ADVFN III Evening Euro Markets Bulletin -November 27th, 2012-.

ADVFN III Evening Euro Markets Bulletin

Daily world financial news

Tuesday, 27 November 2012

London Market Report

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

London close: Markets pare gains as investors digest Greek deal Market Movers techMARK 2,075.70 +0.54% FTSE 100 5,799.71 +0.22% FTSE 250 11,867.18 +0.20% - Europe grants Greece more aid - OECD cuts growth estimates - Footsie comes off day's highs by the close After a solid start for the Footsie following last night's Greek bailout deal, gains were pared by the close of trade on Tuesday with some saying that the agreement just kicks the can down the road for the heavily indebted nation. The FTSE 100 index finished the session at 5,800, up 13 points on the day (+0.22%) but under the intraday high of 5,822 reached this morning. Eurozone finance ministers yesterday finally inked out an agreement on Greece, giving the green light to the disbursement of the next €43.7bn bailout tranche (€34.4bn will be issued next month and the remaining monies will be disbursed in the first quarter of 2013). Market strategist Ishaq Siddiqi from ETX Capital said that the deal was widely priced in to markets given the subdued reaction. "Traders feel all EU leaders have done here is kick the can way down the road with the measures perhaps still not as affective to solve Greece's problems." Similarly, the agreement was labelled a "new can-kicking world record" by Societe Generale chief currencies strategist Kit Juckes. "The key issue for Greece, as for the rest of the Eurozone, is the lack of growth. Today's optimistic mood will in due course be reversed unless someone comes along with a magic growth potion." Also providing some downward pressure was the news that the OECD has slashed its 2013 growth forecasts for the world's advanced economies to 1.4%, from the 2.2% estimate in May. The OECD said that the global economy is "expected to make a hesitant and uneven recovery over the coming two years" and "decisive policy action is needed" in the Eurozone and US. Meanwhile, a barrage of broadly better-than-expected economic data Stateside failed to give equities a boost this afternoon, with markets shrugging off decent readings of consumer confidence, durable goods orders, retail sales and home prices. Benchmarks on Wall Street opened more or less flat. FTSE 100: Banks lead the upside Banking peers Royal Bank of Scotland, Lloyds and Barclays were registering decent gains as investors built positions in 'riskier' assets. RBS was benefitting from an rating upgrade by UBS to 'buy', while Barclays Capital raised its target for both RBS and Lloyds. In contrast, Aberdeen Asset Management was among the worst performers of the morning after Citigroup downgraded its recommendation for the stock to 'neutral'. Pearson shares dropped after Rona Fairhead, the Chairman and Chief Executive Officer (CEO) of its subsidiary the Financial Times Group, announced that she is to leave the firm next year. Fairhead, who has been with Pearson for 12 years, is said to be pursuing "the next phase of her career outside Pearson". Vodafone, the telecoms giant involved in the development of the M-Pesa service in Africa, rose after announcing that from Tuesday 27th the service's Kenyan customers will have access to interest bearing saving accounts and have the ability to take out small loans through a new service, called M-Shwari. Meanwhile, outsourcing giant Capita rose after it said it was the preferred bidder for an educational support services joint venture with Staffordshire County Council. The joint venture, in which Capita will hold a majority stake, will initially deliver a range of educational support services for schools and academies in the Staffordshire region. FTSE 250: Mitchells & Butlers sinks on poor outlook Mitchells & Butlers, the UK's largest operator of managed restaurants and pub, was unwanted after noting it had made a slow start to the new financial year, partly because of unseasonably warm weather in the same period in 2011. India-focused Essar Energy was also lower as shares retreated after making strong gains on Monday on the back of a strong set of first-half results. Broadband and communications provider KCOM fell after reporting a slight fall in revenue and a large rise in net debt in the first half, its first increase in net debt in four years following seven consecutive six-month periods of reduction. British defence-equipment maker Chemring, which scaled back full-year profit guidance earlier this month, made strong gains after saying that expectations for the full year remain unchanged since its last update. Business information and events group Informa was also higher after Morgan Stanley raised its target on the stock from 415p to 485p and upgraded it to 'overweight'. FTSE 100 - Risers Royal Bank of Scotland Group (RBS) 295.10p +3.51% Capita (CPI) 751.00p +3.16% Lloyds Banking Group (LLOY) 46.41p +2.92% BAE Systems (BA.) 319.70p +2.47% Aggreko (AGK) 2,235.00p +2.43% ARM Holdings (ARM) 758.00p +2.36% Intertek Group (ITRK) 3,023.00p +1.99% Standard Life (SL.) 310.70p +1.50% Barclays (BARC) 243.65p +1.31% Tate & Lyle (TATE) 779.00p +1.30% FTSE 100 - Fallers Aberdeen Asset Management (ADN) 328.60p -2.20% Pearson (PSON) 1,168.00p -1.35% Johnson Matthey (JMAT) 2,269.00p -1.18% BG Group (BG.) 1,060.00p -1.07% Royal Dutch Shell 'B' (RDSB) 2,140.50p -0.67% Eurasian Natural Resources Corp. (ENRC) 270.20p -0.66% Antofagasta (ANTO) 1,238.00p -0.64% Rio Tinto (RIO) 2,978.50p -0.52% Royal Dutch Shell 'A' (RDSA) 2,072.00p -0.50% Xstrata (XTA) 1,011.50p -0.49% FTSE 250 - Risers Kenmare Resources (KMR) 33.46p +5.52% New World Resources A Shares (NWR) 252.30p +4.60% Chemring Group (CHG) 238.20p +3.57% St. Modwen Properties (SMP) 218.70p +3.11% Domino Printing Sciences (DNO) 563.50p +2.83% Pace (PIC) 182.30p +2.82% Informa (INF) 416.80p +2.79% Carpetright (CPR) 678.50p +2.73% Bumi (BUMI) 265.00p +2.71% Hunting (HTG) 789.00p +2.47% FTSE 250 - Fallers Mitchells & Butlers (MAB) 312.10p -5.71% Man Group (EMG) 73.25p -4.68% Essar Energy (ESSR) 122.00p -3.94% Perform Group (PER) 380.00p -3.55% Lonmin (LMI) 275.00p -3.34% KCOM Group (KCOM) 69.45p -2.59% Ocado Group (OCDO) 70.10p -2.37% Petropavlovsk (POG) 350.60p -2.15% Petra Diamonds Ltd.