UK/Euro Financial Market Daily Evening Briefing 26-02-2008

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London shares close higher, aided by NY turnaround; banks support gains

At the close, the FTSE 100 index ended up 87.9 points at 6,087.4, off a high of 6,092 and up from a low of 5,991.6, with the FTSE 250 index 108.6 higher at 10,383.9.

Volume was light, with 2.23 shares changing hands in 735,830 deals.

In the US, Wall Street was higher despite worse-than-expected inflation data, as news of a buyback at IBM encouraged investors.

By the London close, the Dow Jones industrial average was up 64.4 points at 12,634.6, while the Standard & Poor's 500 index added 4.35 at 1,376.15, and the Nasdaq composite index rose 9.81 at 2,337.29.

Back in the UK, the banking sector was again the big story, with Standard Chartered remaining near the top of the leaderboard all day after a results statement that came in above expectations, while sector peers followed suit ahead of more results later in the week.

In reaction, Collins Stewart repeated its 'buy' stance and 1,918 pence price target.

Standard Chartered ended 124 pence higher at 1,704, while Alliance & Leicester was the top riser, 45 ahead at 600, and with Royal Bank of Scotland up 16-1/2 at 413-1/2 ahead of full-year results on Thursday, and HBOS, due to publish final numbers tomorrow, taking on 27 to 705.

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On the downside, a broker downgrade helped send Centrica down 5-1/2 to 323, with Lehman Brothers cutting the group to 'equal-weight' from 'overweight' and lowering its target to 390 pence from 400. Similarly, Marks & Spencer fell 2-1/4 to 407-1/4 after Seymour Pierce cut its rating to 'sell' from 'hold' this morning on concerns over the retailer's outlook.

Losses were seen elsewhere in the retailer sector over ongoing high street uncertainty following recent disappointing sales at John Lewis, with Next down 14 at 1,339 and Kingfisher 0.3 lower at 134.3. Investors in Kingfisher will have been disappointed by Home Depot's poor results today, since it has long been touted as a takeover candidate for US firm.

On the second tier, Mapeley soared 20.44 pct, or 297 pence at 1,750 after the company said it has received an indicative non-binding takeover proposal from an unspecified suitor, with traders suggesting the possibility of a management buy-out for the firm.

Elsewhere, Stagecoach Group climbed 17-3/4 to 260-3/4, as Deutsche Bank reiterated its 'buy' stance and raised its price target to 301 pence from 288 pence following its trading update yesterday.

Well-received results pushed St. James's Place up 12-1/2 to 287-1/2 after the wealth management group reported a 39 pct increase in full-year operating profit and hiked its dividend payout by 18 pct.

Also making good gains were shares in Genus, 37 ahead at 715, following its interim results this morning, with Panmure Gordon upgrading its recommendation on the animal genetics company to 'buy' from 'hold', and Landsbanki reiterating its 'buy' rating.

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On the 250 downside, Game Group was the top midcap faller, off 32 at 192, after the company said chief executive Lisa Morgan sold 1.38 mln shares, while deputy CEO and finance director David Thomas sold 1.04 mln shares, at an average price of 224.63 pence each.

In reaction, Shore Capital advised investors to follow the directors' lead and 'sell'. A broker downgrade hurt shares in Premier Foods, off 4-1/2 at 92-1/2, with Panmure Gordon cutting its rating to 'hold' from 'buy', and slashing its target to 100 from 275, ahead of results on March 4.

Bodycote's numbers failed to impress, as it fell 8-1/4 at 188, prompting Numis to cut its rating to 'hold' from 'add,' as it thinks the stock remains cyclically exposed.

Finally, investors took some profits in Hays, with shares down 6-1/2 to 109-1/2, after some recent gains ahead of strong interims this morning. The UK's largest recruiter posted a 22 pct increase in first-half pretax profit boosted by growth from all business areas and said it has made a good start to the second half of the year.

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Paris shares close up on financials, auto rebound

The CAC-40 index ended up 53.81 points, or 1.09 pct, at 4,973.07.
32 CAC-40 stocks closed up and eight were lower.
The SBF 120 was up 40.26, or 1.13 pct, at 3,606.55.

On the Matif, March CAC-40 futures were trading at 4,982.50 and the euro was quoted at 1.4881 usd compared to 1.4829 usd late yesterday. Among financials, Credit Agricole rose 0.67 or 3.67 pct to 18.92, while insurance giant Axa added 0.85 or 3.69 pct at 23.88. Societe Generale climbed 3000 or 4.63 pct at 64.71 and Dexia added 0.36 or 2.20 pct at 16.71.

BNP Paribas gained 0.73 or 1.14 pct at 64.97. In the automobile sector, Peugeot was up 1.72 or 3.31 pct at 53.64, closely followed by Renault, up 1.18 or 1.66 pct at 72.28. Tyre group Michelin climbed 6.46 or 5.49 pct at 66.50, and auto parts maker Valeo jumped 0.68 or 2.69 pct at 26.00.

Elsewhere among industrials, EADS gained 0.72 or 3.86 pct at 19.35, helped by the rotation into industrial stocks and hopes of a possible contract win in the US.

