UK/Euro Financial Market Daily Evening Briefing 30-07-2007

For trading strategies, tips, education, a trader's diary and more click here.

London shares close lower, off highs amid continuing jitters on Wall St

UK blue closed modestly lower, having failed to find sufficient momentum to build on early gains as solid results from HSBC and Pearson were overshadowed by continuing concerns surrounding the US economic
outlook.
   
By the close, the FTSE 100 index was down 9.1 points at 6,206.1, having hit a session high of 6,256.5 and a low of 6,186.2.
   
The broader FTSE indices finished broadly firmer, with the FTSE 250 closing up 87.2 at 11,071.7. Volume was solid, with 3.04 bln shares changing hands in 695,238 deals.
    
Over in New York, US stocks were narrowly mixed in wobbly trading Monday, as Wall Street, still worried that a credit crunch will crimp US growth, struggled to put together a recovery from last week's steep losses.
  
By the London close, the DJIA was down 25.6 at 13,238.7 with the broader stock indicators also lower. The Standard & Poor's 500 index slid 1.19 to 1,458.14, and the Nasdaq composite index off 4.7 at 2,557.04.   
   
In London today, Imperial Chemical Industries topped the blue-chip leaders board, up 41-1/2 pence at 618-1/2, after it emerged that it had rejected an improved 650 pence a share cash offer from Dutch chemicals group Akzo Nobel.
   
ICI said that the two companies were still in talks despite rejecting the 7.8 bln stg offer but that it had not opened its financial books to Akzo for inspection.
   
Elsewhere, the heavyweight mining sector was buoyed by higher base metals prices. Rio Tinto took on 113 pence to 3,451, while Vedanta Resources gained 83 pence to 1,715 -- also benefiting from a Merrill Lynch target hike -- BHP took on 42 to 1,403, Kazakhmys gained 22 to 1,248 and Antofagasta added 28 to 702.
   
Among firms reporting today, HSBC added 12 to 892 as the UK's biggest bank delivered better-than-expected first-half numbers helped by continued strong growth in emerging markets.
    
Also of interest, HSBC becomes the first UK bank to put a figure to the cost of refunding current account customers, many of whom are contesting five years' worth of excess overdraft penalties. It said it was setting aside 115 mln stg charge for settling unauthorised overdraft claims in the UK, considerably higher than the amount assumed.

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

Market talk that the bank may be considering making an eleventh-hour bid for ABN-Amro were quickly downplayed after chairman Stephen Green said it had no plans to join the either of the protagonists bidding for the Dutch bank.
   
Meanwhile, Pearson added 8 to 778 after the publishing giant raised guidance for two of its divisions amid stronger than expected growth across the company.
   
The Financial Times and Penguin books owner, said adjusted pretax profit was 54 mln stg on underlying revenue up 6 pct to 1.7 bln, in line with the average analysts' forecast. Panmure Gordon raised its rating for Pearson today to 'hold' from 'sell' citing valuation factors.
   
At the other end, the fund manager sector remained under pressure against a background of continuing sub prime concerns with Man Group off 17 at 546 and broker ICAP down 8-1/2 at 457-1/2.
   
Insurers were also weak reflecting the drop in equity valuations and the likely hefty cost of the flooding in the UK on underwriters -- Aviva lost 11-1/2 pence at 659-1/2, while Prudential shed 14 pence at 650, and Old Mutual fell 1.20 pence to 156.70.
   
Elsewhere in the sector, a broker downgrade after last week's results saw Northern Rock shares dip 11 pence at 781. Lehman cuts its stance on the mortgage bank to 'equal-weight' from 'overweight' with a reduced price target of 858 pence, down from 956 pence.
   
Meanwhile, Vodafone slid 3.1 to 148.10 after Verizon Wireless, a joint venture of Verizon Communications and Vodafone, said it will buy Rural Cellular Corp which raised some investor concerns.
   
And confectionery giant was another casualty Cadbury Schweppes, down 8-1/2 pence at 595 ahead of results due later this week.
   
