UK/Euro Financial Market Daily Evening Briefing 31-08-2007

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London shares close higher; NY up; Fed will do what is needed - Bernanke

Leading shares closed firmer, reflecting a strong early showing on Wall Street, with US Federal Reserve chairman Ben Bernanke saying the Fed will act to limit "adverse effects" on the economy.
   
At the close, the FTSE 100 index was 91.3 points ahead at 6,303.3, just down from the session high of 6,309.5, and up from a low of 6,212, with the FTSE 250 index firmer too -- 209.7 points stronger at 11,309.2. Volume was average, with 2.47 bln shares changing hands in 566,798 deals.
   
On Wall Street, by London's close, the Dow Jones Industrial Average was 110.1 points ahead at 13,348.8, with the Nasdaq composite index up 20.81 points at 2,586.11.
   
In a speech in the US this morning, Bernanke said The Federal Reserve "stands ready to take additional actions as needed" to provide market liquidity and promote the orderly functioning" of financial markets and to limit any "adverse effects" on the broader economy.
   
Back in London, among UK-listed bluechips, miners were in demand on the back of higher commodity prices.
   
Vedanta Resources finished the session at the top of the blue-chip leaderboard, 74 pence ahead at 1,760-1/2, followed by Rio Tinto, which was up 123 pence at 3,427-1/2, with Anglo American the next highest in the sector, 73 pence ahead at 2,842, and BHP Billiton ending 31 pence firmer at 1,457.
   
Oil stocks were also firmer, against the background of firmer oil prices.
   
BG Group, the best performer in the FTSE 100 yesterday, closed 12 pence ahead at 793-3/4 midafternoon pence after UBS upgraded it to 'buy' from 'neutral'. The broker said it had increased its estimate for recoverable reserves for the giant Tupi field in the Campos Basin, offshore Brazil.
   
Peer BP finished 6-1/2 pence stronger at 557-3/4 and Royal Dutch Shell ended 27 pence firmer at 1,924-1/2.
   
Elsewhere, Imperial Tobacco was also a good gainer, finishing 70 pence ahead at 2,240, amid news the European Commission said the deadline for its inquiry into Imperial Tobacco Group's buy of Altadis SA is set for Oct 4.
   
The merger would make Imperial the second-largest tobacco company in Europe, as well as consolidating its place as fourth biggest in the world.

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Looking at the second liners, on the upside Charter rose 55 pence to 1,114-1/2, as Panmure Gordon upgraded its stance on the company to 'buy' from 'hold', raising its price target to 1,235 pence from 1,030, and increasing its estimates.
   
Also benefiting from broker generated news was Filtrona which gained 13 pence to close at 238-3/4, after UBS upgraded the group to 'buy' from 'neutral' with a reduced target of 270 pence from 285 pence.
   
And, Homeserve ended 34 pence stronger at 1,709-1/2 after it announced a deal with FirstEnergy Solutions, a unit of FirstEnergy Corp, to market home emergency policies to 1.1 mln electricity households in its New Jersey service areas.
   
Elsewhere, Wincanton shares ended higher, up 21-1/2 pence at 383-1/2, after it said this morning arbitrators have found in favour of the company in dispute between its joint venture company PGN Logistics and farm equipment maker CNH.
   
Turning to earnings news, Rightmove gained 20-1/2 pence to 581-1/2 after it reported a 60 pct increase in first-half profit as it recruited more estate agents to advertise their properties through the group's online portal.
   
Rightmove, which advertises residential homes on behalf of estate agents and property developers, said underlying operating profit for the six months to June 30 2007 came in at 13.2 mln stg, up from 8.3 mln stg in the same period last year.
   
On the downside among midcaps, Amlin lost 0-3/4 pence to 305, on profit taking following yesterday's strong first-half numbers.

