UK/Euro Financial Market Daily Evening Briefing 27-06-2007

All you need to know about Spread Betting. Click Here.

London shares closed down, off lows, with NY mixed; UK banks weigh 

Leading shares closed weaker, albeit off lows, with Wall Street mixed as it recovered after an initial drop on falling durable goods orders, with a Northern Rock profit warning initiating a UK banking sector slump.
   
At the close, the FTSE 100 index was down 31.7 points at 6,527.6.
   
The FTSE 250 index closed down 145.2 at 11,391, while all the broader indices remained lower.
   
Volume was fair with 3,443 bln shares changing hands in 627,258 deals.
   
In the US, meanwhile, Wall Street was mixed by the London close as investors wrestled with a larger-than-expected drop in durable goods orders and awaited results of the Federal Reserve's two-day meeting on interest rates.
   
By the London close, the Dow Jones was down 10.00 at 13,327.70, while the Nasdaq Composite was 6.58 ahead at 2,580.74, and the S&P 500 index added 0.45 at 1,492.45.
   
In London, mortgage bank Northern Rock remained the worst blue chip performer, shedding more than 11 pct in value with an 113-1/2 pence drop to 834 after warning its full-year profit is set to undershoot the current consensus analyst forecast, as rising forward interest rates take their toll on lending income.
   
The UK's eighth-biggest bank said its 2007 underlying attributable profit for 2007 is set to rise about 15 pct, compared with the 17 pct increase expected by analysts.
   
In reaction, ABN Amro downgraded its recommendation to 'hold' from 'buy' with a revised price target of 900 pence saying it now has a lower future growth outlook and also a higher uncertainty of earnings sustainability.
   
Collins Stewart also cut its rating to 'hold' from 'buy' following the warning.
   
Other banking blue chips suffered in sympathy, with Alliance & Leicester losing 29 pence to 1,091, HBOS down 25 pence to 978, and Lloyds TSB off 8-1/2 pence to 551-1/2.
   
Sub-prime mortgage lenders on the second line were also affected, with Paragon Group 27-1/2 lower at 483-1/2, while Cattles lost 18 at 381.
   
Barclays shares also slid back, losing 8 pence at 702-1/2 after this morning's Daily Telegraph reported the consortium led by Royal Bank of Scotland is preparing a new bid for ABN Amro that does not include the Dutch bank's US division LaSalle, which raised fears of a costly bidding war. RBS shares were down 12 pence at 629.
   
Mining stocks continued their recent poor performance following declines in metal and oil prices, with Lonmin down 116 pence at 3,941, Kazakhmys off 37 pence at 1,240, and Antofagasta down 16 pence to 593.
   
Blue chip utilities also fell back today as the sector's yield attractions continued to be undermined by rising bond yields -- United Utilities shed 48 pence to 704, and Severn Trent fell back 44 pence to 1,390.
    
Supermarkets were also in focus, as Tesco shares lost 3-1/2 pence at 422-3/4 after being downgraded to 'underweight' from 'neutral' by JP Morgan as it argued that a lack of sales momentum in the UK will weigh on the firm's share price for a while.
   
Food retail peer Sainsbury moved higher again, up 4 pence at 577, amid revived talk the Sainsbury family will sell its stake in the group and precipitate another bid for the firm.
   
Morrison Supermarkets was up in sympathy, 6 higher at 296.
   
Meanwhile, ITV shares took on 1.00 pence at 111.60 after Citigroup upgraded its stance to 'buy' from 'hold' to reflect an improving advertising environment, which the broker said should lead to greater investment.
   
Citigroup lifted its advertising growth forecast for 2007 to -6 pct from -6.9 pct and for 2008 to -2 pct from -3 pct and also raised earnings estimates for 2010 by 10 pct.

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

Making a late move, Vodafone Group rallied in late afternoon deals amid market talk a large protected trade of 1.8 bln shares in the mobile telecoms group is underway at 168 pence apiece.
   
Vodafone closed up 3.80 pence at 163.80 -- a gain of 2.38 pct.
   
Shares in Vodafone have been in play recently after activist shareholder Efficient Capital Structures yesterday repeated its call for Vodafone to either sell its minority stake in Verizon Wireless or create a separate security to track the US mobile operator.
   
Analysts believe Vodafone's 45 pct Verizon Wireless stake could be worth as much as 40 bln stg.
   
Also gaining, Centrica added 3 pence at 385-3/4 after being upgraded to 'overweight' from 'underweight' by Morgan Stanley with an increased target of 425 pence, up from 355 pence.
   
Morgan Stanley said the double upgrade was a result of it being more bullish on Centrica's business and its evolution than the consensus forecasts in the market.
   
Credit Suisse also raised its target for Centrica today.
  
