ADVFN III Evening Euro Markets Bulletin -October 15, 2012-.

ADVFN III	Evening Euro Markets Bulletin
Daily world financial news

Monday, 15 October 201

London Market Report

FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts

London close: Stocks hold on to gains despite Eurozone uncertainty Market Movers techMARK 2,094.74 +0.12% FTSE 100 5,805.61 +0.21% FTSE 250 11,855.67 +0.15% - Chinese data and US figures lift sentiment - All eyes on Spain and Greece ahead of EU summit - Citi economist predicts 'Grexit' London's FTSE 100 index finished the day in positive territory after some better-than-expected results from Citigroup and retail sales figures in the US boosted buying in afternoon trade. Stocks were given a lift early on after export data from China beat expectations: exports rose by 9.9% in September to a record monthly high, well ahead of the prior month's 2.7% rise and better than the consensus estimate of a 5.5% gain. However, the focus on stock markets continues to be on the Eurozone with speculation about a Spanish bailout and Greek exit doing the rounds ahead of the EU summit on Thursday. One anonymous official told Reuters that Spain is likely to request aid in November, despite the government's insistence that it does not need help. "The source said that if Spain does request a bailout this is likely to be dealt with in conjunction with a revised loan programme for Greece. Although sentiment has changed somewhat some investors are still waiting for more details on how Spain would be bailed out and how ministers would avoid the mistakes made when Greece was rescued," said trader Matthew Nelson from Spreadex this afternoon. German Finance Minister Wolfgang Schaeuble said this weekend that a Greek default "will not happen", pushing Greek 10-year bond yields on the secondary market to their lowest level since the debt restructuring in March. Citi's Chief Executive William Butler argued today in the Financial Times that Greece will exit the Eurozone unless it obtains a de factor write-off of the €300bn in remaining sovereign debt. He also said: "Also necessary to save the euro and create the conditions for a resumption of growth is a restructuring of the debt of the most likely insolvent sovereigns – Greece, Portugal, Ireland, Cyprus and possibly Spain, Italy and Slovenia." FTSE 100: Kingfisher on the up after investor day DIY shop retailer Kingfisher was a high riser following an analyst visit to its Screwfix operations on Friday. Espirito Santo, Jefferies and Panmure Gordon reiterated their 'buy' ratings on the stock today, while speculation that the company is thinking of launching its Screwfix chain in France was lifting shares. "Kingfisher's Investor Day provided interesting insights into the growth outlook at B&Q and Screwfix. The former is relatively mature and will benefit from group scale in common ranging and direct sourcing, while the latter still has significant organic growth opportunity and is leading the group's multichannel strategy," said analyst Philip Dorgan from Panmure Gordon. "While there are some headwinds to overcome, we believe that Kingfisher's long term growth prospects mean that the current valuation of 11.8x trough earnings is a good entry point." Financial services provider Hargreaves Lansdown continued to make gains following Friday's interim results, in which it reported record levels of revenue, assets under administration and client numbers in the second quarter. UK lenders HSBC, Barclays and Lloyds were in demand this afternoon but part-nationalised lender Royal Bank of Scotland (RBS) was bucking the trend. RBS fell after confirming that Spanish banking giant Santander is going back on its agreement to purchase 316 RBS branches in the UK. Emerging markets-focused bank Standard Chartered was making gains after analysts at Citi named it as one of their most preferred stocks. The broker said that the lender has underperformed its peers in the European bank sector during the third quarter and by 15% in the year-to-date. Mining peers Kazakhmys, Evraz, Anglo American and Rio Tinto were firmly lower after Goldman Sachs downgraded its ratings on all four stocks. Meanwhile, Babcock, the engineering support services firm, was on the up after Bank of America Merrill Lynch hiked its target for the shares by over 20% from 870p to 1,050p. However, the broker maintained its 'neutral' rating. Telecoms group BT was also a heavy faller after Barclays Capital lowered its rating to 'equal weight' and cut its