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London market
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UK blue chips opened higher this morning, rallying after yesterday's sharp drop in
reaction to the surprise UK rate hike helped by a good advance overnight on Wall Street, but
the gains in London were eroded amid caution ahead of today's key US jobs report and with
some mixed major results, dealers said.
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At 9.02 am, the FTSE 100 index was 2.6 points higher at 5,841.0, having fallen
back from an early peak of 5,864.3.
All the broader FTSE indices were firmer, with the FTSE 250 index up 21.1 points
at 9,285.4.
Early volume was fair, with 169 mln shares changing hands in 25,577 deals.
Overnight on Wall Street, the DJIA closed 42.66 points higher at 11,242.59, while
the Nasdaq composite index ended 13.53 points firmer at 2,092.34 after some mild
economic data and strong retail sales figures helped investors overcome concerns about next
week's Federal Reserve meeting.
Economists believe, however, that today's July non-farm payrolls data could provide the
definitive answer as to whether the Fed will hike interest rates once again next Tuesday or
pause for the first time after seventeen rate hikes over the past two years.
Forecasters predict US non-farm payrolls increasing by 145,000 in July, with the
unemployment rate expected to remain unchanged at 4.6 pct. Average hourly earnings are
forecast to rise 0.3 pct.
Meanwhile, in Asia today, the Nikkei 225 index closed 28.81 points higher at
15,499.18, while the Hang Seng index ended its morning session 13.28 points firmer at
7,035.14.
Oil prices were easier in Asian trade as concerns over the threat of hurricanes hitting
the US Gulf Coast eased and amid hopes of an agreement to stop the conflict in Lebanon.
Light sweet crude for delivery in September fell 13 cents to 75.33 usd a barrel from its
close of 75.46 on the New York Mercantile Exchange.
The easier crude price impacted oil majors in London and pinned back the blue chip gains,
with Royal Dutch Shell off 11 pence at 1,920 and BP down 2-1/2 pence at 634-1/2.
The main early support in London, however, came from the mining sector led by Anglo
American, up 72 pence to 2,295 after the firm raised its share buyback programme by
another 4 bln usd as it delivered bumper first-half earnings.
Anglo American reported first-half earnings of 1.70 usd per share in the first
half, up from 1.18 usd last time, in line with the forecast range of 1.61-1.85 usd.
In response, JP Morgan reiterated its 'neutral' advice and said it had believed
that as the company has created in the region of 1 bln of surplus cashflow that could be used
for special dividends and it was not disappointed.
Other mining issues pushed higher as well, helped too by firmer metal prices with
Lonmin up 30 pence to 2,750, Kazakhmys ahead 13 pence at 1,227, Vedanta
adding 13 pence at 1,281, and Antofagasta gaining 3-3/4 pence at 423.
The main FTSE 100 riser was Partygaming, up 4-1/2 pence at 114-1/2 as the
market continued to welcome yesterday's Gamebookers acquisition.
The biggest FTSE 100 faller early on was ITV, down a penny at 103-1/4 as
profit-takers moved following yesterday's good gains amid continuing uncertainty over the
possible departure of the broadcaster's CEO, Charles Allen.
British Airways was also a poor FTSE 100 performer, down 2-3/4 pence to
386-1/4 as comments that it expects costs to rise on the back of higher staff pensions offset
in-line first-quarter results.
The flagship airline also raised its full-year guidance. Merrill Lynch retained its
'neutral' stance on BA and raised its estimates but was cautious on the ension costs
news.
Meanwhile Royal Bank of Scotland lost 8 pence at 1,709 after what WestLB called a
'messy' set of first-half results.
The UK's second-biggest bank delivered a better than expected 23 pct increase in
first-half profit, helped by a strong performance in investment banking, with pretax profit
for the six months to June 30 rising to 4.51 bln stg, up from 3.68 bln stg in the same period
last year, and ahead of the consensus analyst forecast of 4.35 bln stg.
However, the company saw its net interest margin fall to 2.45 pct from 2.5 pct in the
last six months of 2005, held back by a shift towards less profitable forms of lending and an
increase in customer deposits.
