Daily news of the markets
London shares close roughly flat, assisted by in line US inflation data
Leading shares closed flat, recovering from early lows, thanks to in line US CPI report,
which offered further reassurance that the Fed may once again leave rates unchanged at its
next meeting in September. The news sent Wall Street higher which in turn bolstered UK
sentiment, dealers said.
At the close the FTSE 100 index was 1.3 points weaker at 5,896.6, recovering from
earlier lows of 5,848.7.
Looking on the negative side, the market was weighed down by ex-dividend factors which
took nearly 15 points off the blue chip index with BT Group, Barclays, Standard Chartered,
RBoS, and Aviva all lower as a result.
The broader FTSE indices all closed in the blue. Volume was better than of late, with
2.495 bln shares changing hands in 360,100 deals.
The US consumer price index rose 0.4 pct in July, in line with analysts'
expectations, while the core rate, which excludes energy and food, was up 0.2 pct, slightly
lower than the 0.3 pct expected.
Elsewhere, US housing starts in July came in at an adjusted annualised rate of 1.795 mln
units, down from 1.85 mln in June, and below the 1.81 mln forecast.
At London's close the DJIA was up 43.40 at 11,273.70, while the Nasdaq was
better by 4.85 points at 1,290.40.
In domestic economic news, the Bank of England's rate-setting monetary policy committee
voted six-to-one to raise its key repo rate by a quarter point to 4.75 pct at its meeting on
Dresdner Kleinwort meanwhile, reiterated its 'sell' advice, saying it sees more upside in
sector peer Drax.
Drax failed to benefit however, sliding 8-1/2 pence to 952-1/2, while elsewhere in
the sector International Power shed 7-1/4 pence at 312-1/2, and Scottish & Southern
Energy dropped 19 pence at 1,228.
Other utility issues were also under the cosh today, undermined by news that Germany's
RWE has only attracted two bidders for its Thames Water business, and by a cautious sector
note from Evolution Securities.|
The broker made two rating changes, downgrading blue chip United Utilities to 'add' from
'buy' and midcap Northumbrian Water to 'sell' from 'reduce'.
United Utilities shares sunk back into the red, down 2-1/2 at 680 after being at a
daily low of 668-1/2 pence, while Northumbrian Water shed 10 pence at 256 also after
going ex-dividend today.
News that senior executives at BP, down 6-1/2 at 608, face a lawsuit filed by
shareholders who claim the oil giant's poor maintenance practices at Prudhoe Bay led to the
partial shutdown of the nation's largest oil field, knocked the stock lower.
On the upside with blue chips, the miners led the charge with Vedanta Resources
topping the FTSE 100 risers with a gain of 73 pence to 1,341 amid rising zinc prices and
vague bid speculation.
Rio Tinto meanwhile, added 100 pence to 2,795, while BHP Billiton added 38
pence at 1,027 both lifted by hopes of a swift end to the strike at their joint owned Chilean
copper mine, Escondida.
Away from miners, PartyGaming showed strength, up 4-3/4 at 108-3/4, amid rumours
that the online gaming firm is building a stake in BWIN interactive entertainment, formerly
known as BetandWin.
Traders noted vague speculation that PartyGaming is acquiring stock in BWIN, taking
advantage of the group's recent weakness following reports last week that its German betting
licence may be revoked by the Saxony region.
Investors liked reports that Corus Group, the Anglo-Dutch steel maker, better by
10-1/2 at 394-3/4, is to build a world-class rail welding facility at ts Scunthorpe plant, in
Lincolnshire, as part of the ongoing plan to invest 130 mln stg in the site.
Meanwhile BAE Systems took on 9 pence at 358-1/2 after Morgan Stanley reiterated
its 'overweight' stance albeit with a lowered price target of 450 pence, down from 480, to
reflect dilution from the sale of its Airbus stake.
The airline industry was also bolstered by news that Grupo Ferrovial is unlikely to
suffer any long-term fallout from security concerns at its recently acquired BAA-run airports
after last week's foiled terrorist plot alleged to have targeted flights to the US. BA
added 6-3/4 pence to 382-3/4.
