UK/Euro Financial Market Daily Evening Briefing 28-09-2007

Read our new Spread Betting interviews. Click Here.

London shares close down, NY lower; Tate & Lyle drops on profit warning

UK blue chips closed down, with Tate & Lyle losing over a quarter of its value after issuing a profit warning this morning, while Wall Street turned lower as investors digested a number of economic reports today.
   
At the close, the FTSE 100 index was down 19.6 to 6,466.8, off a low of 6,411.8, while the FTSE 250 index dropped 4.10 points to 11,035.40.
   
Volume was fair with 3.459 bln shares changing hands in 641,139 deals.
   
On Wall Street, US stocks turned lower as investors mined through a batch of economic reports and worried about third-quarter earnings.
   
By the London close, the Dow Jones was 14.10 down at 13,898.8, while the Nasdaq Composite lost 9.23 to 2,700.36 and the S&P 500 index gave away 4.35 to 1,527.05.
   
Stocks stayed afloat partly due to an upbeat report on consumer spending from the Commerce Department. Consumer spending increased 0.6 percent in August, the fastest growth in more than two years.
   
However, still weighing on investors Friday was lingering concern that the third quarter might have severely trimmed corporate earnings power.
   
In London, Tate & Lyle remained the biggest FTSE 100 faller all day, losing more than 27 pct in value, down 155 pence at 402-1/2, after the UK sugar group warned rising corn prices and the weak dollar will weigh on profitability in its sugar division, and analysts said consensus forecasts will have to come down.
   
Elsewhere, Northern Rock saw the bears return after two sessions of gains, shedding 14.3 pence at 179.2 as a reports showed the lender had borrowed a further 5 bln stg from the Bank of England.
   
Fellow mortgage lender Alliance & Leicester suffered in sympathy with the Northern Rock news, shedding 3 pence at 792.

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

Goldman Sachs today cut its price target for Alliance & Leicester to 815 pence from 912, and repeated its 'sell' stance, lowering its estimates to reflect an increase in funding costs and a slowdown in commercial lending.
   
Also on the back foot was Enterprise Inns, down 7 pence at 592, after the pub operator's in-line pre-close trading update revealed it is still difficult to evaluate the impact of the smoking bans introduced in England and Wales during the year.
   
In reaction to the news, Evolution Securities said it is retaining its 'reduce' rating and 560 pence price target, calling the refinancing delay disappointing but not surprising, adding that the company will continue to buy-back stock from existing reserves.
   
A broker downgrade put pressure on Compass Group, losing 8-3/4 to 302, after Panmure Gordon cut its rating to 'sell' from 'hold' on the suggestion emanating from an article in this morning's FT that the recovery potential in the business is nearing an end.
   
In an interview with Compass Group's CEO Richard Cousins in today's FT, he said: "We want the discipline to come through, capital expenditure and working capital needed to be controlled better," he says.
   
On the upside, Smith & Nephew traded 15 pence higher to 597-1/2, following news it has reached a settlement regarding an investigation into the company's consulting contracts, while Landsbanki repeated its 'hold' stance in reaction.
   
In reaction, Landsbanki said that since the announcement of the investigation some industry practices have changed, though it does not expect this agreement will substantially change the reliance these companies have on key consulting surgeons.
   
Insurer Royal & SunAlliance PLC closed 3.7 higher at 154.5, with ABN Amro upgraded its recommendation to 'buy' from 'hold' and raised its price target to 185 pence from 160 today, analysts said.
   
ABN said in its opinion, in the past four years, RSA has dealt with several negative issues that threatened its existence, including potential large claims from its past business in the US. The broker now feels RSA can proceed with greater confidence, due to its more robust business mix.
   
Elsewhere, Yell Group gained 11-1/4 pence at 429 after Exane BNP Paribas upgraded its rating to 'outperform' from 'neutral' with a maintained price target of 540 pence.

