UK/Euro Financial Market Daily Evening Briefing 22-10-2007

Fully furnished one-bed garden townhouses from £140,000.  Click Here.

London shares close weaker but well off lows as Wall Street trims losses

Leading shares closed weaker for the fifth day out of the last six, with the heavyweight mining sector badly hurt, but a relatively mild fall on Wall Street helped ensure that the FTSE 100 finished well off session lows.
   
At the close, the FTSE 100 index was 68.6 points lower at 6,459.3, off the session low of 6,413.4. The index was in negative territory the whole day. The FTSE 250 index ended the day off 121.4 points at 11,177.9. Volume was weak, with 2.23 bln shares having changed hands in 640,418 deals.
  
In the US, the Dow Jones Industrial Average, which lost 4 pct last week, was down as much as 114 points a few minutes after trading started. As the London markets closed, however, it was about 60 points lower at 13,462.
   
Wall Street turned mixed in volatile trading as investors pulled away from stocks amid worries about the credit and housing markets and disappointing corporate earnings.
   
The market remained uneasy although several companies reported decent third-quarter results. Investors were still mindful of the downbeat profit outlooks from some blue chip companies and Standard & Poor's downgrade of another series of mortgage-backed securities.
   
David Buik, trader at Cantor Index, said: "We've had the follow-through from the US slide on Friday, and Asia today. The banks and mining shares were hurt, which is what you would expect. But this week will be different, with only Merrill Lynch (reporting third-quarter results on Wednesday) to upset the apple
cart."
   
Buik described the slide as a "correction" to some extent and said he expects only a mild pick-up in the FTSE 100 later this week.
   
Merck & Co. helped sentiment by posting a 62 pct increase in its third-quarter profit, as revenues increased by double digits, while lower administration and overhead costs offset more spending on research and development.
   
The maker of osteoporosis treatment Fosamax and Singulair for asthma and allergies reported net income of 1.53 bln usd for the three months to September, up from 940.6 mln  a year earlier. The results were slightly ahead of expectations.
   
Back in London, UK mining shares dragged the FTSE 100 index lower against a background of falling commodity prices and negative broker comment from Citigroup, which cut five miners to 'hold' from 'buy' on valuation grounds following the shares' strong rally since August.
   
The five downgraded shares all closed lower: Anglo-American, 154 pence lower at 3,046; BHP Billiton, down 71 pence at 1,764, Kazakhmys, 79 pence at 1,455, Rio Tinto, down 156 pence at 4,050, and Vedanta Resources, 109 pence down at lighter at 2,054.
   
Banks were also under the cosh, after Credit Suisse told clients to avoid the sector, citing the deterioration of the UK housing market.

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

Lloyds TSB, which the broker cut to 'neutral' from 'outperform', fell 6-1/2 pence to close at 530. This might have been worse if WestLB had not upped the stock to 'neutral' from 'reduce'.
   
Alliance & Leicester, which Credit Suisse rated 'underperform', was 7-1/2 pence off at 727-1/2, and HBOS, which it kept as 'neutral' while cutting its target to 1,025 pence from 1,080, dropped 9-1/2 pence to 825-1/2.
  
But British Energy, down 47, or 8.1 pct, at 532, was the biggest FTSE 100 faller. The company said the start-up of its Hartlepool 1 Reactor has been delayed due to complications during a planned inspection of its boiler units.
   
As a precaution, the company has also closed sister units at Hartlepool and Heysham, with four units down in total.
   
Also on the back foot was J Sainsbury, off 4-1/2 pence at 577-1/2, as doubts grow about the ability of Delta Two to fund its 10.6 bln stg planned takeover of the supermarkets group. Most investors had expected an announcement last week giving final details, but the delay has helped fuel rumours that Delta Two may have to pull out.
   
Tullow Oil fell 36 pence to close at 585-1/2 pence, suffering as oil prices continued their retreat from last week's record highs and from UBS cutting its rating on the company to 'sell' from 'neutral', mostly on valuation grounds.
   
