ADVFN III Morning Euro Markets Bulletin
Daily world financial news from Thomson Financial News Supplied by advfn.com
05 Jun 2008 09:58:31
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London
London shares higher in early deals; NY, Asia mixed; rate decisions key
LONDON - UK blue chips pushed higher in early deals, rallying after mixed performances overnight in New York and Asia, with banks, housebuilders and retailers in the vanguard of the advance and any underlying caution ahead of key interest rate decisions in the UK and Europe shrugged aside.
At 9:20 a.m., the FTSE 100 index was 28.7 points lower at 5,999.8, having closed 87.6 points weaker on Wednesday.
Overnight on Wall Street, the DJIA ended 12.37 points lower at 12,390.48, while the broader S&P 500 index was down 0.45 points at 1,377.20, but the Nasdaq composite index ended 22.66 points firmer at 2,503.14.
The mood was also mixed in Asia. Japan's Nikkei 225 index closed 94.45 points higher at 14,341.12, but Hong Kong's Hang Seng Index ended 132.04 points firmer at 24,255.29.
All eyes in London will be on the lunchtime interest rate decisions. The Bank of England is expected to keep borrowing costs unchanged following the latest monthly Monetary Policy Committee meeting as concerns over the inflation outlook dominate amid mounting evidence of a sharp UK economic slowdown.
And the welter of evidence showing the UK housing market is faltering continued to mount after another key survey revealed a steep fall. HBOS unit Halifax's housing market survey showed a 2.4 percent fall in May. Prices were forecast to fall 1.0 percent after a 1.3 percent decrease in April.
The annual rate in May fell 3.8 percent against predictions of a 3.5 percent drop. The latest drop was also far worse than the 0.9 percent fall in April.
And the European Central Bank is also expected to keep its interest rates unchanged after Thursday's Governing Council meeting, with a rate cut now looking unlikely before the fourth quarter of this year, according to a poll of economists by Thomson Financial News and Agence France-Presse.
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In London, a rally by banking issues provided the main fuel for the early FTSE 100 advance, with the sector attracting some bargain hunters after recent sharp falls helped by recent talk private equity firm Texas Pacific Group could look to take further stakes in the banks after news it is to acquire a stake in mid cap Bradford & Bingley on Monday.
Royal Bank of Scotland was a top performer, up 8-1/2 pence at 258 ahead of the close on Friday of its mammoth 8 billion pounds rights issue and amid recent vague talk of hedge fund stake building. HBOS recovered 9-3/4 pence at 350-1/4, having confirmed the timetable for its own rights issue, while Barclays took on 10 pence at 362 and Bradford & Bingley firmed 1-3/4 pence to 70-1/2.
Housebuilders also rebounded after sharp falls over the past few sessions amid some bargain hunting ahead of the UK interest rate decision despite the depressing Halifax house price survey and a further dull trading update in the sector.
Mid cap Bellway said the deterioration in the market since Feb. 1 has resulted in the construction firm's net reservations being down 31 percent, adding there has been no sign of the normal spring selling surge since March 26.
But with the gloomy statement much as expected, Bellway shares managed to rally 14 pence higher at 608, with Landsbanki reiterating its 'buy' stance on the stock, while mid cap peer Bovis Homes added 12 pence at 400, Redrow gained 9-1/2 pence at 223-1/2, Taylor Wimpey firmed a penny at 79 and blue chip Persimmon took on 13-3/4 pence at 468-1/2.
Retailers also recovered, with Kingfisher taking on 2.4 pence at 138.3 after Thursday's reassuring sales news with its first-quarter results, while Home Retail Group added 9-3/4 pence at 248-1/4 helped by a recent Seymour Pierce upgrade, and Marks & Spencer took on 6-1/4 pence at 386-3/4.
But not everything was rosy on the high street, with food retailer Wm.Morrison shedding 8 pence to 284-1/4 after it reported continuing robust but slower sales growth over its first quarter.
The Bradford-based group said like-for-like sales, excluding fuel, increased 7.0 percent for the 13 weeks to May 4. This compares with analyst forecasts of a rise of 6.5 percent to 8 percent for the 370-store group. In reaction, Numis Securities cut its stance for Wm.Morrison to 'hold' from 'buy'.
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Among the other blue-chip fallers, miners were once again the main casualties, suffering from weaker metal prices and some negative sector comment.
Lonmin was the worst off, down 98 pence at 3,356 after Goldman Sachs cut its stance to 'neutral' from 'buy' and reduced its target after reducing earnings forecasts for companies with exposure to the South African rand in a metals review.
Anglo American also fell, losing 72 pence at 3,329 although Goldman Sachs raised its target for the stock, while BHP Billiton shed 35 pence to 1,865 and Rio Tinto dropped 95 pence to 5,909. Meanwhile specialty chemicals and precious metals group Johnson Matthey was also a faller, shedding 39 pence at 2,000 on profit taking following its full-year results.
The firm said its prospects remained "very encouraging" despite the slowdown in the U.S. market as it reported a 16 percent increase in annual pretax profit to 265.4 million pounds, up from 229.3 million previously and ahead of the consensus forecast of 258.7 million pounds.
On the second line, however, the day's results were taken more positively. Premier Farnell was the top riser, adding 8-1/2 pence at 176-1/2 after reporting a 37 percent rise in first-quarter pretax profit and said it is confident of further progress in the current year.