Use our professional platform to trade on margin and trade tax free. Speculate on Oil, Gold, Foreign Exchange, Worldwide Indices, Equities and Options. Go long or short on all our markets. Click here.

On the second line, reinsurance broker Benfield Group made good gains, up 20 at 290, amid bid speculation.
   
According to a report in this morning's Daily Telegraph, the private equity arm of investment bank Goldman Sachs held talks with Benfield over a potential 700 mln stg bid for the UK reinsurance broker, but was unable to secure debt finance for the deal.
   
Still among the gainers, Dana Petroleum moved up 69 pence at 1,162, after the firm revealed an oil discovery with its first well in Norway.
   
Finally on the 250 downside, New Star Asset Management shares shed 56 pence at 364, as a cautious outlook offset better than expected first half results from the fund manager.
   
The group said it faces a somewhat more challenging environment, but added that, subject to markets not deteriorating, it remains robust about its prospects for the full year.

Diary of Events

For a diary of key financial and corporate events in the UK today, click here

UK Small Cap Report

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

Lafite 1998:             Jan 06 - September 07      + 240%

Haut-Brion 1998:    August 06 - September 07   + 100%

Lafite 2005:            August 06 - September 07   + 57%

Lafite 1996:             November 06 - September 07  + 66%

Above is just a small selection of the wines we trade, from which our clients are making considerable tax-free profits.  For a free information pack, Click here.

Paris shares close down as Wall St, weak French data weigh on sentiment

The CAC-40 index finished down 17.68 points or 0.31 pct at 5,715.69. Among CAC-40 stocks, 18 closed higher and 22 closed lower. On the Matif, October CAC-40 futures were trading at 5,712. On the broader indices, the SBF-80 index closed down 0.38 or 0.01 pct at 6,709.18 while the SBF-120 ended 11.09 or 0.27 pct lower at 4,155.26.
 
Data showed consumer confidence dropped sharply in September, and confirmed a slowdown in second quarter GDP to a sluggish 0.3 pct quarter-on-quarter rise.
   
BNP Paribas analysts said household confidence had collapsed in France, adding "this is very bad news for consumer spending in coming months." After a two-day rally on the CAC-40, the negative macro signals prompted widespread profit-taking from investors.
   
Banks were among falling stocks as uncertainties persist over the impact of the current credit turmoil. Societe Generale fell 2.48 eur or 2.06 pct to 117.68, Credit Agricole shed 0.20 or 0.73 pct to 27.05, while Dexia slipped 0.12 or 0.56 pct to 21.26.
   
BNP Paribas fared better, rising 0.43 or 0.56 pct to 76.74, after the bank's CEO said yesterday there would be no negative surprises in third-quarter corporate and investment banking earnings.
   
The big faller on the CAC-40 was Alstom, which gave up some of its recent speculation-fuelled gains after Les Echos reported that government-commissioned studies had cast doubt over the merger with Areva.
   
Alstom ended down 6.08 or 4.09 pct at 142.57, while Areva dropped 20.65 or 2.83 pct to 709.35. Bouygues, which is reportedly part of the government's plans to merge Areva with Alstom, fell by 0.70 or 1.14 pct to 60.49.
   
According to Les Echos, a study conducted by McKinsey said the deal would not generate direct synergies, while a separate study by HSBC found a tie-up would be difficult to put into action due to the lack of a precise value for Areva. Separately, SG Securities questioned the value of a merger deal for Alstom, downgrading the stock to 'hold' from 'buy'.
   
Elsewhere, Danone extended yesterday's losses, falling 0.80 or 1.43 pct to 55.20. The group has been hit by a series of downgrades this week, as analysts question its short-term prospects given rising milk costs and a higher cost of financing for the Numico acquisition.
   
On the upside, Alcatel-Lucent regained some of its recent losses amid speculation that Patricia Russo has been issued an ultimatum by her board.
   