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Amsterdam shares close higher tracking Wall St; Corporate Express falls

The AEX closed 5.06 points or 0.98 pct higher at 522.73, after trading in a range of 519.72-525.27. Government bonds traded lower while the euro stood at 1.3634 usd versus 1.3653 usd late yesterday.
   
Of the few decliners, Corporate Express suffered the biggest losses, shedding 1.44 pct to 8.24 eur after it said it will start a new round of reorganisations at its troubled North America division. Analysts from several brokerages warned that the reorganisation may lead to more disruptions than results.
   
Among the winners was Arcelor Mittal, which added 2.53 pct to 48.28 eur amid news that it intends to buy a stake in Saar Ferngas for about 367 mln eur.
   
TomTom rose 1.77 pct to 47.76 eur, and Vedior added 2.14 pct to 16.67 eur while Randstad put on 1.76 pct to 41.08.
   
Royal Dutch Shell added 1.72 pct to 28.36 eur as crude oil prices rose to around 72 usd per barrel, and after Austrian company OMV expressed interest in exploration licences for the British Isles, including Shell's.
   
Ahold added 1.03 pct to 9.80 eur after Rabo Securities raised its price target to 11.5 eur from 10.8.
   
Semiconductor shares rose. ASML put on 0.56 pct to 21.73 eur and ASMI added 3.09 pct to 20.04 after Dell's second-quarter earnings of last night.
   
Most financials ended higher. ING rose 1.27 pct to 29.55 eur, Fortis rose 0.98 pct to 26.90 and Aegon put on 1.21 pct to 13.39 eur. ABN Amro was the only financial losing out, dropping 0.50 pct to 34.13 eur.
   
Among midcap shares, Ordina rose 2.91 pct to 14.87 eur, BAM put on 2.79 pct to 19.88 and Boskalis rose 2.45 pct to 31.75 eur.
   
Vopak added 1.92 pct to 43 eur after what analysts called "stunning" first-half earnings. Corio rose 1.02 pct to 57.18 eur, recovering from earlier losses after it said it expects the full-year direct result to be "marginally lower" than the year before.
   
Wessanen dropped 0.81 pct to 11.09 eur, Van der Moolen dropped 0.85 pct to 3.52 and Oce shed 1.62 pct to 15.80 eur.

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Milan shares close higher, supported by US mortgage measures

The Mibtel index was up 0.91 pct to 31,282 points and the S&P/Mib up 0.87 pct to 40,187. Volume traded was an estimated 4.884 bln eur.
   
The market came off its highs late in the session after comments from Federal Reserve chairman Ben Bernanke on the sub-prime credit problems. One broker said fund managers were keen to "massage" shares higher on the last day of the month after losses earlier in August.
   
Among the leading gainers was Seat PG, up 4.04 pct to 0.4045 eur. The share reacts to speculation on the prospects of private equity funds finding the cash to acquire the company.
   
Bulgari was another leader, 2.29 pct to 10.30. Brokers said the stock was benefiting from recent positive broker comment. Yesterday, Deutsche Bank upgrade the stock to 'hold', from 'sell'. Among other luxury stocks. Tod's gained 3.03 pct to 65.54.
   
Fiat was up 1.82 pct to 19.50 ahead of Monday's Italian new car registrations for August. Brokers said August's are less than other months of the year and investors see a fillip from Fiat's latest 500 model.
      
STMicro was up 1.29 pct to 12.77, giving up earlier gains on positive semiconductor sector sentiment on worries later in the session over the US antitrust probe into its flash memory alliance with Intel.
   
Autogrill continued this week's strong performance, up 1.99 pct to 15.37, supported by hopes it will buy UK duty free shops being put up for auction by Ferrovial. Industry sources said the auction has not started yet.
   
Banks lagged the market. Brokers said the sector continues to react to market rumours on sub-prime problems at individual banks, though overall the worries on the size of the problem are subsiding.
   
Unicredito rose 0.35 pct 6.29 and Intesa Sanpaolo was up 0.66 pct to 5.53. BPM, which rose sharply yesterday on merger hopes, was unchanged at 10.66.
   