The company had been expected to provide an update on takeover interest for its US drinks business with interim figures this Wednesday but global debt markets has thrown the plan off track.
   
And GlaxoSmithKline shares fell back 10 pence to 1,215 ahead of the US Food and Drug Administration advisory panel's discussion later tonight over the UK firm's diabetes Avandia drug.
   
The Advisory Committee will vote on what course of action it thinks the FDA should take, then the FDA will make a final decision at some point in the future. If the committee recommends withdrawing Avandia from the US market then it is likely to put further pressure on Glaxo's share price.

Lafite 1998:             Jan 06 - June 07                + 240%

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

Lafite 2005:            August 06 - June 07          + 57%

Lafite 1996:             November 06 - June 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.

On the second line, Soco International made good progress, up 129 pence to 1,911 with investors excited about the scale of a hydrocarbon find at its Te Giac Den exploration well on offshore Block 16-1 in Vietnam after encountering strong pressure while digging the hole. Soco said it had temporarily suspended drilling due to the pressure.
   
And Beazley was up 4-3/4 pence to 154-3/4 after the Lloyd's of London insurer reported that first half pretax profits had more than doubled. Beazley saw its first half pretax profits rise to 60.2 mln stg, up from 28.3 mln stg, buoyed by a 10 pct rise in gross written premiums.
   
In reaction KBC Peel Hunt upped its recommendation for Beazeley to 'hold' from 'reduce'.
   
Among the FTSE 250 fallers, Ultra Electronics shares shed 34 pence at 1,059 after its first half results failed to impress.
   
Ultra reported pretax profits before amortisation of 26.2 mln stg for the first half against 23.8 mln stg for the same period in 2006, after a strong civil aerospace market drove growth in its Aircraft and Vehicle Systems
division.
   
Citigroup noted that Ultra Electronics' first half EPS was 2 pct below its forecasts, and said while its order book clearly remains healthy, due to currency effects, the order book is down 1 pct on December 2006 levels.

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

..in St Lucia's UNESCO's World Heritage Site.  Superb buy to let opportunity in a breathtaking location with immediate income and dramatic capital appreciation.  For more information click here.

Paris shares end flat as credit fears outweigh strong earnings, upgrades

The CAC-40 index finished up 2.40 points or 0.04 pct at 5,646.36. Among CAC-40 stocks, 16 closed higher and 24 closed lower.  On the Matif, August CAC-40 futures were trading at 5,681.00. On the broader indices, the SBF-80 index closed up 14.39 or 0.21 pct at 6,848.83, while the SBF-120 ended the day up 2.71 or 0.21 pct at 4,123.27.
   
The CAC-40 staged a modest recovery earlier in the afternoon, pulling back after four days of steady declines, but finished the day virtually flat as analysts warned that European markets could still correct further downwards.
       
Nonetheless, tyre-maker Michelin managed to outperform finishing up 3.44 eur or 3.82 pct at 93.52 on the back of upbeat broker comments about Friday's first-half results.
   
SocGen analysts raised their target to 108 eur from 105 and reiterated their 'buy' rating. The broker called the first-half numbers "very strong" and said it expects earnings to rise steadily over the next three years as Michelin benefits from its Horizon 2010 savings plan. Natixis, meanwhile, upgraded its recommendation on Michelin to 'buy' from 'add', with a target of 110 eur.
   
Schneider Electric added 1.71 or 1.82 pct to end the day at 95.91, after Goldman Sachs added the stock to its 'conviction buy' list. In a note to clients today, Goldman analysts said they expect Schenider to show continued strong organic growth when it reports H1 earnings on Wednesday, which could lead to consensus forecasts.
   
ArcelorMittal closed up 0.47 or 1.05 pct at 45.08 ahead of its first half results on Wednesday, helped by a strong earnings surprise from Indian peer Tata Steel Ltd. Tata beat analyst forecasts today with a 28 pct rise in first-quarter net profit, although sales fell slightly short of expectations.
           