The Financial Times reported Russo had been given one month to submit an emergency turnaround plan in the wake of the latest profit warning, which was widely interpreted as a sign she could be forced to step down. The shares ended up 0.30 or 4.35 pct at 7.20.   
   
EADS climbed 0.49 or 2.33 pct to 21.56, helped by an upgrade to '2 Outperform' from '3 Underperform' at CA Chevreux. The broker also raised its price target to 30 eur from 17 eur, citing "a better pricing environment, (the) first take-off of two major programmes, A380 and A350, lower R&D costs and a better cash-flow profile." The weak dollar is a real issue but can be addressed efficiently, the broker said in a note to clients.
   
Outside the CAC-40, Atos Origin soared at the end of the session after the IT services firm announced it is in exploratory talks with Engineering Ingegneria Informatica SpA over a deal to exchange its Italian operations for a minority stake in the Italian group, as well as to set up a wider global alliance.
   
Atos shares closed up 1.09 or 2.74 pct at 40.80, after climbing as high as 41.41 after the announcement. Atos has been under pressure from investment fund Centaurus, which has just under 10 pct of the French group, to consider a takeover after talks earlier in the year with unnamed parties failed to produce a deal.

Have your ISAs, PEPs, Unit Trusts or OEICs checked. Moneyspider will provide a unique performance rating for each of your funds, plus their rank and a current valuation in a single FREE report which is online and updated daily For more click here

German shares close higher led by TUI, technology, financial stocks

The DAX ended up 7.71 points or 0.10 pct at 7,861.51 after trading in the 7,790.23-7,880.42 band. The MDAX was down 63.41 points or 0.61 pct at 10,334.74, while the TecDAX added 5.77 points or 0.60 pct at 966.06. DAX futures were down 3.50 points or 0.04 pct at 7,994.50. Bund futures advanced 0.25 or 0.22 pct to 112.68.
  
Dealers said TUI, up 0.76 eur or 4.20 pct at 18.84, benefited from a Handelsblatt newspaper report that said US financial investor Guy Wyser-Pratte has acquired a 1 pct stake in the company.
   
Infineon, up 0.32 or 2.72 pct at 12.09, was the second best performer. Other tech stocks were higher, with SAP adding 0.31 or 0.76 pct at 41.05 and Siemens gaining 0.19 or 0.20 pct at 96.42.
   
Financials were all in positive territory, led by Hypo Real Estate, up 0.68 or 1.73 pct at 39.88.
   
Bucking the trend was Merck KgaA, which ended down 5.40 or 6.00 pct at 84.60. Deutsche Bank downgraded its stance to 'hold' from 'buy' and reduced its  target to 91 eur from 96 as it believes market expectations for Merck's LCD operations are too high, although there may be some upside potential in its pharma divisions.
   
Automotive stocks were mostly lower, with truck maker MAN leading the sector with a loss of 2.06 or 1.98 pct at 102.05. BMW followed suit with a loss of 0.75 or 1.63 pct at 45.23.
   
UBS downgraded its stance on BMW to 'neutral' from 'buy' and lowered its price target to 50 eur per share from 55, saying the car maker's plans to boost margins and sales volumes are convincing but the results won't be seen for quite some time.
   
Among the MDAX stocks, Patrizia Immobilien led advancers with a gain of 0.53 or 5.19 pct at 10.74.
   
Celesio was the biggest loser, losing 4.04 or 8.36 pct at 44.26 after the company said it is no longer expecting to achieve double-digit growth in pretax profit for the years until the end of 2010 due to "unexpected drastic measures" taken by the UK Department of Health.
   
Stada Arzneimittel ended 0.23 down or 0.50 pct at 45.73. It said it will restructure the sales and marketing business of its German generics, including cutting 230 sales jobs, and will book a 29 mln eur one-off restructuring cost, mostly in the third quarter. On the TecDAX, Freenet, up 1.05 or 5.80 pct at 19.15, was the top performer.
   
