Molson Coors Brewing Company to combine their US and Puerto Rico operations to create MillerCoors.

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The two parties announced plans in October to merge the Miller and Coors subsidiaries in the US, with a view to agreeing a definitive deal before the end of the year and completing the transaction in mid-2008.

Rolls-Royce gained 23 pence higher at 533 helped by yesterday's news it will pay 500 mln stg to cut its pension deficits and has also won an offshore marine contract.

On the downside, all of the seven stocks which from tonight exit the FTSE 100 index as part of the the biggest reshuffle since September 11 2001 featured among the smattering of blue chip fallers today.

Northern Rock was the worst performer, down 6.5 pence to 85.5 ahead of its blue chip demotion and as the stricken mortgage lender urged shareholders to vote against a new set of EGM resolutions tabled by SRM Global Master Fund and RAB Special Situations arguing the new resolutions would hinder the company at a crucial time if passed.

Meanwhile Mitchells & Butlers shed 15 pence at 427-1/4, Punch Taverns lost 8 pence at 767-1.2, Daily Mail & General slipped 9-1/2 pence lower to 485-1/2, Barratt Developments dropped 9-3/4 pence at 431-1/4, DSG International lost 2.3 pence at 100.5, and Tate & Lyle fell back 2-1/2 pence to 433-1/2 ahead of their serial demotion to the FTSE 250 index tonight.

On the second line, Emap was the stand-out gainer, leaping nearly 22 pct in value with as 165-1/2 pence gain to 925 after the group said it has recommended a cash takeover from Eden Bidco, a vehicle formed by private equity firm Apax Partners.

Earlier this month Emap agreed to sell its consumer media and radio operations to Germany's Heinrich Bauer for 1.14 bln stg and announced plans to return 1 bln stg to shareholders via a special dividend of 461 pence.

Apax said together with this dividend and its 470 pence a share offer, Emap shareholders would now receive 931 pence per share in cash, thus giving Emap a total value of some 2 bln stg.

Elsewhere, shares in Inmarsat took on 34 pence at 518-1/2 on news it has agreed for a spectrum coordination and cooperative agreement with SkyTerra Communications, Mobile Satellite Ventures and Mobile Satellite Ventures (Canada). Inmarsat said that the deal will enable it to expand its mobile satellite services in North America.

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Meanwhile Sports Direct extended yesterday's post-interims advance, up 5-3/4 pence to 120 as investors focused on a fairly upbeat outlook statement from the retailer.

The stock was also lifted by news the company has raised 56.12 mln stg by selling the balance of its holding of 29.07 mln shares in Umbro to Nike at 193.06 pence each, just below the US firm's 195 pence bid price for Umbro.

And Northern Foods shares added 5 pence at 95 pence after Merrill Lynch upgraded it to 'buy' from 'neutral', with a 100 pence price target. However on the downside, Carpetright was a late faller, dropping 188 pence to 980, a 17.6 pct drop in value after founder Lord Harris of Peckham announced that talks regarding an offer for the retailer had ended.

Lord Harris said his consortium had failed to obtain funding for the Carpetright bid due to the credit market turmoil.

UK Diary of Event:
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UK Small Cap Report:
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Milan shares close higher, Alitalia falls ahead of partner choice

The Mibtel index rose 0.82 pct to 29,095 points and the S&P/Mib was up 0.83 pct at 38,182. Volume traded was an estimated 4.316 bln eur.
   
Alitalia fell 2.14 pct to 0.76 eur as the board meeting called to choose a partner continues, with a statement expected later. The two main rivals are Air France-KLM and AP Holding. The operator that Alitalia chooses will then enter exclusive talks with the government with a final decision expected before Jan 15. Yesterday, transport minister Alessandro Bianchi said both bidders could be admitted to the final phase of the sale process.
   
Terna fell 1.17 pct to 2.74 eur and Bulgari fell 1.15 pct to 9.49 after yesterday's positive performances.
   
The biggest gainer of the day was Saipem, up 3.78 pct at 27.18 eur. The stock extended yesterday's gains boosted by news it has won drilling contracts worth 1.25 bln usd.
   
Construction stocks performed well in step with the European sector with Impregilo up 3.06 pct at 4.49 eur and Buzzi up 1.44 pct at 18.51.
   
BPM rose 2.83 pct to 9.31 eur rebounding from recent losses. Yesterday the chairman of Credit Mutuel said alliance talks with BPM are ongoing while another possible partner is Banca Popolare dell'Emilia Romagna.
   
