UK MARKET TALK ROUNDUP: BROKERS COMMENTS

15th Jun 2010 07:31

Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 0631 GMT [Dow Jones] Deutsche Bank downgrades Home Retail (HOME.LN) to hold from buy and cuts target price to 250p from 350p. This follows the company's disappointing 1Q trading update. It notes sales were below the brokerage's expectations, with the performance at Argos particularly disappointing. "We continue to see opportunities at Homebase, the dividend yield is healthy and the company is buying back shares. However, key metrics at Argos...have deteriorated and we believe a near-term recovery is unlikely." While management continues to control costs tightly, DB now sees risk as being to the downside. Shares closed Monday at 231p. ([email protected]) 0628 GMT [Dow Jones] Bellway's (BWY.LN) trading update shows overall sales rates broadly comparable to last year in the 18 weeks under review, a trader says. Notes a slight reduction in site visitors and weekly sales rates post the election. Also notes the management is slightly more cautious on the outlook since the election. Expects FY '10 pretax profit to come in at GBP41.7M, and EPS at 24.9p. Shares closed Monday at 635p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] 0627 GMT [Dow Jones] UBS raises Weir Group (WEIR.LN) price target to 1200p from 1150p. "While Weir has already delivered four decent-sized upgrades to '10 estimates this year we believe the momentum will keep on going, albeit probably not at the same pace that has seen '10 estimates," says UBS. It adds that the acquisition of Linatex provides further earnings accretion into '11. It raises '10 EPS estimate to 88p from 74p and '11 EPS estimate to 94.3p from 76.8p. Keeps the stock at buy. Shares closed Monday at 1066p. ([email protected]) 0619 GMT [Dow Jones] September bunds have opened higher Tuesday from Monday's settlement price after Moody's overnight downgraded Greece to junk, prompting a move back to assets perceived to be safer. While a rating downgrade was not entirely unexpected, the action again reinforces worries over sovereign finances in Europe. Equities in Europe are also expected to open lower, and that should also support safe havens. In the primary market, Ireland offers bonds for up to EUR1.5B after debt sales by other peripherals met a strong response last week. On the data front, ZEW indicator of economic sentiment and euro zone 1Q employment data are both out at 0900 GMT. September bunds are up 0.40 at 128.93. ([email protected]) 0612 GMT [Dow Jones] EUR/CHF held above 1.39 in late Asian trade Tuesday, boosted by advances in most European stocks markets, says UBS. "While Swiss fundamentals continue to favour a lower EUR/CHF, the existence of marked CHF longs and the increased attractiveness of riskier assets hinted at by higher equities on Monday supported EUR/CHF," says economist Reto Huenerwadel. EUR/CHF was at 1.3924 by 0515 GMT. ([email protected]) 0611 GMT [Dow Jones] Credit Agricole CIB looks for "smooth sailing" at Ireland's EUR1 billion to EUR1.5 billion auction Tuesday, as Ireland is under no liquidity threat and the European Central Bank has been seen buying Irish bonds. Ireland will auction 4.6% April 2016 and 4.5% October 2018 bonds, with the results due at 0900 GMT. ([email protected]) 0606 GMT [Dow Jones] ASIAN SUMMARY: Regional markets mostly higher; Nikkei +0.1%, HSI +0.4%, S&P/ASX 200 +0.1%, STI +0.2%, Kospi flat, Taiex +0.9%, Sensex off 0.3%, SET +0.1%, NZX-50 flat. China markets closed for holiday. In FX markets, EUR halts rally vs USD, JPY on Japanese exporters' selling. EUR/USD at 1.2212 vs 1.2225 late NY trade Monday, EUR/JPY at 111.75 vs 111.81. USD/JPY at 91.50 vs 91.47. Bank of Japan's policy board decides to make Y3 trillion available to private banks at 0.1% to lend to companies, encourage firms to make long-term business investment, strengthen nation's economic foundation; votes unanimously to maintain policy interest-rate target at 0.1%. Australia's RBA says in minutes of June 1 policy meeting it has flexibility to keep rates on hold for now, time to assess global impact of European debt crisis, await domestic 2Q inflation data at