Oils were higher. Eni gained 1.72 pct to 25.38. Brokers say they see Eni or the Italian government resolving a dispute with the Kazakh government over Eni's development of the huge Kashagan field. Saipem added 0.92 pct to 27.49.
   
Alitalia was down 1.34 pct to 0.836 after the airline confirmed its business plan late yesterday, including the selection of Citigroup to advice on finding an investor to take control of the company. Alitalia did not confirm a reported 1.5 bln eur capital increase and its board will meet next week to discuss the plan further. One broker noted how Alitalia's market capitalisation is only 1.2 bln.
   
Pirelli extended yesterday's losses, off 0.05 pct to 0.8245 on delays to a Brazilian clearance for the sale of its Telecom Italia stake. Telecom Italia rose 0.95 pct to 2.0825.

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German shares close higher as Bernanke comments boost Wall Street

The DAX was up 118.23 points or 1.57 pct at 7638.17, having traded between 7,536.78 and 7,659.72. The MDAX added 157.65 points or 1.56 pct to 10,296.07 while the TecDAX advanced 18.01 points or 2.00 pct to 917.30. DAX futures were 158.50 points or 2.11 pct higher at 7,666.50 while bund futures fell 0.16 or 0.14 pct to 113.77.
   
Tech stocks were on the buyers' radar, with Infineon leading the way among advancers, adding 0.41 eur or 3.72 pct at 11.42. It said yesterday that it and International Business Machines Corp (IBM) have agreed in principle to sell their shares in joint venture Altis Semiconductor to Advanced Electronic Systems AG (AES) for an undisclosed amount.
   
Siemens closed up 2.22 at 92.19. Siemen's IT solutions and services unit won a contract worth more than 60 mln eur from the British Broadcasting Corp to design, build and operate a new coding and multiplexing infrastructure.
   
TUI, up 0.63 or 3.42 pct at 19.05, was the second best performer as TUI Travel, a joint venture with First Choice Holidays, makes its debut on the London bourse next Monday.
   
EON rose 2.98 or 2.48 pct at 123.15. Gazprom Neft deputy chief executive Alexander Medvedev told Sueddeutsche Zeitung in an interview that he will meet this week with management of EON AG's unit EON Ruhrgas to negotiate the 25 pct stake EON seeks to acquire in the Siberian gas field Yushno Ruzkoje.
      
On the downside, Metro was the only stock in negative territory to close down 0.65 or 1.01 pct at 63.60 as investors pondered to figure out the meaning of today's announcement that Haniel Group increased its stake in Metro to 34.24 pct from 18.56 pct.
   
Standard & Poor's Ratings Services said it is putting Metro's 'BBB' long-term corporate credit ratings on positive watch after Franz Haniel & Cie GmbH together with the Schmidt-Ruthenbeck family acquired controlling stake in the company.
   
S&P said the move reflects support provided by parent Haniel, which is planning to help Metro review, decide and implement value-enhancing measures, which could strengthen the retailer's financial profile.
   
Financial stocks were on positive terrain but were generally underperformers compared with the overall index.
   
Munich Re was up 0.47 or 0.37 pct at 126.78, Commerzbank gained 0.17 or 0.57 pct at 30.09 while Deutsche Bank added 0.64 or 0.71 pct at 90.63.
   
Hypo Real Estate rose 0.77 or 1.95 pct at 40.30 after analysts at Merck Finck said they think the risks from sub-prime mortgages at Hypo Real Estate are limited.
   
On the MDAX, Arcandor gained 2.04 or 11.36 pct at 20.00. It showed a profit in its second-quarter operating income due to inclusion of figures from tourism unit Thomas Cook Group PLC. Symrise lost 0.22 or 1.14 pct at 19.05. On the TecDAX, QSC added 0.19 or 5.16 pct at 3.87 while Tele Atlas lost 0.21 or 1.02 pct at 20.30.

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