Fiat was up 2.50 pct at 17.37 eur boosted by a firm European sector performance.
   
Finmeccanica rose 1.94 pct to 22.06 eur after it said its SELEX Sistemi Integrati unit has signed a contract worth 52 mln eur with an Indian company.
   
Eni retraced some of its earlier gains to close up 0.12 pct at 24.69 eur after it said the consortium it leads developing the Kashagan oil field has signed a new memorandum of understanding defining the terms of a settlement for its dispute with the Kazakh government over cost overruns and delays at Kashagan.
   
It also said the consortium and the Kazakh government are going to continue discussions with the aim of finalising the agreement early 2008. Reports said Kazakhstan could ask for a greater stake in the consortium plus cash compensation.
   
Lottomatica rose 0.68 pct to 25.00 eur as market watchdog Consob said De Agostini has raised its controlling stake to 55.3 pct from 52.5 pct. Earlier Lottomatica said it has obtained approval from the Nevada Gaming Commission to buy a stake in Atronic International and Atronic Americas.

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German shares close higher on Wall Street gains, repositioning

The DAX closed 133.48 points or 1.70 pct higher at 8,022.67 points after trading between 7,913.38 and 8,015.42 today. The MDAX gained 117.88 points or 1.22 pct to 9,741.14 points, while the TecDAX was 17.41 points or 1.82 pct higher at 972.04 points.

DAX futures advanced 105.50 points, or 1.34 pct, to 8,000.00, while bund futures declined 0.42, or 0.37 pct, to 113.06. The euro was trading at 1.4356 usd, against 1.4366 usd in midday trade.

On triple witching day, the third Friday in March, June, September and December, stock and indices can show strong ebbs and flows due to massive trades as investors, hedge strategists and arbitrageurs attempt to close their positions.

In addition, some stocks saw support through revised weightings for the DAX, which Deutsche Boerse will make official after the close of trade this evening. The re-weightings will take effect on Dec 27.

According to traders, shares in Hypo Real Estate and Continental should see the biggest gains through the new weightings, while the standard cap of 10 pct for index constituents will likely hurt EON and Siemens the most.

On the Frankfurt trading floor, shares in BMW were 2.11 eur or 5.22 pct higher at 42.52 eur, as the index's top gainer, after the automaker said it plans to cut "several thousand" jobs in 2008, primarily in production.

Deutsche Postbank climbed 2.40 eur or 4.10 pct to 60.92 eur, benefiting from increased demand for German financial stocks. Traders attributed heightened demand to a media report that said Merrill Lynch may soon receive up to 5 bln usd to help it brace for possible heavy subprime-related writedowns in the fourth quarter.

"The news is raising confidence in the sector," said a Frankfurt-based trader. "Whenever a new party emerges on the scene and offers additional funds to stem prolonged difficulties associated with the subprime mortgage crisis, it helps to reassure investors."

Peer Hypo Real Estate added 0.08 eur or 0.22 pct to 36.53 eur, Deutsche Bank was 0.72 eur or 0.83 pct higher at 87.87 eur, while Commerzbank saw a 0.07 eur or 0.27 pct gain to 25.99 eur.

Allianz was up 4.43 eur or 3.12 pct at 146.43 eur after the insurance giant said it sold a number of German commercial properties for some 1.7 bln eur, which analysts said should moderately raise 2008 earnings per share levels.

Continental shares added 1.80 eur or 2.07 pct to 88.73 eur as the stock should, along with Hypo Real Estate, see the greatest benefit from new index weightings, according to traders.

Siemens gained 3.87 eur or 3.69 pct to 108.75 eur as dealers pointed to several positive factors boosting the stock including a number of investors repositioning ahead of today's expiration of options and futures contracts and as an older positive broker note from UBS continued to offer support.

On the other end of the index, TUI lost 0.24 eur or 1.28 pct to 18.45 eur as the sharpest of four decliners.
Merck KGaA shares were down 0.68 eur or 0.76 pct at 89.04 eur and Deutsche Telekom declined 0.01 eur or 0.07 pct to 15.01 eur. MAN slid 0.24 eur or 0.22 pct to 109.99 eur. Over on the MDAX, K&S rose 11.87 eur or 7.91 pct to 161.87 eur as the index's best performer.

Shares in MLP lifted 0.38 eur or 3.68 pct to 10.72 eur, fuelled by vague takeover speculation after a report in Financial Times Deutschland said that Deutsche Postbank was earlier this year considering buying MLP's financial services peer AWD Holdings AG.