Elsewhere, shares in Reuters were higher again following a report yesterday that
US hedge-fund ValueAct Capital has bought a 3.3 pct stake. In a research note published this
morning, JP Morgan told investors that although the stake in Reuters was acquired during Q2,
the broker sees it as an endorsement of its view that the media group is under-valued on a
medium-term view. Reuters gained 5-3/4 pence to 394-1/4
On the second line, Ashtead Group was a key 250 riser, up another 7-3/4 pence at
127-3/4 after the recent completion of its 150 mln usd rights issue to part fund its 1 bln
usd acquisition of US firm NationsRent.
Panmure Gordon reiterated its 'buy' recommendation and also dismissed rumours that the
CEO is planning to dispose of his 12 mln shareholding.
Inmarsat was also a top mid cap gainer once again, adding another 14-3/4 pence at
350 in a continuing positive read-across from the ongoing auction for the US Advanced
Wireless Services spectrum.
Carphone Warehouse also moved higher again, up 5-3/4 pence to 269-1/2 after
newspaper reports highlighted talk of a possible 330 pence a share private equity bid for the
telecoms retailer, even though traders dismissed such a move as 'highly unlikely'.
Cazenove said it believes the chance of a successful bid is extremely low, noting that
the company is controlled by Charles Dunstone, 33 pct, and David Ross, 22 pct. The UK broker
however, upgraded its rating to 'in-line' from 'underperform' on valuation.
And Balfour Beatty gained 10-3/4 pence at 363 after the firm reported a solid set
of first-half results, which led several brokers to raise their estimates and price targets.
The construction group posted pretax profits before exceptionals of 60 mln stg versus 52
mln stg in the previous year.
On the downside, however, ex-dividend issues helped limit the FTSE 250 gains, with DS
Smith, GKN, SSL, and Stanley Leisure all losing pay-out attractions
Elsewhere, shares in Morgan Crucible shed 5-3/4 pence at 270 amid talk of a
placing of 7.3 mln shares being undertaken by Morgan Stanley at a price of 272 pence each,
according to dealers.
The placing news came just over a week after Morgan Crucible revealed it has received a
preliminary bid approach from an unnamed third party.
And Cable & Wireless shares lost 0-1/2 pence to 123-3/4 after being downgraded to
'hold' from 'buy' by Dresdner Kleinwort with an unchanged target of 120 pence.
German shares close higher as US CPI data seen as benign, oil falls
At closing, the DAX 30 index was up 36.14 points or 0.63 pct at 5,812.94, having
traded between 5,764.8 and 5,826.41. The MDAX was at 8,098.18, up 120.11 points
or 1.51 pct, while the TecDAX was at 649.26, up 10.97 points or 1.72 pct.
The DAX futures contract was at 5,829.00, up 20.00 points, while bund futures were at
116.74, up 0.37 points.
SAP remained on top of the blue-chip leader board with traders attributing its
strength to support levels at 130 eur and 142 which have held after being tested recently.
They also said the shares showed a delayed reaction to Dresdner Kleinwort's reiterated 'buy'
rating and 210 eur price target yesterday. SAP shares closed at 147.92 eur, a gain of
4.84 or 3.38 pct.
ThyssenKrupp was up 0.64 eur or 2.41 pct to 27.19.
Elsewhere, TUI recovered some of its recent losses after AXA confirmed that its
stake in the shipping and tourism conglomerate now stands at 5.07 pct.
Dealers thought that AXA might be positioning itself ahead of a potential bid for
the group. The shares closed up 0.16 eur or 1.10 pct to 14.66.
Linde led losers, down 1.49 or 2.16 pct to 67.56.
On the MDAX, Salzgitter raced to the front up 3.62 eur or 5.68 pct to 67.39. The
issue benefited from upbeat comments from Credit Suisse, which reiterated its 'outperform'
rating and 100 eur price target on the German steel group, arguing that it is under-valued.
In earnings related news, Lanxess gained 0.99 or 3.32 pct to 30.80, after posting
better than expected second quarter results.
The chemicals manufacturer reported second-quarter EBITDA of 201 mln eur versus 163 mln
previously and against a consensus forecast of 193 mln, thanks to reduced costs and the
continuing robust growth in the chemical industry.
Second quarter sales rose to 1.751 bln eur versus 1.859 bln previously, and against
expectations of 1.787 bln.
Shares in Praktiker Bau- und Heimwerkermaerkte rose 0.80 eur or 3.32 pct to 24.93.
The retailer announced it is acquiring the operational business of home improvement chain
Max Bahr Holzhandlung GmbH & Co, which prompted positive broker comment.