(DI) (PDL) 103.00p -2.09% Raven Russia Ltd (RUS) 61.70p -2.06% Europe Market Report FTSE 100 Euronext Dax perf CAC 40 Europe midday: Cool reaction from analysts to Greek agreement -Cool reaction from analysts to Eurogroup agreement on Greece -Greek 10 year bond yields fall 18bp to 16.45 per cent -ECB's Hansson says worth examining a negative deposit rate -Euro/dollar rebuffed at 1.30 FTSE-100: 0.41% Dax-30: 0.50% Cac-40: 0.29% FTSE-Mibtel 30: 0.26% Ibex 35: 0.27% Stoxx 600: 0.39% The main Eurozone equity benchmarks are now trading slightly higher following the cool reaction from economists to the 'breakthrough' achieved at last night's meeting of Eurozone finance ministers, the so-called Eurogroup. The 'deal' appears quite ambitious but still faces various hurdles. The assembled ministers agreed to lower the country's stock of debt to below 124% of gross domestic product (GDP) by 2020. Furthermore, they agreed to bring Athens's mountain of liabilities down to "substantially lower" than 110% of GDP in 2022. Amongst the measures agreed on to achieve the above were: reductions on the interest-rate paid on loans to Athens, the European Central Bank (ECB) returning the profits earned on its holdings of Greek debt and a buyback of Greek debt at sharply discounted prices. It is the success of the latter which seems to worry observers the most (although it is not the only source of preoccupation), as the entire package - and the International Monetary Fund's (IMF) involvement - seems to hinge on it. Furthermore, without the IMF's backing Brussels could be left scrambling to find how to plug another significant gap in the Mediterranean nation's financing needs. In that regard, Kathleen Brooks, Director of Research at Forex.com had this to say: "As usual when it comes to meetings with European Union (EU) officials, they tend to under-deliver. They didn't actually reduce Greece's debt burden and no official holders of Greek debt like the ECB or European governments have had to take haircuts on their debt holdings. Thus, Greece's debt reduction is still reliant on its economic performance, which remains dismal and is likely to continue to be enveloped in recession for many more years." In a similar vein, Fabio Fois from Barclays Research remarked that: "some of the measures are steps in the right direction; however, we think that, as they were announced last night, they will be not sufficient to reduce public debt substantially and so to restore debt solvency by 2020. We also found surprising the fact that no fresh funds were committed, not even for the debt relief. On this specific point, we think it is worth noting the comment made by Christine Lagarde: "Once progress has been made on specifying and delivering on the commitments made today, in particular implementation of the debt buybacks, I would be in a position to recommend to the IMF Executive Board the completion of the first review of Greece's program." Carrefour planning foray into China French spirits maker Remy Cointreau unveiled first-half operating profits from continuing operations of €141.5m, ahead of consensus estimates. French supermarkets group Carrefour is higher on reports that it is to move into the Chinese market. From a sector stand-point the best performance on the DJ Stoxx 600 is now to be seen in the following groups of stocks: Banks (0.84%), Real estate (0.73%) and Media (0.02%). French consumers hold up INSEE's French consumer confidence gauge for the month of November has come in at 84, the same as last month (Consensus: 83). Italian hourly wages rose by 0.2% month-on-month in October, following a gain of 0.1% in the previous month. Slight gains in single currency The euro/dollar is now falling by 0.27% to the 1.2964 dollar mark. Front month Brent crude futures are now rising by 0.090 dollars to the 111.02 dollar mark on the ICE. Broker Tips Broker tips: Tesco, IMI, Mitchells & Butlers Credit Suisse has retained its 'neutral' rating and 350p target for supermarket behemoth Tesco ahead of the company's third-quarter results due on December 5th. Analyst Andrew Kasoulis said in a research report on Tuesday morning: "We do not expect quarter-on-quarter underlying improvement in key regions, which has largely been already flagged by market share and macro data." Investec has maintained its 'buy' rating for industrial engineering group IMI and raised its target for the shares from 1,100p to 1,140p, saying that this month's third-quarter update showed the expected mixed of "softness" and "resilience". "IMI's Q3 IMS contained news of softness where it was expected – in the truck sector and general pneumatics within Fluid Power – and the recovery in Severe Service will probably be less steep than we anticipated. Nevertheless, we do expect steady progress from IMI and we believe that the shares are undervalued." Panmure Gordon has reiterated its 'sell' rating for pubs group Mitchells & Butlers after some worse-than-expected full-year results and a gloomy update on current trading. The broker kept its 225p target for the shares, compared with Monday's closing price of 331p, implying 32% downside potential.