The same broker cut BG Group to 'neutral' from buy', again on valuation grounds. BG shares ended the day 16-1/2 pence lower at 863. BP, which unveils third-quarter results tomorrow, finished 6 pence lower at 605.
   
Only 19 FTSE 100 companies ended the day in positive territory. Index heavyweight Vodafone closed in top spot, up 4.7 pence at 179.7, as its share buyback programme continues.
   
Traders said Vodafone's rise was partly a flight to quality, on the grounds sizeable telecoms won't be hurt too much in the turmoil. Some also pointed to an increasingly positive perception of its joint venture in India. There is also the feeling that chief executive Arun Sarin may sell the 46 pct stake in Verizon before he bows out, something he has been pressurised by institutional investors to do.  
   
Financial Times owner Pearson was 11 pence ahead at 776, after lifting full-year guidance for its education segment as underlying sales across the group in the first nine months rose 6 pct and underlying profit lifted 20 pct.
   
Numis Securities also sees upside to its low end of the range full-year numbers and highlighted that Pearson has defensive qualities which may  prove attractive in an uncertain environment. Numis retained its 'add'.
   
Cunard owner Carnival rose 36 pence to close at higher at 2,304, buoyed by results from rival Royal Caribbean Cruises that beat expectations.   

Spread bet on the UK top 350 with 3% deposit.  Subject to stock restrictions and client status. Click here - http://www.spreadex.com/

Home Retail Group, owner of Argos, closed up 6-3/4 pence at 380 pence, ahead of first-half results on Wednesday. Dresdner Kleinwort said it expected a very solid set of interims from the company. With the shares having been sold aggressively in recent sessions, the broker said it expects the "reassuring update" to result in a (moderate) relief rally.
   
Turning to the second line, AGA Foodservices fell 15-1/4 pence to end the day at 411-1/2 pence after suffering downgrades following its decision to sell its foodservice business to private Italian company Ali for 260 mln stg in cash.
   
Citigroup downgraded its stance in the group to 'hold' from 'buy', while traders reported Merrill Lynch had also cut AGA to 'neutral' from 'buy'.
   
Shares in Paragon Group slumped 24-1/2, or 9.8 pct, to 225-1/2, making it the biggest midcap loser, after a Financial News article today suggested the company is facing a funding crunch, prompting Daniel Stewart to consider lowering its earnings per share forecast for 2008, but by no more than 10 pct.
   
London Stock Exchange closed 89 pence lower at 1,614 after WestLB cut its stance on the company to 'reduce' from 'hold' and lowered the target  for the British bourse operator to 1,520 pence from 1,700 pence as part of a  sector review.
   
Bradford & Bingley fell 4-1/4 pence to a 12-month low of 254 after Credit Suisse cut its target to 270 pence from 390.  
   
Food and beverage equipment maker Enodis was the runaway leader, up 22-1/4, or 11.8 pct, to close at 211. Investec raised its target to 258 pence from 21 and reiterated its 'buy' stance.

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 tradng on the FTSE 250 and the AIM, click here

Do you fancy trading commodities using the benefits of leverage, but without expiration dates and with a minimised risk?  If the answer is yes, then speak to CA Trading.

CA Trading can offer an execution service, or you could speak to one of their account executives. To find out more, call 02071903320 or click here

Paris shares close sharply down, but off lows; US jitters weigh on market
 
The CAC-40 index finished down 79.21 points, or 1.38 pct, at 5,661.27. Among CAC-40 stocks, five closed higher and 35 closed lower. On the Matif, November CAC-40 futures were trading at 5,660.5. On the broader indices, the SBF-80 index closed down 106.10 or 1.54 pct at 6,779.28 while the SBF-120 ended 58.73 or 1.40 pct lower at 4,127.27.
       
