UK/Euro Financial Market Daily Evening Briefing 23-11-2007

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London shares close at day's high; NY gains: miners up on bid talk

At the close, the FTSE 100 index was up 106.8 at a days high of 6,262.1, recovering from a low of 6153.6, while the FTSE 250 index gained 216.3 to 10,531.2. Volume was light, with 2.114 bln shares changing hands in 658,774 deals.
   
"The UK market has had a positive day. However, it is too early to say we are out of the woods; there is still uncertainty in the US economy and the oilprice remains high," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
   
Over on Wall Street, US stock markets remained higher with investors closely watching "Black Friday" retail sales, with department stores trading higher amid cautious optimism over this year's holiday shopping season. At the close in London, the Dow Jones Industrial Average index was up 119.0 points at 12,918.0.
   
Turning to UK equities, heavyweight miners were propelled higher by talk circulating of a bid for Vedanta Resources, up 136 at 2,036, with vague rumours of interest from China, and also boosted by strong copper and gold prices. Rio Tinto was the top riser, up 390 at 5,315 ahead of its investor seminar on Monday and as talk of a merger with BHP Billiton, up 79 at 1,568 continues.
   
Antofagasta was 45-1/2 higher at 684-1/2 and Anglo American gained 171 at 2,980 also benefiting from an HSBC upgrade to 'overweight' from 'neutral', with the broker saying retracement on growth fears seems overdone.
   
And Mitchells & Butlers was up 43 at 641 ahead of next Thursday's update on the progress of its stalled 4.5 bln stg property joint venture with 18.8 pct stake holder Robert Tchenguiz.  The retailers were also in demand following the trend of their US peers with DSG International gaining 8.1 at 113.2 and Home Retail Group up 15-1/4 at 359.

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In broker-generated news, Aviva gained 34 at 670-1/2 after Citigroup upgraded the life insurer to 'buy' from 'hold' albeit with a reduced price target of 750 pence from 900 pence. Its peer Prudential was 32-1/2 firmer at 660.
   
British Airways was also 14 higher at 345-3/4 after the TPG-BA-led consortium is mulling pulling out of the bid for Iberia Lineas Areas de Espana SA after recent stake-building by Caja Madrid, La Gaceta de los Negocios reported, without citing any sources.
  
Turning to the downside, there were few blue chip fallers, with oil stocks extending falls after recent weakness. Royal Dutch Shell was off 32 at 1,994 and BG Group was 4 lower at 985.  Centrica fell back 7-3/4 at 347-3/4 as bid speculation faded.
   
Turning to the midcaps, Biffa stormed ahead 64-1/2 or 24.76 pct at 325 as Montagu Private Equity said an offer for the group would be at a significant premium to the Spet 4 share price.  Intermediate Capital Group was also among the top gainers, up 190 at 1,650, as it posted a 33 pct increase in first-half pretax profit due to significant change in the credit markets, and declared an interim dividend of 19.5 pence per share, up from 16.5 pence last year.

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Meanwhile, a broker upgrade helped boost shares in IG Group, up 19-1/2 at 411-3/4, with Citigroup upgrading its stance on the company to 'buy' from 'hold', seeing valuation upside in a read-across from CMC Market's deal yesterday.
   
The UK securities dealing and spread-betting firm yesterday sold a 10 pct stake in the company to investment bank Goldman Sachs for an undisclosed sum. Among the casualties, a broker downgrade provided the impetus for Stagecoach, which slipped 10-1/4 pence to 242-1/4. JP Morgan downgraded the company to 'underweight' from 'neutral', while upping its price target to 203 pence from 191, urging investors to take profits.
   
Finally, Chemring was down 32 at 2,110 as the group said it expects profit for the full year to be in line with market expectations as it performed strongly in the second half, increasing revenues and improving margins in both its Countermeasures and Energetics businesses.

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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Paris shares up sharply as Wall St rise reinforces gains led by banks

The CAC-40 index finished up 105.07 points or 1.94 pct at 5,521.17. Among CAC-40 stocks, 37 closed higher and three closed lower. On the Matif, December CAC-40 futures were trading at 5,542.5. On the broader indices, the SBF-80 index closed up 160.60 or 2.64 pct at 6,242.81 and the SBF-120 ended 79.60 or 2.03 pct higher at 3,993.30.
   
Financial stocks led the gainers today as investors took heart from yesterday's encouraging news on Natixis' US unit CIFG and a positive report today on the French banking sector from ratings agency Moody's. The agency said the outlook for French banks remains stable, reflecting their relatively ample capitalisation and diversified business models, as well as the supportive and efficient regulatory environment.
   