Experian took on 6 pence to 606 after UBS applauded the credit checking agency's 65 pct stake build in Brazilian Serasa, announced yesterday, and upgraded its stance to 'buy' from 'neutral' with an increased target of 710 pence.
   
BAE Systems recovered some of Tuesday's heavy falls, adding 2-3/4 pence at 410-1/2 after Credit Suisse said the reaction to the Department of Justice's investigation into whether it had broken anti-corruption laws had been overdone.
   
Away from the banks on the second line, soon-to-be-merged housebuilders Taylor Woodrow and George Wimpey were lower at the close after releasing cautious first half trading updates, broadly meeting broker estimates, which flagged flat volumes in the UK but with materially weaker conditions in the US.
   
Bridgewell Securities said overall, the two statements were in line with its views.
   
The broker said that it feels that the risks and uncertainties of the US market have not been taken account of on a relative basis, and therefore would recommend investors switching into solely UK-exposed housebuilders until improved visibility can be gained over the outlook for the US housing market.
   
Shares in Wimpey were 12-1/2 pence lower at 513 and Taylor Woodrow off 9-3/4 pence at 369.
   
Elsewhere, Pendragon was down 3-3/4 to 79-1/2 continuing after its profit warning on Monday, and with investors switching to sector rival Inchcape after the motor group had an in line trading update today.
   
Failing to impress after it issued an in-line trading statement, Wood Group was down 6-1/4 at 320, with Evolution Securities apathetic towards the news, reiterating its 'add' stance and 330 pence price target.
   
Turning to the upside, Stagecoach Group was the top FTSE 250 riser at the close, up 9-3/4 pence to 181-1/4 after the bus and rail operator posted sharply higher profits for the full-year.
   
Deutsche Bank reiterated its 'buy' stance and said the results were ahead of its forecasts, with all of Stagecoach's UK businesses performing well.
   
In other earnings news, Hikma Pharma rose 11 pence to 375 after saying first half revenues will show an increase of 40 pct and gross margins will be around 50 pct.
   
Merrill Lynch said it believes Hikma has once again delivered up to expectations and the company is uniquely positioned to benefit from the boom in the Middle East and Northern Africa region, while its new factory should provide a welcome boost.
   
Rank Group shares added 4-3/4 pence to 180-1/2 after being upgraded to 'hold' from 'sell' by Deutsche Bank ahead of full year results due tomorrow.

NBP Investments offers a unique investment opportunity, high returns are projected. Visit us today.

Click Here

For a diary off key financial fand corporate events in the UK next week, click here

UK Small Cap Report

For a summmary of today's trading on the FTSE 250 and the AIM, click here

Frankfurt 

German shares close lower on US rate concern, financial stocks

Shares closed lower for the fifth consecutive trading day, led down by financial stocks hit by a bearish broker note and tracing a lower opening on Wall Street afs investors braced for a US Fed interest rate decision tomorrow.
   
The DAX was down 59.29 points or 0.75 pct at 7,7801.23, having traded between 7,750.62 and 7,822.35.
   
The MDAX dropped 99.28 points or 0.91 pct to 10,757.72, while the TecDAX was down 3.42 points or 0.38 pct at 905.94 points.
   
DAX futures were down 47.00 or 0.59 pct at 7,863.50, while bund futures added 0.40 or 0.36 pct to 111.01.
   
The euro was trading at 1.3431 usd, against 1.3445 usd in midday London trade.
   
Iredi sees the DAX maintaining a support barrier at between 7,500-7,600 points.
   
With a lack of positive news flow, macroeconomic figures, interest rates, bond rates and concerns over sub-prime lending business in the US are taking centre stage, he said.
   
Investors were cautious ahead of a Fed announcement tomorrow, in which the central bank is expected to make comments on the US economy's outlook and keep the benchmark rate steady at 5.25 pct.
   
On the Frankfurt trading floor, financial stocks were hardest hit today, suffering by concerns over prolonged problems in the sub-prime lending market in the US and by a downbeat note published by Dresdner Kleinwort today.
   
The broker downgraded European banks to 'underweight,' according to market sources, nothing that even after a period of underperformance current valuations do not fully discount further deteriorations.
   
Dresdner Kleinwort said the European Banks sector has underperformed by 5 pct so far this year, dragged down by the UK sub-sector, after having traded sideways for the previous four years.
   
Deutsche Postbank dropped 1.49 eur or 2.36 pct to 61.56 eur and peer Deutsche Bank was 2.17 eur or 2.01 pct at 105.68 eur.
   
Commerzbank fell 0.59 eur or 1.68 pct to 34.49 eur.
   
Deutsche Boerse lost 1.46 eur or 1.77 pct to 80.80 eur as traders said the recent drop in the DAX may have investors worried that trading volumes will be lower for the German stock market operator.
   