On the second line, satellite communications provider Inmarsat was the top riser,
up 20-1/2 pence to 335 after posting better than expected first half results which prompted
Lehman Brothers to reiterate its 'overweight' recommendation and 390 pence price target.
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Inmarsat saw its underlying EBITDA in the six months to June 30 rise 3.6
pct to 171.4 mln usd, with adjusted sales up 2.2 pct at 245.9 mln usd.
The company said the core business is performing well and meeting expectations for the
year.
Elsewhere Great Portland took on 5-3/4 pence at 535 after the real estate firm
acquired two London properties from rival Hammerson for 57.6 mln stg.
Broker comment, meanwhile, supported Colt Telecom shares, up 3-3/4 pence at 118
after being upgraded to 'neutral' from 'underperform' on valuation grounds by Credit Suisse,
albeit with a reduced target of 120 pence, down from 134.
And a trio of upgrades after yesterday's results helped lift GKN shares 2-3/4
pence higher to 280, with Deutsche Bank, Citigroup, and UBS all raising ratings for the
autoparts group.
On the downside, bakery firm Greggs shed 35 pence at 3,715 after it revealed a 20
pct drop in interim pretax profits and announced the loss of 200 jobs in a restructuring
move.
The group saw its pretax profits shrink to 12.5 mln stg, hit by flat like-for-like sales
and a 69 pct hike in energy costs.
In response to the figures, UBS reiterated its 'neutral' stance noting that Greggs'
pretax figure was 2.5 pct ahead of its expectations.
The broker also felt trading in the second half had started well with 1.4 pct
like-for-like sales growth over the first 4 weeks, although this was offset by a 2.6 pct
decline over the subsequent 2 weeks of very hot weather.
On the domestic macro front, after yesterday's surprise Bank of England rate hike there
is little important data to provide further clues to the state of the UK economy.
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Paris market
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Major indices:
CAC-40 up 18.05 at 5,001.73
SBF-80 up 27.54 at 5,524.21
SBF-120 up 12.39 at 6.607.58
Volume: 280 mln eur
30 CAC-40 stocks up
9 CAC-40 stocks down
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Arcelor deleted from index, no replacement yet
Major gainers:
EDF up 1.53 or 3.66 pct at 43.28 as govt approves request for first tariff hike
since Jan 2003.
Schneider Electric up 1.10 at 97.00
Capgemini up 0.42 at 40.30 on bargain-hunting
Gemalto up 0.95 or 5.88 pct at 17.05 on US passport contract win
Major losers:
EADS down 0.19 at 22.84
Michelin down 0.25 at 46.55, as S&P cuts long-term rating. Total down 0.50 at
51.50, on profit-taking
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Amsterdam market
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Major gainers:
Philips rose 2.06 pct to 26.25 after the company confirmed it sold 80.1 pct of its
chip operations to a financial consortium for 8.3 bln eur.
Many tech-related issues benefited from the higher-than-expected sales price for the
Philips semiconductor operations, with ASML putting on 1.43 pct to 15.60 and ASMI
advancing 0.48 pct to 12.46.
Getronics went 1.50 pct higher to 5.40 on profit-taking after recent losses
following the release of disappointing second quarter results earlier this week.
Financials were mainly up, with ING 1.13 pct higher to 32.20, Fortis adding 0.93
pct to 28.25 and Aegon strengthening 0.61 pct to 13.25.
Heijmans was another strong gainer, up 0.95 pct to 39.37.
BAM added 0.63 pct at 16.10 after the company said it was named preferred bidder by
England's Solihull council for a public private partnership order worth around 108 mln eur
to build and maintain four schools.
Pharming lifted 0.28 pct to 3.63 after the biotech company reported a narrowing
net loss in the second half due to falling costs.
Major decliners:
Ordina led decliners, falling 1.44 pct to 16.46.
Hunter Douglas slipped 1.30 pct to 53.30.
On the AEX, Unilever shed 0.82 pct to 18.05.
Royal Dutch Shell was off 0.65 pct to 27.32.
Ahold lost 0.14 pct to 7.09 after Petercam downgraded the issue to 'hold' from
'add' on valuation grounds.
Arcadis edged 0.27 pct lower to 36.50, with investors disregarding the company
winning a 26 mln usd order from the US Army.
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