Meanwhile, Halfords added 8 pence at 274-1/2 and fellow mid cap retailer WH Smith firmed 3-1/2 pence at 403 after well-received numbers from both. On the macro front, ahead of the interest rate decisions, no key economic pointers are due for release on Thursday so the main data focus will be across the Atlantic on U.S. weekly initial jobless claims numbers.
The number of individuals filing first-time claims for unemployment is expected to total 374,000 in the week ending May 31, up from 372,000 in the previous week.
After Wednesday's above-forecast ADP employment survey, Thursday's figures will be an indicator for Friday's key May U.S. non-farm payrolls, always a closely watched and volatile barometer of the health of the world's biggest economy.
UK Diary of Events:
For a diary of key financial and corporate events in the UK today, Click here
US Summary:
For a summary of US stocks at yesterday's close of trade, Click here
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Milan
Milan shares TFN market data at 9.45 a.m.; Atlantia, Telecom Italia lead gains
Main indices:
Mibtel at 25,130 points, up 0.14 percent
S&P/Mib at 32,554 points, up 0.14 percent
Main S&P/Mib gainers
Lottomatica up 2.16 percent at 18.43 euros as JP Morgan upped the stock to 'overweight' from 'neutral' while keeping unchanged its price objective of 25 euros
Telecom Italia up 2.08 percent at 1.421 euros after announcing an efficiency plan that envisages about 5,000 job cuts in Italy by 2010 and a subsequent reduction in costs of about 300 million euros per year
Atlantia up 1.71 percent at 23.19 euros after the Senate approved Wednesday the tariff convention between motorway regulator ANAS and Atlantia's main operating unit Autostrade per l'Italia
STMicroelectronics up 1.56 percent at 8.39 euros
Autogrill up 1.53 percent at 9.43 euros
Main S&P/Mib losers
Saipem down 1.89 percent at 27.99 euros
Tenaris down 1.15 percent at 19.19 euros
Intesa Sanpaolo down 0.74 percent at 4.0975 euros
Mediolanum down 0.68 percent at 3.51 euros
UBI Banca down 0.25 percent at 16.20 euros
Other stocks in the news
Fiat up 1.48 percent at 13.81 euros after CEO Sergio Marchionne late Wednesday confirmed that the group will meet its full-year targets despite weak car sales in some European markets
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Paris
Paris shares TFN market data 10.35 am; Credit Agricole, France Tel fall sharply
Major indices:
CAC-40 up 13.29 points or 0.27 percent at 4,928.36
SBF-80 up 2.42 or 0.04 percent at 5,748.54
SBF-120 up 8.55 or 0.24 percent at 3,579.11
9 CAC-40 stocks up
31 CAC-40 stocks down
Major gainers:
Michelin, up 1.48 euros or 2.72 percent at 55.87; Renault, up 1.24 or 1.89 percent at 66.90; Peugeot, up 0.66 or 1.66 percent at 40.45. Auto stocks are recovering from steep losses earlier in the week
Major losers:
Credit Agricole, down 0.78 or 4.68 percent at 15.90. Wednesday evening, the banking group announced the terms of its 5.9 billion euro rights. The group is offering one new share for every three existing shares held, at a subscription price of 10.6 euros per share
France Telecom, down 0.77 or 4.00 percent at 18.46. The telecoms operator said Thursday it has launched a "friendly" and "indicative" 63 crown per share cash and stock offer for TeliaSonera
EADS, down 0.35 or 2.31 at 14.78. Exane BNP Paribas downgraded the aeropsace and defence group to 'underperform' from 'neutral'
Ipsen, 3.99 or 9.22 percent lower at 39.28. The French pharmaceuticals group said it has reached agreement with the board of Tercica Inc to buy the 74.7 percent it does not already own in its U.S. partner for $9.0 per share, or a total of about $404 million
ADP, down 0.85 or 1.19 percent at 70.79. SG Securities reinitiated coverage with a 'Sell' recommendation and 63 euros target, citing uncertainties about the company's business mode
Most active stocks:
France Telecom, 16.81 million shares traded
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Madrid
Madrid shares market data at 10:10 a.m. - blue chips up in tentative rebound
IBEX-35 index 13,378.10, up 36.9 points
Major gainers:
Selected heavyweights, with Telefonica up 0.05 euros at 18.04 and BBVA 0.03 higher at 14.08. Constructors, with Ferrovial up 0.65 at 50.65, FCC up 0.51 at 43.72 and ACS 0.26 higher at 37.30.
Inditex, up 0.35 at 32.69 after Industry Minister Miguel Sebastian said the government is considering relaxing restrictions on store hour openings.
Major losers:
Fenosa, down 0.08 at 41.71 after Spanish Primer Minister Jose Luis Zapatero appeared to back away from earlier calls for the creation of a national energy champion in an interview with the FT.
Iberia, down 0.02 at 2.03 on profit-taking after yesterday's 4 percent gain fuelled by easing oil prices and revived hopes of a bid from Lufthansa. Acerinox, down 0.15 at 16.71.
Forex
London 0752 GMT Hong Kong 0500 GMT
U.S. dollar
yen 105.85 up from 105.54
Swiss franc 1.0449 down from 1.0457
Euro
U.S. dollar 1.5437 up from 1.5402
yen 163.42 up from 162.52
Swiss franc 1.6133 up from 1.6101
pound 0.7907 up from 0.7891
Pound
U.S. dollar 1.9513 up from 1.9506
yen 206.57 up from 205.93
Swiss franc 2.0390 down from 2.0393
Australian dollar
U.S. dollar 0.9565 up from 0.9532
pound 0.4901 up from 0.4885
yen 101.25 up from 100.62
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