UK/Euro Financial Market Daily Evening Briefing 29-01-2008

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London shares close at session highs as NY rises on rate cut hopes

At the close, the FTSE 100 index was up 96.3 points at a day's high of 5,885.2, while the FTSE 250 index closed 264.9 higher at 9,905.4. Volume was light, with 2.292 bln shares changing hands in 733,093 deals.

On Wall Street, stocks advanced as the Federal Reserve opened a two-day meeting expected to result in another interest rate cut to revitalize the struggling U.S. economy.

By the London close, the Dow Jones industrial average rose 81.40 to 12,465.30. Broader indexes were also higher. The Standard & Poor's 500 index rose 7.70, to 1,361.65, and the Nasdaq composite added 4.82, to 2,354.73.

In London, the miners helped to underpin blue-chip gains, rallying on hopes of a rate cut in the US tomorrow and as production scares in China and South Africa help to push base metal prices higher.

Antofagasta was up 42 at 669-1/2, while Anglo American climbed 143 to 2,608 and Xstrata continued its strong recent gains on Brazilian deal hopes, adding 207 to 3,719.

Meanwhile, Kazakhmys, up 54 at 1,193, was boosted by a 'buy' recommendation from Evolution Securities, alongside a 1,475 pence target.

Away from commodities, travel agents remained under the spotlight, as investors cheered a positive trading update from TUI Travel, 1 penny ahead at 240.

In reaction, Merrill Lynch said it feels the success in TUI's UK mainstream business, arguably the source of most concern currently, is particularly pleasing and repeated its 'buy' view and 400 pence price objective.

Peer Thomas Cook advanced 13-1/2 to 260, ahead of its final results tomorrow and buoyed by a UBS' 'buy' recommendation yesterday.

Rolls-Royce Group added 17-1/2 to 482 following news it has won an order from Oman Air for its Trent 700 engine to power its new fleet of five purchased and two leased Airbus A330 aircraft.

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Elsewhere, shares in Prudential climbed 19 to 654, after the UK's second-biggest insurer reported better-than-expected full-year sales, helped by a further strong performance at its fast-growing Asian division.

On the downside, Alliance & Leicester was the biggest loser at the close of play, down 25 at 700, after the UK mortgage lender said charges related to the global credit squeeze will be more than three times its original estimate, weighing heavily on its 2007 profits.

Royal Dutch Shell slipped 10 to 1,766 after the Daily Telegraph reported the company will delay publication of key data about its oil reserves, which is typically released alongside its results on Thursday.

Shares in Imperial Tobacco lost 5 to 2,365, on profit taking after the company's trading update earlier today, in which it said full-year trading is in line with management expectations.

Turning to the midcaps, Debenhams ended 4-3/4 pence, or 7.09 pct higher at 71-3/4 after the retailer said Milestone Resources Group Ltd has raised its stake in the department stores group to 9.13 pct.

While Autonomy moved 61 higher to 906 as it reported a 64 pct rise in fourth-quarter profits, prompting Merrill Lynch to keep 'buy' on the stock.

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Eaga jumped 9-1/2 to 151 following well received second half results this morning, while in reaction KBC Peel Hunt repeated its 'buy' recommendation and 172 pence price target.

Finally, Dairy Crest gained 32-1/2 to 552, after the UK's biggest branded dairy foods group said its overall trading is in line with expectations, and Panmure Gordon kept its 'buy' rating and 700-pence price target.

UK Diary of Event:
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UK Small Cap Report:
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Paris shares close higher, lifted by Wall Street; SocGen soars on BNP bid talk

PARIS - Share prices ended higher as US shares were mostly in positive territory, extending overnight gains as investors took comfort from better than expected economic data and remained hopeful of a further rate cut from the Federal Reserve tomorrow.

Among Paris shares, Societe Generale soared as much as 13 pct in afternoon trade as speculation intensified that BNP Paribas will bid for its French peer, weakened by the trading scandal revealed last week.

The CAC-40 index finished up 93.15 points or 1.92 pct at 4,941.45. Among CAC-40 stocks, 34 closed higher and 6 closed lower. On the Matif, February CAC-40 futures were trading at 4,940.

On the broader indices, the SBF-80 index closed up 164.13 or 3.02 pct at 5,605.82 and the SBF-120 ended up 72.26 or 2.06 pct at 3,575.19. The euro was quoted at 1.4774 usd compared to 1.4794 usd late yesterday.

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German shares close higher on positive US data, higher Wall Street opening

FRANKFURT - German shares closed higher, boosted by macroeconomic data in the US, which showed demand for durable goods grew at a stronger rate than expected in last month.

Speculation the US Fed will cut rates by more than 50 basis points tomorrow together with a higher opening on Wall Street also helped German shares upwards.

The DAX was up 74.11 points or 1.09 pct at 6,892.96 points, having traded between a low of 6,823.68 points and a high of 6,929.88 points.

The MDAX gained 282.70 points or 3.33 pct to 8,781.91 points, while the TecDAX advanced 24.02 points or 3.10 pct to 799.38 points.

DAX futures shed 0.50 points or 0.01 pct to 6,853.53 points, while bund futures lost 0.44 points or 0.38 pct at 116.06. The euro was trading at 1.4763 usd, compared with 1.4767 usd in London afternoon trade.

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Amsterdam shares close higher, aided by Wall Street gains

The AEX closed 6.76 points or 1.54 pct higher at 446.08, after opening at 443.15 and trading in the range 440.66-448.49. Government bonds traded lower, while the euro stood at 1.4764 usd, compared with 1.4784 usd late yesterday.

Akzo Nobel led gainers, closing 6.15 pct higher at 46.42 eur, supported by US chemicals peer Dow Chemical's solid fourth-quarter results. DSM also benefited from Dow Chemical's figures, adding 4.04 pct to 28.59 eur.

Retailer Ahold climbed 5.53 pct to 8.97 eur, while Corporate Express added 5.37 pct to 4.12 eur. Belgo-Dutch bancassurer Fortis gained 4.12 pct to 14.90, continuing its advance after sharp gains yesterday when investors drew a sigh of relief after the group issued a reassuring statement concerning its subprime exposure.

SBM Offshore advanced 0.41 pct to 19.38 eur. The oil-services group posted an increase in full year revenues and in-line preliminary net profit after the market's close.

On the midcap, SNS Reaal added 1.34 pct to 12.81. The company said late this afternoon that its shareholders have approved the issue of a new class of shares to help fund the acquisition of Swiss Life's Zwitserleven business.

Pharming gained 3.54 pct to 1.17 eur, as news that the Dutch biotech company is expecting a final decision on its application to market its lead product Rhucin re-ignited investor confidence in the stock, market sources said.

Shell was lead blue chip decliner, off 0.49 pct at 24.35 eur after saying it will not provide an update on oil and gas reserves estimates alongside its annual results on Thursday.

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