Among other risers outside the CAC-40, Dassault Systemes finished 1.24 or 2.86 pct ahead at 44.53, pulling back from last week's heavy losses which followed its disappointing second-quarter sales figures.
       
Among the fallers, financial stocks remained under pressure after last week's heavy losses on equities, caused by growing signs of tension in credit markets.
   
Societe Generale -- which reports first-half results on Thursday -- fell 2.22 eur or 1.77 pct to 123.52, and Dexia was down 0.37 or 1.70 pct at 21.38, Credit Agricole shed 0.14 or 0.51 pct to 27.46 and BNP Paribas -- which reports earnings on Wednesday -- dropped 0.38 or 0.48 pct to 79.27.
   
A Paris dealer commented that investors will be paying particular attention to interim results from the major banks, in order to gauge the "real impact" of problems in the subprime mortgage market.
   
Elsewhere, Gaz de France shed 0.48 or 1.41 pct to close at 33.65, following its first-half sales on Friday, when it reported an 11 pct drop under the impact of warm weather.
   
Outside the CAC-40, Groupe Steria plunged 2.66 or 5.80 pct to 43.20 as analysts said the French IT services company's agreed 130 pence a share offer for Xansa PLC looks on the high side.
       
Bic fell 2.19 or 4.06 pct to 51.81. In an interview with the financial weekly Investir, CEO Mario Guevara said the consumer products company expects a full year operating margin of more than 17 pct, down from 17.5 pct last year, as cost cuts through productivity improvements offset investment costs.

LOW-RISK, AWARD-WINNING, INVESTMENT STRATEGY
 
£2,000 to over £80,000 Tax-Free

Click Here

German shares close higher as gains by Linde, Henkel offset subprime woes
 
The DAX was up 4.63 points or 0.06 pct at 7,456.31, after trading between 7,386.60 points and 7,503.17 points. The MDAX was down 28.71 points or 0.27 pct at 10,523.60 points, while the TecDAX added 7.08 points or 0.79 pct to 898.32 points. DAX futures were up 72,00 or 0.97 pct at 7,509.00, while bund futures gained 0.12 or 0.11 pct to 113.12.
  
Leading blue-chip stocks higher, Linde jumped 4.50 eur or 5.37 pct to 88.24 eur after it posted better-than-expected second-quarter figures, boosted by its acquisition of BOC.
       
Henkel advanced 1.31 eur or 3.50 pct to 38.71 eur after the German household products manufacturer announced that it has entered into an exclusivity agreement with Akzo Nobel to acquire Imperial Chemical Industries PLC's adhesives and electronic materials business units in the event that Akzo's bid for ICI is successful.
   
MAN rose 2.44 eur or 2.43 pct to 102.72 eur ahead of second-quarter figures to be released tomorrow that are expected to be solid. Meanwhile, Deutsche Boerse added 1.05 eur or 1.27 pct at 83.90.
   
Siemens was 0.33 eur or 0.35 pct higher at 95.12 eur after rumours circulated that the electronics giant might be planning to give its shareholders a special dividend from some of the proceeds of the sale of its VDO auto parts unit to Continental AG for 11.4 bln eur.
       
Among today's falling stocks, Hypo Real Estate shed 1.75 eur or 3.78 pct to 44.55 eur and Commerzbank dropped 0.94 eur or 2.96 pct to 30.77 eur as the two DAX-listed banks currently worst hit by subprime jitters.
   
A spokesman for Commerzbank earlier said the company has set aside 80 mln eur of provisions to cover its exposure to the US subprime market, emphasizing the company does not expect the sector's woes to hurt its full-year earnings.
   
MDAX-listed peer IKB overnight slashed its full-year earnings forecast and replaced its chief executive after the US subprime market led investors to pull money out of a fund managed by the company.
   