target for the shares from 260p to 230p. FTSE 250: SDL sinks on tech slowdown Information management firm SDL fell after saying that first-half trends had continued into the third quarter: services sales are strong but technology revenues continue to be 'suppressed'. Investec downgraded the stock from 'buy' to 'hold' today, saying: "We continue to see SDL as an appealing investment proposition due to its position of strength in multiple growth markets. However to justify a premium rating we believe the company will need to deliver on its growth potential within the technology business as well as the services business." Nickel and zinc miner Talvivaara was unwanted after saying that heavy rainfall in the third quarter is proving a major obstacle in its aim of mining 17,000 tonnes of nickel this year. Foam products supplier Filtrona was in demand after firing on all cylinders in the third quarter with like-for-like sales up by one-tenth year-on-year. Rentokil Initial gained after the Sunday Telegraph said that the firm is working to spin-off its loss-making City Link business by the end of the year. House builder Bovis Homes was in demand after JPMorgan Cazenove upgraded the stock to 'overweight' and lifted its target from 485p to 560p. FTSE 100 - Risers Admiral Group (ADM) 1,119.00p +2.94% Kingfisher (KGF) 275.80p +2.72% Standard Chartered (STAN) 1,461.50p +2.38% Barclays (BARC) 236.85p +2.00% British Land Co (BLND) 532.00p +1.92% Hargreaves Lansdown (HL.) 725.50p +1.90% Lloyds Banking Group (LLOY) 40.32p +1.56% Land Securities Group (LAND) 796.50p +1.53% ITV (ITV) 90.90p +1.51% Aberdeen Asset Management (ADN) 331.30p +1.35% FTSE 100 - Fallers Kazakhmys (KAZ) 690.00p -3.56% Eurasian Natural Resources Corp. (ENRC) 319.80p -2.77% Evraz (EVR) 229.20p -2.18% Anglo American (AAL) 1,788.50p -1.97% Rio Tinto (RIO) 2,973.50p -1.60% International Consolidated Airlines Group SA (CDI) (IAG) 158.00p -1.37% Fresnillo (FRES) 1,916.00p -1.24% Vedanta Resources (VED) 1,072.00p -1.20% Royal Bank of Scotland Group (RBS) 268.10p -1.03% Vodafone Group (VOD) 173.30p -0.86% FTSE 250 - Risers Filtrona PLC (FLTR) 548.00p +7.45% Savills (SVS) 408.00p +3.87% Kentz Corporation Ltd. (KENZ) 424.70p +3.84% Spectris (SXS) 1,600.00p +3.29% Hikma Pharmaceuticals (HIK) 745.50p +3.18% Kenmare Resources (KMR) 37.63p +2.95% St James's Place (STJ) 385.60p +2.85% Daejan Holdings (DJAN) 2,825.00p +2.69% Stobart Group Ltd. (STOB) 118.60p +2.68% London Stock Exchange Group (LSE) 957.00p +2.63% FTSE 250 - Fallers Bumi (BUMI) 245.30p -12.39% SDL (SDL) 568.00p -11.25% Talvivaara Mining Company (TALV) 135.40p -7.39% Perform Group (PER) 400.00p -6.98% Hunting (HTG) 777.50p -4.31% Lonmin (LMI) 486.60p -3.83% FirstGroup (FGP) 184.60p -3.20% Morgan Crucible Co (MGCR) 220.30p -3.08% Investec (INVP) 358.40p -3.08% Ocado Group (OCDO) 64.45p -3.01% Europe Market Report FTSE 100 Euronext Dax perf CAC 40 Europe midday: Banks lead gains on the continent -Troika recommends giving Greece 2 more years -Investors worried by weak prospects in emerging markets -Draghi says common bank regulator in force only in 2014 -Buybacks will fall by 67% in 2012-Bbg FTSE-100: 0.55% Dax-30: 0.80% Cac-40: 1.32% FTSE-Mibtel 30: 1.07% Ibex 35: 0.48% Stoxx 600: 0.69% European equities are being buoyed this morning by reports that the Troika has asked the Eurogroup for another two years' time for Greece to be able to meet its commitments as regards fiscal adjustment. Said proposal is expected to be discussed at this next Thursday's summit of Eurozone leaders. Critically, some estimates purport to show that giving Greece more time could equate to another €30bn in aid. The country's Prime Minister however is adamant that they do not need more money, just liquidity. Hence his proposal to pay a lower interest rate on the European Central Bank's holdings of Greek public debt. Also worth noting, European Central Bank (ECB) President Mario Draghi said that common banking supervision in the euro area is likely to become operational only in 2014, even if the council regulation enters into force in January 2013. Acting as a backdrop, there is quite a bit of market chatter today regarding the relatively poor prospects for growth this year in emerging markets. That comes ahead of Chinese third quarter gross domestic product data expected out on Thursday morning. As an aside, Bloomberg is commenting on how corporate buybacks minus equity sales will fall by 67% to less than €10bn ($13bn) in 2012 even as cash held by Stoxx 600 companies