Natixis extended yesterday's gains, climbing 0.53 eur or 4.05 pct to 13.62. The corporate bank also announced it will bring forward its third-quarter results statement to Sunday, as opposed to its scheduled date of Nov 29, saying it wants "to give investors the information as soon as possible."
   
Among other banks, Franco-Belgian bank Dexia climbed 0.86 or 5.16 pct to 17.53, BNP Paribas added 3.48 or 5.08 pct to 71.93, Credit Agricole rose 1.05 or 5.00 pct to 22.05, and Societe Generale was up 3.85 or 4.10 at 97.75. Insurers were also in focus following a report that Axa is mulling a bid for France's number one life insurance company, CNP Assurances. Shares in CNP surged 8.01 or 11.00 pct to 80.85, while Axa was up 1.09 or 4.30 pct at 26.42.
   
Cheuvreux raised its stance on CNP to 'country selected' from 'outperform' on the back of the rumour, saying the insurer's "value could be revealed soon."   But Banque Postale, Caisse d'Epargne and Caisse des Depots, who together hold over 70 pct of CNP, subsequently issued separate statements denying any intention of selling their shares in the insurance company.
   
Another major gainer was Iliad, owner of internet service provider Free, which jumped 5.33 or 8.37 pct to 69.00, amid positive sentiment on the group's potential entry into the mobile telecoms market.  Morgan Stanley upgraded the stock to 'overweight' from 'equal-weight', saying the potential risk of the group's mobile telecoms ambitions has been overestimated.
   
In contrast, France Telecom, owner of mobile operator Orange, saw further profit-taking, dropping 0.09 or 0.35 pct to 25.65. The entry of a fourth mobile operator into the market is widely perceived as a competitive threat to the existing players, France Telecom, Bouygues, which owns Bouygues Telecom, and Vivendi, owner of SFR.
   
Elsewhere among the risers, auto stocks joined in the rally after seeing profit-taking in recent sessions along with other cyclicals. Michelin added 2.76 or 3.67 pct to 78.00, Renault rose 3.06 or 3.36 pct to 94.00, while Peugeot climbed 1.42 or 2.79 pct to 52.37.  Alstom continuing yesterday's recovery, rising 6.89 or 4.90 pct to 147.36. The share is in focus at the moment amid speculation that president Nicolas Sarkozy's state visit to China might yield significant contracts for French industrial groups.
   
Areva climbed 34.05 or 4.94 pct to 723.00. Shares in the state-owned nuclear engineering group were also supported by a report in Le Figaro this morning claiming that the 7 bln eur deal Areva is expected to sign with China will be paid in euros rather than dollars. Also among midcaps, Rexel rose 0.60 or 4.84 pct to 13.00 after the electrical supplies companies announced agreement on a cash offer of 4.85 eur per share for all Hagemeyer shares.
   
Elsewhere, caravan and camping equipment maker Trigano surged 2.63 or 8.88 pct to 32.26 after giving stronger-than-expected guidance for 2008. Seismic explorer CGG Veritas added 6.56 or 3.63 pct to 187.07. The company announced this afternoon that it is to sell its 12.7 pct stake in Norwegian peer Eastern Echo Holding to US-based Schlumberger, which is a carrying out a takeover offer for Eastern.
   
Back on the CAC-40, defence and aerospace group EADS trailed the market, adding 0.11 or 0.52 pct to 21.41 after last night's statements from chief executive Tom Enders, who said the decline in the dollar is "life-threatening" for the group and will cause "massive losses" at Airbus.

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German shares close higher tracking Wall St, led by Deutsche Postbank

The DAX was up 46.86 points or 0.62 pct at 7,608.96. The MDAX added 200.32 points or 2.2 pct to 9,286.8, while the TecDAX gained 7.55 points or 0.86 pct to 881.24. DAX futures were up 46.00 points or 0.61 pct to 7,641.00, while bund futures were 0.10 or 0.09 pct lower at 115.21.
   
Leading blue chips higher, Deutsche Postbank added 2.34 eur or 4.14 pct to 58.86 as dealers noted increased speculation about a sale of the bank on renewed statements of interest from rivals. Its shares were added to Merrill Lynch's 'most preferred banking list'.
   
Speaking today at the Euro Fiance Week in Frankfurt, Commerzbank chief executive Klaus-Peter Mueller said his bank "was and is interested" in possibly acquiring Postbank.
   
"I tell you what I have always said: yes, we are interested," Mueller said. The comments add further weight to what analysts reckon might be a hard-fought bidding war if Postbank's parent company, Deutsche Post AG, decides to sell it.
   
