UK MARKET TALK ROUNDUP: BROKERS COMMENTS -2-

15th Jul 2010 12:33

0635 GMT [Dow Jones] There's currently not much basis for the beginning of a major ruble uptrend, says Mikhail Rumyantsev, senior trader at Troika Dialog. "The uptrend may resume only if we see a number of factors, including a higher S&P, higher yields on U.S. treasuries and higher oil prices. Until then it could be quite volatile." Technical resistance on the euro-dollar basket is around 34.25. Below that, 33.40 is the area where the central bank may make a stand to prevent the currency's further appreciation, Rumyantsev says. The ruble trades at 34.31 against the basket Thursday. ([email protected]) 0632 GMT [Dow Jones] Taiwan's new NT$40 billion 5-year government bond sold at 1.0110%, lower end of 1.0000%-1.0400% band tipped by local trader, boosted by banks buying (banks account for 61.6% for total bond sold vs 55.12% in previous 5-year bond auction), lifting market, says local brokerage trader. "Although banks' funding costs are higher than the 5-year yield, they have to buy bonds to park their excess cash," he says. Notes 1-year deposit at banks around 1.06%. Tips bonds to rise Friday; expects 5-year yield to test 1.0000% floor. ([email protected]) 0631 GMT [Dow Jones] Bunds are being supported by dovish minutes from the FOMC overnight, with the Fed trimming its growth forecast and members citing downside risks to inflation. Asian stocks are trading lower while European equities are also expected to open little changed. In the primary market, Spain and France tap markets Thursday after bond sales by Portugal, Italy and Germany attracted good demand Wednesday. September bunds are up 0.25 at 128.97 and the 10-year bund is up at 103.04 to yield 2.648%. ([email protected]) 0619 GMT [Dow Jones] September bunds are up 0.19 at 128.91 and WestLB pegs immediate resistance at 129.10, the high from Tuesday. The contract still needs to break above 129.53 for the outlook to stabilize and contract highs to be tested, the bank says. Support at 128.49, 128.40 and 128.19. ([email protected]) 0653 GMT [Dow Jones] KBC Peel Hunt cuts Mothercare (MTC.LN) price target to 550p from 620p following the company's 1Q update. Mothercare's UK performance is weak against tough comparatives, as expected, notes KBC Peel. However, the brokerage notes international growth remains strong, while Direct to Home is also robust. KBC Peel says the group continues to offer strong growth prospects for the medium term. However, with UK trading set to undermine profit growth, the brokerage thinks the shares may struggle to hold ground. Hold rating. Shares closed Wednesday at 552p. ([email protected]) 0649 GMT [Dow Jones] Investec upgrades Cookson Group (CKSN.LN) to buy from hold, ahead of its interim results on Aug. 4. Thinks Cookson has been oversold, and 2H '10E and FY '11E will be better than the stock market appears to be anticipating. Says, "the current US 2Q results season, followed by that of the UK, is arguably more important than the company's results as a barometer of global economic health and we think this should serve to reassure investors and see the shares go better." Meanwhile, expects the tone at the interim results will be cautious but broadly positive. Cuts price target to 600p from 620p. Shares closed at 432.3p. ([email protected]) 0648 GMT [Dow Jones] Electrocomponents' (ECM.LN) interim results for 1Q are in line with expectations, representing a continued improvement since May, says KBC Peel Hunt. While the strong recovery performance continues, thinks the market is up with events, with the shares recovering from the recent dip to around 210p. Notes that comparatives will get tougher as it heads into '11. Keeps at hold, with 235p price target. Shares closed on Wednesday at 236.7p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 15, 2010 07:33 ET (11:33 GMT)