In the defensive utility sector, Veolia Environnement shed 0.56 or 0.94 pct at 58.72, while EDF gained 0.58 or 0.92 pct at 63.57 after recent declines. Suez added 0.48 or 1.17 pct after this morning's full-year results failed to impress the market.

The mid and small caps saw strong performances from individual stocks, notably chemicals group Rhodia which surged 1.41 or 6.77 pct at 22.23. The group is due to report full-year results on Thursday and is widely expected to resume payment of a dividend.

Transport group Geodis jumped 5.73 or 6.78 pct at 90.20, after reporting a higher than expected full-year net profit and proposing an increase in its annual dividend. 

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German shares close up on Ifo index rise, strong Lufthansa FY results

The DAX closed up 103.41 points or 1.50 pct at 6,985.97, having traded between a low of 6,906.43 and a high of 7,007.44 in today's session. The MDAX added 159.10 points or 1.70 pct to 9,493.79, while the TecDAX rose 8.09 points or 0.99 pct to 823.81.

DAX futures were up 51.00 points or 0.73 pct to 7,008.00, while bund futures retracted 0.37 points or 0.32 pct to 115.28. The euro was traded at 1.4881 usd, compared with 1.4875 in London afternoon trade. Lufthansa led blue chips higher, adding 0.90 eur or 5.91 pct to 16.14, after the airline released strong full-year figures ahead of schedule.

Lufthansa was scheduled to release its full-year results on March 12. ThyssenKrupp gained 2.15 eur or 5.80 pct at 39.21 after Credit Suisse raised its target to 75 eur per share from 61 and reiterated its 'outperform' rating.

Hypo Real Estate added 0.96 eur or 5.24 pct to 19.27, as dealers said news that credit rating agency Standard & Poor's had reaffirmed its AAA ratings on bond insurers Ambac and MBIA was helping out the German financier which has many large bonds insured with Ambac.

Banking peer Commerzbank -- up 0.80 eur or 3.96 pct to 20.99 -- also gained on the news. TUI advanced 0.53 eur or 3.37 pct to 16.28 on a report in Russian newspaper Kommersant claiming the group's TUI Travel unit may increase its stake in Russian joint venture TUI Mostravel Russia (TMR).

At the other end of the DAX, Deutsche Boerse led a group of four decliners, dropping 1.48 eur or 1.27 pct to 115.01. EON lost 1.58 eur or 1.24 pct to 126.25 and RWE fell 0.26 eur or 0.32 pct to 80.32 as utilities came under pressure in a rising market.

Adidas declined 0.18 eur or 0.41 pct to 43.62. Over on the MDAX, ProSieben was the top riser, up 1.25 eur or 8.95 pct to 15.22, after Merrill Lynch added the television and media company to its 'Europe 1 list'.

Meanwhile, Arcandor fell 0.51 eur or 3.94 pct to 12.43 as the day's sharpest midcap decliner. TecDAX-listed Morphosys gained 2.37 eur or 5.27 pct to 47.37 as the index's top gainer, while Conergy dropped 0.54 eur or 3.33 pct to 15.66 as the weakest performer.

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Amsterdam shares close higher, as financials continue to rally 

The AEX closed up 5.33 points, or 1.16 pct, to 464.34 after opening at 461.01 and trading in the range 459.10-464.47. Government bonds traded lower, while the euro stood at 1.4878 usd versus 1.4825 usd late yesterday.

Fortis led blue chip risers, closing 4.55 pct higher at 15.18 eur. The Belgo-Dutch bancassurer said today its real estate division is in talks with the Vinci Park arm of French construction group Vinci to operate a parking management joint venture, but it is "too early" to give details.

ING added 3.44 pct to 24.07 eur while Aegon gained 3.06 pct to 10.43 eur. Aalberts led midcap gainers, up 6.61 pct to 14.20 eur in heavy trade, as investors took positions ahead of the Dutch flow control company's full-year results on Thursday, trading sources said.

LogicaCMG gained 3.52 pct to 1.47 eur, as the Anglo-Dutch computer services company prepares for its first results under new chief executive Andy Green tomorrow.

ASMI put on 2.27 pct to 13.50 eur. The company expected to post flattish fourth-quarter earnings tomorrow after the market close, with the focus firmly on the full-year outlook and its troubled front-end business.

Boskalis Westminster gained 1.29 pct to 39.30 eur, as it said its 50-50 joint venture with Saudi Rezayat Group will continue to pursue Smit Internationale's Terminals division, despite being rebuffed by the company this afternoon.

Smit closed the day 0.88 pct higher at 58.31 eur. Unit 4 Agresso surged 10.39 pct to 18.81 eur after reporting strong full-year results and providing an upbeat outlook for 2008.

Heineken led blue chip decliners, off 1.14 pct at 37.14 eur. Het Financieele Dagblad reported that the Dutch brewer is facing a damages claim of 2.6 mln eur from the curator of bankrupt events bureau Van Hoorn. Wessanen fell 4.59 pct to 9.14 eur as it posted  lower-than-expected full-year results, prompting a downgrade to 'hold' from 'buy' at Petercam.

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