Deutsche Post was 0.80 eur or 3.71 pct higher at 22.35. MAN rose 4.00 eur or 3.88 pct to 106.99, correcting from yesterday's losses.
   
Siemens added 1.84 eur or 1.91 pct to 98.23 after WestLB raised its stance on the electronics giant to 'buy' from 'add' and lifted its price target to 116 eur per share from 114, largely on valuation grounds, after the stock's underperformance during the last 10 days.
   
At the other end of the index, Henkel - the session's worst performer -- was 0.55 eur or 1.48 pct weaker at 36.55 on speculation the household goods manufacturer might be mulling a capital increase. RWE lost 1.02 eur or 1.10 pct to 91.96 as takeover speculation petered out.
   
Peer EON lost 1.51 eur or 1.08 pct to 137.69, while Bayer retreated 0.63 eur or 1.10 pct to 56.75. K&S was the worst performer on the MDAX, down 4.87 eur or 4.10 pct at 113.97, after it issued its third profit warning in two months, blaming the impact of the weak US dollar against the euro and subsequent changes to its currency hedging strategy. At the other end, IKB surged 0.95 eur or 10.97 pct to 9.61, making it the top gainer.
   
GEA Group shares added 1.78 eur or 8.51 pct to 22.70 on rumours a Kuwaiti investment group wants to raise its stake in the company to 25 pct from just under 7.8 pct. TecDAX-listed ADVA was up 0.25 eur or 5.54 pct at 4.76 as the index's top gainer.

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Amsterdam shares close broadly higher on positive Wall St trade

The AEX closed up 7.54 points or 1.55 pct at 492.47, after opening at 484.72, touching an early low of 484.72 and a pre-close high of 493.15. Government bonds traded lower while the euro stood at 1.4820 versus 1.4846 usd late yesterday.
   
Staffing issue Randstad led AEX gainers, up 4.79 pct to 30.64 eur, while Vedior added 1.91 pct at 11.74. Midcapper USG People put on 3.87 pct to 16.38.
   
Philips rose 4.71 pct to 28.44 eur on news Dutch MPs have passed a bill doubling the limit on the amount of tax-free share buybacks, sparking positive sentiment towards shares in cash-rich Philips, market sources said.
   
Ordina went up 6.44 pct to 11.24 and LogicaCMG rose 4.35 pct to 1.68, but fellow tech stock ASML fared less well, falling 0.97 pct to 22.55. Oce slid 1.21 pct to 11.39 and ASMI weakened 0.26 pct to 15.51.
   
Among financials, Fortis rose 4.67 pct to 17.05, Aegon advanced 2.68 pct to 11.86 and ING was up 3.45 pct to 25.22. ArcelorMittal added 3.35 pct 48.44 at following reports the company is open to a listing in India but says current government norms are just not feasible at this time.
   
Akzo Nobel rose 3.25 pct to 50.88 after the European Commission extended its inquiry deadline for the company's acquisition of Imperial Chemical Industries PLC to Dec 14 from Nov 30. Hagemeyer was up 1.96 pct to 4.68 eur as it agreed to recommend a cash offer of 4.85 eur per share from French peer Rexel.
   
On the midcap, BAM rose 5.21 pct to 14.55 eur and Boskalis Westminster put on 6.84 pct to 37.0 eur, with Petercam attributing the gains to relief in the market following strong losses in the past few weeks.
   
Local issue Fornix Biosciences soared 9.87 pct to 18.25 eur after SNS upped the stock to 'buy' from 'accumulate' in anticipation of clinical study results regarding its Oralgen Grasses product.
   
VastNed Retail climbed 0.87 pct to 66.25 after the company said it will not agree to a request from potential bidder IEF Capital for additional information about the Dutch property group's operations. VastNed Retail said information for all companies interested in VastNed Retail would be ready by Dec 14 but IEF
Capital wants the information by Nov 26.
   
Draka rose 7.22 pct to 22.14 ahead of its trading update, due on Monday. Analysts expect the company to reiterate its second-half guidance.
   
Royal Dutch Shell remained the strongest decliner on the AEX, falling 1.64 pct to 27.65, as oil prices continued to fall from recent highs. Midcapper Fugro slid 1.12 pct to 51.89.
   
Other decliners include Unilever, off 0.58 pct to 23.89; Heineken, down 0.74 pct to 42.98; and TomTom, weakening 0.73 pct to 59.43. On the midcap, Tele Atlas slipped 0.24 pct to 29.02. Local stock Antonov plunged 16.46 pct to 0.66 eur after it said its co-operation deal with Geely would not go any further.

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