"Because Postbank didn't get AWD, which it was apparently after, one could say that it is still looking for other takeover targets in the sector," a trader said.

MTU Aero Engines advanced 1.13 eur or 2.96 pct to 39.32 eur after UBS upgraded its stance to 'buy' from 'neutral' saying the shares trade at an unjustified discount to its aerospace and defence peers. At the other end of the MDAX, Premiere lost 0.56 eur or 4.29 pct to 12.48 eur.

TecDAX-listed Kontron was the best performer among tech stocks, charging 1.26 eur or 9.94 pct higher to 13.94 eur. Conergy, meanwhile, added 1.80 eur or 8.02 pct to 24.24 eur after Goldman Sachs added the stock to its "Pan-Europe Buy List". ADVA, meanwhile, lost 0.39 eur or 8.65 pct to 4.12 eur as the index's worst performer.

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Amsterdam shares close near highs buoyed by optimistic Wall Street

The AEX closed up 6.92 points or 1.37 pct at 513.71, after opening at 512.03 and reaching a late afternoon high of 514.80. Government bonds traded mainly lower, while the euro stood at 1.4358 usd versus 1.4328 usd late yesterday.

"The market is doing well, receiving good signals from the US and a good old Christmas feeling ahead of the new year. The AEX rise is also in rebound from the past weeks which were so negative due to the credit crisis. Investors are now seeing a light at the end of the tunnel and hoping that the crisis will end in a soft landing," a local trader said.

Staffing company Randstad led gainers, rising 6.78 pct to 26.76 eur and Vedior lifted 3.34 pct to 17.31, on bargain hunting following recent sharp losses, the trader said.

Among food and drink related issues, Unilever went 4.26 pct higher to 25.20, Heineken added 0.54 pct at 44.45 and Ahold was up 0.84 pct to 9.58. Unibail-Rodamco was up 3.54 pct to 149.50 eur after the company announced the acquisition of part of a large shopping mall in Vienna.

ArcelorMittal added 3.43 pct to 51.20 eur on news the Argentinian market regulator cleared the company's buyout of Acindar minorities.

Financials were in the fore following news that Merrill Lynch could receive a capital injection worth up to 5 bln usd from Singapore's state-owned investment company Temasek Holdings. Fortis put on 1.69 pct to 18.01, Aegon strengthened 1.44 pct to 11.94 and ING added 1.19 pct at 26.45.

KPN went 1.46 pct higher to 12.50 eur, still buoyed by news late yesterday the telecom sold its Getronics Spain and Portugal units. Akzo Nobel closed up 1.18 pct to 53.25 after the company said it has finalised its restructuring plans ahead of the ICI acquisition completion on January 2.

SBM Offshore advanced 0.86 pct to 21.05 and Royal Dutch Shell lifted 0.80 pct to 28.90 as oil prices edged further above 91 usd, with international traders saying the strength in global stock markets has helped ease demand worries and allowed traders to reassess concerns over falling stockpiles and tight OPEC output.

Hagemeyer edged up 0.21 pct to 4.67 eur after Rexel said it will formally launch its takeover bid for the Dutch company on Christmas eve. SNS Securities said the offer memorandum, available today, indicates the deal will close on March 4 "at the earliest."

On the middcap, BAM led gainers, up 3.77 pct to 15.69, followed by Oce, rising 3.24 pct to 12.44 eur after the company sold its German Documents unit. ASMI lifted 2.30 pct to 15.60. LogicaCMG added 0.65 pct to 1.56 eur following an upgrade to 'neutral' from 'sell' at Goldman Sachs.

Boskalis advanced 1.23 pct to 41.0 eur after the Australian city of Melbourne awarded the dredging group a 300 mln eur contract. Local stock Spyker closed up 2.79 pct to 4.05 eur after the company secured new financing from Lithuanian bank Snoras.

Crucell strengthened 0.89 pct to 11.35 eur after the company announced that tuberculosis vaccine clinical trials starting in the US. Among the few AEX decliners, Philips ended the day down 1.95 pct to 30.11 as investors digested the 3.6 bln eur takeover price tag for Respironics. DSM lost 0.99 pct to 32.09.

Local issue Pharming fell 3.19 pct to 0.91 after the company said it has submitted a request to the European Medicines Agency (EMEA) to reexamine its application to market lead product Rhucin, which was rejected earlier this month.

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