Allianz declined 3.42 eur or 2.36 pct to 61.56 eur as the stock corrected from gains in early June.
   
Among today's gainers, SAP was 0.33 eur or 0.88 pct higher at 37.81 eur, boosted by solid fourth-quarter figures reported by US business software manufacturer Oracle Corp and ahead of its second-quarter results, due mid-July, which analysts expect to be strong.
   
TUI was ahead, gaining 0.10 eur or 0.51 pct to 19.89 eur after a long-standing rumour that Oetke Group is interested in buying TUI's shipping unit was warmed over again yesterday.
   
Fresenius Medical Care advanced 0.05 eur or 0.15 pct to 33.62 eur after analysts at Dresdner Kleinwort said that dialysis specialist should not be hurt by continued debate in the US congress about possible changes to Medicare payments for anti-anaemia drugs.
   
The brokerage recommended buying the stock after news of the hearings depressed the FMC share price recently.
   
Adidas edged up 0.02 eur or 0.04 pct to 44.90 eur after the sporting equipment manufacturer benefited from positive fourth-quarter figures reported by US rival Nike Inc.
   
Adidas has retreated a bit in the US market and Nike's figures could give
investors hope that this may be a short-lived phenomenon, Lesser added.
   
Bayer gained 0.03 eur or 0.05 pct to 55.23 eur after Morgan Stanley issued a bullish broker note for the pharma company. In addition, Bayer's US unit Bayer HealthCare Pharmaceuticals Inc said it has submitted an application to the US Food and Drug Administration along with Onyx Pharmaceuticals for its Nexavar tablets, which treat the most common form of liver cancer.
   
Over on the MDAX, Kloeckner & Co dropped 1.87 eur or 3.49 pct to 51.70 eur.
   
ProSiebenSat.1 jumped 1.15 eur or 4.06 pct to 29.50 eur after the TV broadcasting company announced that it has acquired a 100 pct stake in Luxembourg-based SBS Broadcasting for 3.3 bln eur to become a possible a contender for Bertelmann's RTL Group's position as the largest broadcasting company in Europe.
   
Stada Arzneimittel rose 0.86 eur or 1.93 pct to 45.51 eur after Deutsche Bank issued a bullish broker note in which it reiterated the brokerage's 'buy' stance on the pharma company and maintained its 60 eur per share price target.
   
TecDAX-listed Epcos was the worst performer on the index, dropping 0.65 eur or 4.19 pct to 14.85 eur.
   
Nordex gained 1.12 eur or 4.13 pct to 28.22 eur at the other end.

Move to Selftrade and enjoy fast, efficient dealing with connections to over 18 online market makers. Deal in shares, funds, gilts, corporate bonds, covered warrants and Listed CFDs. All trades a flat £12.50. Click here for more information.

Amsterdam shares close lower, held down by lower Wall Street

Shares in Amsterdam closed lower, held down by negative Wall Street trading on news of falling durable goods orders in the US.
   
The AEX closed 3.64 points or 0.67 pct lower at 539.62 after trading in the range 538.74-542.14.
   
Government bonds traded higher, while the euro stood at 1.3436 usd versus 1.3465 usd late yesterday.
   
Steel giant ArcelorMittal led decliners, off 2.02 pct at 45.65 eur. Peer Tata Steel closed lower on media reports that Indian steel prices may decline on soft global prices and cheap imports flooding the markets, while reports said that Nippon Steel is expected to reach a new partnership agreement with ArcelorMittal in mid-July that will include mutual technology transfers in Japan and Europe, the Nikkei said, without citing sources.
   
Retailer Ahold dropped 1.57 pct to 9.43 eur, while TomTom lost 1.50 pct to 36.84 eur.
   
Coporate Express shed some of yesterday's gains, off 0.71 pct at 11.20 eur. Blue chip financials all finished in the red, with ABN Amro down 1.05 pct at 34.05, Aegon off 1.02 pct at 14.55, ING shedding 0.85 pct at 32.62 while Fortis lost 0.52 pct to 30.49 eur. The Financial Times today reported that the consortium of Royal Bank of Scotland Group, Fortis and Banco Santander Central Hispano may revise its bid if it cannot stop the sale of LaSalle, ABN's US operation, to Bank of America Corporation, while Fortis CEO Jean-Paul Votron said he is confident he can trigger greater growth and synergies in the Dutch businesses if his bank manages to snap up ABN's retail and private banking units. Meanwhile, HSBC Holdings said it is interested in acquiring ABN's Brazilian operations.
   
Akzo Nobel was off 0.43 pct at 62.73 eur. Its Organon unit said it has reached its recruitment target for Phase 3 clinical trials for its  corifolllitropin alfa fertility hormone.
   