AWD Holdings found itself at the bottom of the MDAX, dropping 0.20 eur or 0.75 pct
United Internet led TECDAX gainers up 0.75 or 7.63 pct to 10.59, while
Draegerwerk shed 0.78 eur or 1.65 pct to 46.44.
Paris shares close higher as US data eases fears of further rate hikes
The CAC-40 index finished up 22.50 points or 0.44 pct at 5,137.31, just below its
intraday highs. Volume for the day reached 4.2 bln euro.|
Among CAC-40 stocks, 29 closed higher, 8 closed lower and 2 ended unchanged. Arcelor has
been removed from the benchmark following its takeover by Mittal Steel, and no replacement
has yet been named.
On the Matif, August CAC-40 futures were trading 20.5 points firmer at 5,134.5.
Technology stocks led the gains, tracking strength on the bellwether Nasdaq
composite this afternoon. Capgemini rose the most among blue chips, up 1.34 eur or
3.4 pct at 41.33, and STMicroelectronics added 0.18 or 1.5 pct to 12.47.
Alcatel advanced 0.26 or 2.8 pct to 9.47, building on recent gains after French
daily La Tribune reported that a group of hedge funds controlling a third of Alcatel shares
could move to block its planned merger with Lucent, due to concerns about pension liabilities
at the US group.
Alcatel shares have fallen by over 30 pct since the merger with Lucent was announced on
Elsewhere, Peugeot climbed 1.28 or 3.1 pct to 42.34 after China Business News
reported that its Dongfeng Peugeot Citroen Automobiles joint venture swung to a net profit
of 190 mln yuan in the first half of 2006, up from a 636 mln loss a year earlier, citing
Index heavyweight Total slipped 0.05 to 53.65 as oil prices fell in the wake of an
increase in US crude stockpiles.
On the broader indices, the SBF-80 index closed up 57.87 at 5,627.19 and the
SBF-120 rose 19.09 to 3,702.83.
Amsterdam shares close higher, boosted by Wall St on tame US CPI Data
The AEX closed 1.60 points or 0.35 pct higher at 462.85, after trading in the
range 460.11-463.84. Government bonds traded broadly higher, while the euro stood at 1.2858
usd, up from 1.2783 usd late yesterday.|
Midcap issue Ordina was the day's main gainer, up 6.93 pct to 17.75 after Rabo
Securities upgraded the company to 'buy' from 'hold' and raised the price target to 20.0 eur
from 17.5 on the strong ICT services market.
Crucell rose strongly, up 6.13 pct to 17.13 after analysts said they expect news
from the WHO in the very near future regarding Quinvaxem, Crucell's new vaccine against
diphtheria, tetanus, pertussis, hepatitis B and flu type B, dealers said.
Staffing stocks performed well, with Vedior leading blue chip gainers, up 3.99 pct
to 14.07 eur, Randstad 5.60 pct higher at 41.33 and USG People gaining 5.92 pct
to 52.75 eur, after a report from the ABU (the Dutch association of temporary work agencies)
said the Dutch staffing market is increasing faster than anticipated.
Stocks with a high US exposure faired well, with ASML Holding adding 1.89 pct to
16.19 eur, Buhrmann up 1.73 pct at 10.02 eur and TomTom adding 1.57 pct to
ABN Amro led financials, up 1.38 pct to 21.25 eur after ING increased its
recommendation to 'buy' from 'hold' on upside potential. ING rose 1.10 pct to 33.23 eur.
Aegon ended the day flat at 13.85 eur, while Fortis fell 0.56 pct to 30.12.
Philips rose 0.12 pct to 25.94 as the company said it was selling Philips Enabling
Technologies Group (ETG) to VDL Group for an undisclosed amount. F.van Lanschot Bankiers
said that while gains on the sale will be minimal, the move shows Philips is continuing on
the road to becoming a more "focused" company.
Ahold led decliners, down 1.35 pct to 7.30 eur, amid on-going press reports about
the break up of the retailer. Brewer Heineken lost 1.05 pct to finish at 36.91 eur.
Shell closed 0.25 pct down at 27.59 eur as oil prices slipped. Reed Elsevier lost
0.40 pct to 12.42, as the market brushed aside the three-year academic agreement signed with
the Jordanian Consortium.
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