Financial Times Deutschland said in a prerelease of tomorrow's edition, citing sources, that Drillisch and United Internet have started to look into the books of Freenet with a view to acquiring some of its businesses.
   
United Internet was up 0.54 or 3.54 pct at 15.79. Bear Stearns initiated coverage of the company with a 'outperform' rating and a price target of 18.5 eur per share. QSC lost 0.17 or 4.37 pct at 3.72.

..from an award winning developer.  High demand for apartments within a 30 minute commute of central London make this new off-plan development an exceptional opportunity. Just 5% initial investment required!  For more information click here.

Amsterdam shares close lower, tracking Wall Street; Hagemeyer soars

The AEX closed 1.26 points or 0.23 pct lower at 540.98 after opening at 542.14 and trading in a range of 537.72-542.75. Government bonds were broadly higher and the euro stood at 1.4229 usd versus 1.4150 usd late yesterday.
   
TomTom was 2.68 pct weaker at 54.51 eur while Unilever shed 1.90 pct at 21.65.
   
Fortis closed 1.85 pct lower at 20.65 amid news that it has sold its 4 pct stake in Banco Comercial Portugues, while the consortium it shares with the Royal Bank of Scotland and Banco Santander in bidding for ABN Amro made news by saying it reserves the right lower the minimum acceptance threshold for its offer below the current 80 pct.
   
Among Fortis' financial peers, ING was up 0.29 pct at 31.13 eur, Aegon was 0.15 pct lower at 13.43 and takeover target ABN Amro was on the rise, gaining 0.14 pct at 36.95.
   
Corporate Express lost 1.42 pct at 7.64 while Ahold closed 0.84 pct lower at 10.60, unmoved by a price target upgrade to 11.5 eur from 11.0 at KBC. The supermarket group was also in the news because its Schuitema unit announced the appointment Theo Janssen as its financial director.
   
KPN, which was upgraded to 'add' from 'hold' at Petercam and reiterated at 'buy' at ING this morning while both brokerages said Deutsche Telekom's acquisition of Orange Netherlands could lead to a reduction in competitive intensity in the Dutch mobile market, closed 0.57 pct lower at 12.17.
   
Lead blue-chip gainer Hagemeyer closed 12.50 pct higher at 3.24 eur after soaring throughout the afternoon on speculation of a potential takeover, with traders mentioning Rexel as a potential predator. An ING analyst said he was sceptical and Hagemeyer itself declined to comment.
   
ASML closed 1.53 pct higher at 23.25 ahead of its impending reverse stock split while its midcap semiconductor sector peer ASMI closed 0.60 pct lower at 20.01.
   
TNT ended the day 1.03 pct higher at 29.40 after starting it with a price target downgrade at Petercam, while Heineken was 0.94 pct firmer at 46.02 and Philips, which held a conference today in which it said its lighting division expects to continue its current growth path, added 0.92 pct at 31.68.
   
CSM led midcap decliners, losing 2.97 pct at 14.74 while Oce slipped 2.96 pct to 14.74, Van der Moolen lost 1.86 pct at 3.17 and Wessanen was down 1.81 pct at 10.33.
   
Among other decliners in the news, Stork closed 1.06 pct lower at 45.70 eur amid reports that a former politician is acting as negotiator for a state-run Chinese company for a possible takeover of Stork's Aerospace division. Stork confirmed that the company was approached, but said the proposal was dismissed.
     
Standing out among local issues, Spyker closed 7.46 pct lower at 3.35 after underperforming throughout the day mid reports that Friesland Bank is demanding that the struggling Dutch car maker prioritise the repayment of its 5 mln eur loan.
   
Smallcap financial Van Lanschot outperformed and closed 1.09 pct higher at 72.50. Earlier, the share was upgraded to 'hold' from 'reduce' at Rabo Securities.

Closing Forex Rates

ADVFN Services