climbed to a record last quarter. That would mark the smallest total since 2009, when equity offerings exceeded repurchases. Takeovers slumped to a two-year low of $92bn last quarter. Orkla has agreed to combine units with Norsk Hydro to provide aluminum profiles, building systems and tubing in North America and Europe. The Fashion retailer H&M is advancing after reporting a 15% increase in total sales for September. Like-for-like sales rose by 6%. Shares of German cosmetics retailer Douglas are up strongly after Advent made an offer for the company. From a sector stand-point the best performers within the DJ Stoxx 600 are now to be seen in the following industrial groups: Banks (1.19%), Chemicals (1.10%) and Real estate (1.06%). Slightly stronger than forecast Swiss wholesale prices Swiss producer prices increased by 0.3% month-on-month in September (Consensus: 0.2%). Slight gain in the euro The euro/dollar is now up by 0.11% to the 1.2970 dollar mark. Front month Brent crude futures are now rising by 0.555 dollars to the 114.5 dollar mark on the ICE. US Market Report US pre-open: Retail sales boost for equities US markets are set to open higher on the back of better than expected US retail sales figures. US retail sales, excluding automobiles, rose 1.1% in September, comfortably beating the consensus expectation of a 0.6% rise. The previous month's reading has been revised down to a rise of 0.8% from a preliminary estimate of 1.0%. In other economic news, the Empire State Manufacturing Index for October remained in negative territory for the third month in a row, at -6.2, though this was an improvement from September's reading of -10.2. Spread betting quotes indicate the Dow Jones index will open around 25 points higher while the broader based S&P 500 is set to start three points firmer. Banking colossus Citigroup saw revenue from fixed income securities trading surge by just under two-thirds year-on-year in the third quarter, putting a positive sheen on the company's results. American phone company Sprint Nextel shot up in pre-market trade in New York after Softbank confirmed that it will acquire a 70% share in the company for 20.1bn dollars. The deal will be the largest acquisition ever made by a Japanese company. According to a statement by Softbank, the operation will take place with a direct purchase of $8bn of Sprint's treasury stock, while the remaining $12.1bn will be acquired via market transactions. Softbank says both boards of directors have approved the deal and that they expect the transaction to close in mid-2013. Wireless broadband firm Clearwire, in which Sprint owns a strategic stake, rose in sympathy. Advanced Micro Devices, a distant second to Intel in the US computer chip manufacturing market, is rumoured to be slashing around one-fifth of its workforce. Broker Tips Broker tips: RBS, Tate & Lyle, SDL Nomura has maintained its 'reduce' rating and 260p target for UK banking group Royal Bank of Scotland (RBS) after the news of the cancelled branch sales to Santander. Nomura labelled the cancellation as "modestly negative": "RBS has been dealing with issues that caused the delay in the sale thus far, and now its cancellation. The headline price tag was already under review as per various press reports (Telegraph, FT etc), so in that sense some negatives were already priced in." Jefferies has upgraded its rating for sweeteners and food products group Tate & Lyle from 'hold' to 'buy' and raised its target from 690p to 800p, saying that the stock currently offers a 'compelling buying opportunity'. "We argue that the company has laid a strong foundation for a sustainable growth profile and see the current valuation as a compelling buying opportunity to enjoy future re-rating towards specialty peers on c15x." Investec has downgraded its rating for information management group SDL from 'buy' to 'hold' after Monday's trading update showed that the slowdown in technology revenue growth continued into the third quarter. The broker said: "We continue to see SDL as an appealing investment proposition due to its position of strength in multiple growth markets. However to justify a premium rating we believe the company will need to deliver on its growth potential within the technology business as well as the services business." "We believe this will likely come through during FY13E as operational execution improves and we will look to revisit our target and recommendation on evidence of this delivery. For now we move to 'hold'."