"With sharp closing losses in the US and in Asia this morning, coupled with US earnings reports last week that weren't too great, investors are starting to feel scared," a local trader commented.
   
In his view, Paris is seeing a typical bear market scenario today, spurred by concerns that the decline in the US economy could be worse than expected, leading to profit-taking and a sell-off of cyclicals, with an outperformance in defensive stocks.
   
Construction stocks were among cyclicals seeing profit-taking, with Lafarge dropping 3.01 eur or 2.64 pct at 111.14, Vinci shedding 1.33 or 2.52 pct to 51.54, and Bouygues slipping 1.53 or 2.43 pct to 61.41.
   
ArcelorMittal was the biggest bluechip faller at the close, off 2.06 or 3.74 pct at 52.99, giving up gains from Friday that had been fuelled by talk of sector consolidation.
   
Elsewhere in the CAC-40, auto and banking stocks were mostly trailing the market, with Renault giving up 1.90 or 1.79 pct to 104.15 and Societe Generale falling 2.83 or 2.43 pct to 113.85.
   
Banks were also affected by intensifying concerns over third quarter results after the CEO of German peer Commerzbank warned that its 80 mln eur write-down due to US sub-prime exposure is not enough.
   
In contrast, food and drink producers as investors opted to bolster defensive positions. French food producers were also boosted by news that the government's draft reform of retail regulations stops short of giving stores the right to negotiate prices.
   
Groupe Danone led the rare bluechip risers, adding 0.88 or 1.53 pct to 58.37 on top of substantial gains last week that followed its upbeat third-quarter statement.
   
Drinks maker Pernod Ricard was also in positive territory, up 0.57 or 0.38 pct at 152.13, while outside the CAC-40 food producers Bongrain, down 0.01 or 0.01 pct at 80.00, and Bonduelle, off 0.58 or 0.65 pct at 88.22, also outperformed the market.
   
EADS was another rarer climber, inching up 0.03 or 0.13 pct to 23.89. At the aeronautics group's EGM in Amsterdam, shareholders approved the new, single management structure.
   
Elsewhere, a number of stocks were supported by M&A talk, notably Business Objects, which ended up 0.14 or 0.34 pct at 41.34 after resuming trade at 11 am. The shares were suspended at the open following the submission of SAP AG's 42.00 eur per share takeover offer, and subsequently resumed after Business Objects issued a press release saying its board unanimously accepted the bid.
   
GFI Informatique also shrugged off the market pessimism, rising 0.08 or 1.05 pct to 7.73, on hopes of an impending merger with fellow IT services company Bull SA.

Protect yourself from market turmoil with the opportunity to benefit from either a rise or a fall in the FTSE 100 over the next 6 years with Capital Security (all profit subject to CGT)
 
Click here to find out more

German shares close lower on last week's losses in US markets

The DAX closed down 89.19 points or 1.13 pct at 7,794.94 after trading within a range of 7,763.64 and 7,819.28 during the day.  The MDAX lost 154.68 points or 1.48 pct at 10,296.47 while the TecDAX fell 24.95 points or 2.52 pct at 964.83.
   
DAX futures dropped 14.50 points or 0.18 pct to 7,845.50 while bund futures rose 0.05 or 0.04 pct to 113.71. The euro was trading at 1.4141 usd compared to 1.4145 usd in afternoon London trade.
   
Leading German large caps lower, Hypo Real Estate declined 1.65 eur, or 3.88 pct, to 40.93, as banks were generally down in today's market.
   
Bayer dropped 2.07 eur, or 3.44 pct, to 58.16, after the US Food and Drug Administration last week decided to put more prominent warnings of potential hearing loss on impotence drugs Viagra, Cialis and Levitra, which is made by the company.
   
Commerzbank lost 0.88 eur, or 2.92 pct, to 29.26, after the Financial Times Deutschland quoted chief executive Klaus-Peter Mueller as saying the bank's 80 mln eur in writedowns stemming from its US sub-prime mortgage exposure will not be enough.
   