IKB said the uncertainty caused by the crisis in the US subprime mortgage market and a sharp widening of spreads last week caused "massive" uncertainty among investors that impaired the ability of IKB-managed Rhineland Funding conduit to access funding. Shares of IKB plummeted 4.32 eur or 20.11 pct to 17.16 eur.
   
Back on the DAX, Deutsche Postbank, which dropped nearly 5 pct earlier largely due to slightly-below-expectations second-quarter figures, had recovered some and was off 0.71 eur or 1.27 pct at 55.00 eur.
   
Deutsche Bank shares were 0.86 eur or 0.88 pct lower at 97.00 due to the same pressure on the sector and a negative brokerage note from Societe Generale. Societe Generale dropped its price target on Germany's largest bank to 104 from 119 eur per share while retaining its 'hold' stance, saying that profits for the investment bank could fall next year.
   
Fresenius Medical Care eased 0.98 eur or 2.80 eur to 34.02 eur ahead of releasing second-quarter figures tomorrow. Among further MDAX stocks, Vossloh gained 3.51 eur or 4.30 pct to 85.06 eur. Morphosys dropped 2.45 eur or 5.77 pct to 40.00 eur on the TecDAX, after it released second quarter numbers that largely disappointed.

ADVFN Poker will match your first deposit up to $500. All you have to do is open an account with us, deposit money and play in our buzzing cash games or exciting tournaments. We will credit your bonus automatically! Play Now

Amsterdam shares close flat, tracking tentative Wall St trade

The AEX closed 0.93 point or 0.18 pct lower at 525.76, after opening at 527.11 and trading in a range of 523.76-530.74. Government bonds closed higher, and the euro stood at 1.3677 usd compared to 1.3656 usd late Friday.
   
All eyes were on ABN Amro this morning when the bank came out with generally higher-than-expected second quarter results and declared it could not recommend any takeover offer to shareholders. The move was largely seen by analysts as a blow to Barclays' ambitions and an opening of the door to the consortium consisting of Fortis, Santander and Royal Bank of Scotland. ABN Amro closed 0.29 up pct to 35.0 amid high trading volume.
   
Among other financials, Fortis fell 1.10 pct to 28.82, Aegon slipped 0.84 pct to 13.02, and ING shed 0.52 pct to 30.72. On the midcap, Binckbank slid 4.18 pct to 13.29 and SNS Reaal lost 1.47 pct to 16.13.
   
KPN and Getronics provided the news of the day however, with Getronics soaring 22.55 pct to 6.25 after KPN came out with an offer for the technology company, with investors ignoring Getronics' first half net loss and outlook of full year net loss due to a 50 mln eur impairment charge in the US. KPN was off 1.51 pct to 11.10 in high volume, with investors looking mainly at its cash offer for Getronics rather than the early publication of second-quarter figures that beat analysts' estimates.
   
Unilever fell 1.47 pct to 22.13, while fellow food-related issue Numico closed down 0.24 pct to 53.48. Corporate Express lost 0.99 pct at 10.04 and Wolters Kluwer was off 0.52 pct to 21.22, both ahead of results expected later this week.
   
Akzo Nobel closed down 1.02 pct to 59.97, after initially rising on news its latest approach to the UK's Imperial Chemical Industries with an increased offer was rejected. Chemical peer DSM by contrast went up 2.40 pct to 37.50.
   
TNT ended the day down 0.03 pct to 31.28 after the company came out with in-line second quarter results and the announcement of a new 500 mln eur share buy-back, with investors pleased about the increased outlook for the Mail.
   
Royal Dutch Shell closed down 0.18 pct to 28.40 and Ahold up 0.11 pct to 9.28, both in high volume.
   
Vedior led AEX gainers, rising 2.77 pct to 18.90, while fellow staffing company Randstad went 0.54 pct higher to 48.12 and USG People put on 1.11 pct to 27.40, all rebounding from last week's sharp losses. ASMI was 0.39 pct higher to 20.44 ahead of results expected today at 6.00 pm.   

Forex

ADVFN Services