On the midcap, Tele Atlas led decliners, off 2.89 pct at 15.80 eur, while SNS Reaal shed 0.90 pct to 16.55 eur. Earlier, the Dutch bancassurer said it has raised an additional 50 mln eur after exercising a greenshoe option following its recent issue of new shares.
   
Hagemeyer led the handful of blue chip gainers, adding 2.14 pct to 3.82 eur, while staffer Randstad closed 1.0 pct up at 57.80 eur, following an upgrade to 'add' from 'hold' at Petercam and on news it has purchased Swiss temping agency Job One.
   
Unilever gained 0.70 pct to 22.99 eur, with the stock in demand amid speculation that the group may dispose of more of its assets, an Amsterdam-based trader said.
   
On the midcap, Nutreco addded 0.41 pct to 53.92 eur as Petercam raised its earnings forecasts for the Dutch nutrition company after its recent acquisitions. The brokerage maintained its 'add' rating but lowered its price
target to 60.50 eur from 62.

Projected ROI of between 7-8% in this World renowned resort in St Lucia

Superb buy to let opportunity that allows you to enjoy the benefits of a holiday resort, with a share of room profits.  For more information click here.

Paris shares close lower, tracking US; GDF jumps as merger talk resumes

Share prices ended slightly lower, amid mixed UfS trade as investors remained nervous ahead of the Fed's interest rate decisions tomorrow night, but Gaz de France rose sharply on a report the French government will finally push ahead with the Suez merger, market sources said.
   
The CAC-40 index closed down 11.69 or 0.20 pct at 5,941.67 on volume of 7 bln eur.
   
18 CAC-40 stocks closed lower and 22 higher.
   
On the Matif, July CAC-40 futures were trading down 13 points at 5,956.
   
The euro was at 1.3436 against the dollar, against 1.3464 late yesterday.
   
Gaz de France put in the sharpest gains, ending up 1.32 or 3.70 pct at 37.01, while Suez added 0.42 or 1.02 pct to 41.72.
   
Le Figaro reported this morning the French government will approve the groups' long-planned merger within the next few days, although analysts said the delicate issue of how to compensate Suez shareholders remains.
   
Finance minister Christine Lagarde later told journalists "no decision has been taken", adding "all the options are being studied".
   
But a Paris dealer said Le Figaro's report was plausible since Lagarde is thought to be in favour of the GDF-Suez tie-up.
   
According to the newspaper, which did not name its sources, the government will officially announce its decision in the next few days. But the daily added the authorities have yet to settle the merger terms, with the main sticking point being the valuation difference between GDF and Suez. Under their agreement, they are supposed to conduct a one-for-one share swap.
   
Eiffage was the other major news focus of the day, as it resumed trading following last night's ruling by financial regulator AMF Sacyr Vallehermoso acted in concert with other Spanish shareholders and must raise its bid for the French group, including a new cash element.
   
Eiffage shares ended little altered, adding just 0.20 to 105.20 after initially rising 2.24 pct when they resumed trading at 10 am.
   
Dealers said the muted reaction of the shares showed the market is realising Sacyr may not be able to afford an increased offer, while the legal battle between the two companies is also likely to drag on for months.
   
Exane BNP Paribas analysts, meanwhile, raised their target for Eiffage to 115 eur, taking into account both the 127 eur offer price stipulated by the AMF and the possibility Sacyr will walk away.
   
Elsewhere, financial and property stocks remained under pressure from concerns about interest rates and subprime mortgage loans.
   
In the banking sector, Dexia was down 0.52 or 2.18 pct at 23.36, the sharpest loser on the CAC-40 while Societe Generale was off 1.31 or 0.94 pct at 137.32 and BNP Paribas fell 0.81 or 0.92 pct to 86.85.
   
In real estate, Klepierre fell 1.06 to 124.34 and Nexity shed 2.00 or 3.32 pct to 58.20.
   
In contrast, Fonciere des Regions recovered from recent losses to climb 6.29 or 5.98 pct to 111.50. The company announced yesterday it was launching a planned 200 mln eur capital increase, designed to finance acquisitions.
   
Unibail-Rodamco recouped some recent losses, adding 0.75 to 192.86.
   
ArcelorMittal lost 0.93 or 2.00 pct to 45.68, extending yesterday's losses when Merrill Lynch cut its recommendation on the shares to 'neutral' from 'buy', citing flat carbon steel prices in Europe and the US.
   
Beneteau rose 2.73 or 2.88 pct to 97.44 as the yacht builder late yesterday announced a greater-than-expected 28.4 pct leap in sales to 373.1 mln eur in its third quarter to May.

Save up to 50% on Jermyn Street style shirts and accessories, from silk ties to silver cufflinks, by shirt-maker Joseph Turner.
Click Here

ADVFN Services