Daimler fell 2.11 eur, or 2.86 pct, to 71.79 after Automobilwoche reported the luxury-car maker plans to hand out record discounts to promote its vehicles in the fourth quarter, citing internal documents of the company's marketing department. Infineon slid 0.24 eur, or 2.26 pct, to 10.38.
   
On the upside of the DAX, Volkswagen gained 2.92 eur, or 1.65 pct, to 180.42 as the company is expected to unveil a rise in third-quarter operating profit of at least 20 pct next Friday, on the back of strong car sales, particularly in developing countries, analysts said.
   
Lufthansa rose 0.11 eur, or 0.54 pct, to 20.32, while Continental was up 0.31 eur, or 0.32 pct, at 97.29.
   
Deutsche Telekom increased 0.02 eur, or 0.15 pct, as the company said that around 35,000 employees would be affected by plans to sell some of its businesses, a company spokesman said, confirming a Der Spiegel magazine report. MAN climbed 0.13 eur, or 0.11 pct, to 123.14.
   
Over on the MDAX, KUKA AG was the worst performer, losing 1.52 eur, or 5.37 pct, at 26.76, while GEA Group was down 1.41 eur, or 5.14 pct, at 26.00.
   
At the other end of the index, Techem rose 8.36 pct, or 16.99 pct after the company said Macquarie European Infrastructure is making a takeover offer for its shares at 58.00 eur per share cash. Wincor Nixdorf was the second-best performer, adding 0.50 eur, or 0.80 pct, to 63.00.
   
TecDAX-listed Q-Cells fell 4.47 eur, or 5.52 pct, to 76.53, while at the other end ADVA increased 0.19 eur, or 3.15 pct, to 6.22.

..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.

Amsterdam shares close lower tracking Wall St; Hagemeyer falls

The AEX closed 9.62 points or 1.75 pct lower at 541.43, after trading in a range of 538.51-543.40. Government bonds traded higher while euro stood at 1.4138 usd, versus 1.4250 usd late yesterday.
   
Hagemeyer led decliners, dropping 4.07 pct to 4.72 eur ahead of third quarter earnings tomorrow which are expected to show a modest rise in sales, but all eyes an ears are on possible news regarding a takeover of the company.
   
ArcelorMittal dropped 3.78 oct to 52.97 eur after news that minority shareholders of Arcelor were to lodge a request at a Luxembourg court to delay an EGM which is to vote on the merger of Arcelor and Mittal.
   
Fortis was down 3.37 pct at 21.78 eur after its chairman said to a newspaper that the Belgo-Dutch bancassurer might perform 1 or 2 smaller acquisitions after its buy of ABN Amro.
   
TNT shed 3.07 pct to 28.12 eur after ABN Amro cut its price target to 34 eur from 36.20 eur.
   
Vedior dropped 3.04 pct to 16.24 eur after Rabo lowered its price target to 21 eur from 24.50 eur. Randstad shed 0.73 pct 40.61.
   
DSM  shed 2.41 pct to 38.11 eur after Lehman Brothers cut the stock to 'underweight' from 'overweight'.
   
Heineken ended flat at 46.49 eur amid reports that Carlsberg is to issue 30 bln dkr in shares.
   
On the other end of the spectrum, ASML rose 0.87 pct to 24.56 eur while TomTom added 1.31 pct to 54.76 eur.
   
Among midcap shares, USG People shed 4.06 pct to 20.82 eur after Rabobank cut its price target on the stock to 28 eur from 38. Binckbank dropped 1.15 pct to 13.70 eur amid reports that the online bank is in exclusive talks to buy Rabobank's Alex bank. Vopak shed 0.37 pct to 40 eur, SNS Reaal edged 0.24 pct lower to 16.40 and Fugro dropped 0.10 pct to 57.10 eur.

Closing Forex Rates

ADVFN Services