end-July. Country's April value of personal finance issued down 0.6% seasonally-adjusted from March to A$6.81 billion. South Korea May trade surplus revised to $4.13 billion vs $4.37 billion earlier. Philippines April jobless rate hits 4-year high at 8.0% vs 7.3% January. New Zealand May median home price at NZ$350,000 vs NZ$356,000 in April. U.K.'s RICS home price balance +22 in May vs upward revised +19 in April, +15 forecast; highest level since January. Spot gold at $1,220.60/oz, down 80 cents vs NY close. July Nymex crude oil futures up 1 cent at $75.22/bbl. ([email protected]) 0602 GMT [Dow Jones] S&P/ASX 200 should test higher levels in the short term, says Cityindex dealer James Persson. "While the U.S. equities market did pull back fairly sharply from its highs last night, the currency market is still indicating that there's a fairly bullish view out there...I think we'll see a bullish lead headed into Europe and I think we'll see that translated into a bit more conviction for the bulls in the U.S. tonight. Obviously we're still very close to the 200 day moving average on the S&P 500 and it's not going to take too much to break above it." He sees the intraday bounce in resources and today's strong showing by Australian small caps as positive signs for equities. Rio Tinto (RIO.AU) up 0.4% at A$69.35 after hitting A$68.48. S&P/ASX 200 Small Ordinaries index up 0.7%. Index last up 3.3 points, or 0.1%, at 4508.8. ([email protected]) 0602 GMT [Dow Jones] Thai shares +0.1% at 782.01 midday break but moderate volume suggests lack of conviction; "due to the absence of domestic driver, European markets' movement may dictate the Thai stock market in the afternoon trading session," says Capital Nomura Securities strategist Chai Jirasevenupraphund. Resistance tipped at 785-787, support at 774-772. Among top actives, Charoen Pokphand Foods (CPF.TH) +3.2% at THB19.50, Thaicom (THCOM.TH) +5.7% at THB7.45, Banpu (BANPU.TH) +1.3% at THB620, PTT (PTT.TH) flat at THB246. Stocks added in blue chip SET50 Index, effective from July 1, also higher: TPI Polene (TPIPL.TH) +8.2% at THB9.95, Tisco Financial Group (TISCO.TH) +2.7% at THB29, Home Product Center (HMPRO.TH) +3.8% at THB6.80. ([email protected]) 0555 GMT [Dow Jones] Taiwan government bonds end higher on short-covering after bond bears fail to push benchmark 10-year yield through key resistance level, says local brokerage trader. Fresh buying into off-the-run 10-year bond capped its yield at 1.51%, forcing short-covering in current 10-year near 1.50%, he says; but adds yield downside limited because "the reason why yields rose nearly 15 basis points (in past 2.5 weeks), namely concerns over selling by the postal service, is still valid." Tips bonds to range-trade Thursday (markets closed tomorrow for Dragon Boat Festival holiday). Yield on benchmark 10-year bond ends down at 1.4700% vs yesterday's close 1.4876% (which was highest close for bond since it was issued) and off intraday high of 1.4949%, tipped in 1.46%-1.50% band Thursday; 5-year down at 1.0589% vs 1.0695%. ([email protected]) 0554 GMT [Dow Jones] Taiwan shares end +0.9% at 7454.06, highest since May 19, led by banks, tourism companies, transportation stocks as they continue to be boosted by recent positive news on progress in planned Taiwan-China trade pact, says Grand Cathay Securities analyst Mars Hsu. Still, says "the resistance of the 240-day moving average at 7532 is likely to cap the Taiex's gains in short term," he says. Tips Taiex to consolidate in 7100-7500 band this week. Markets shut Wednesday for Dragon Boat Festival. China Airlines (2610.TW) +4.0% at over 2-year high of NT$16.05, most heaviest traded stock in Taiwan bourse; EVA Airways (2618.TW) +4.1% at NT$19.15, highest since April 2008, second heaviest traded stock in bourse. Formosa International (2707.TW) +2.1% at NT$390.00. Cathay (2882.TW) +3.0% at NT$48.05. ([email protected]) 0527 GMT [Dow Jones] Indonesia shares +0.7% at 2846.638 midday in light volume, off earlier low of 2824.745, tracking gains across Asian markets, traders say; add, firmer rupiah also helps; tip immediate resistance at 2850. "Foreign buying in bank and consumer-related blue chips has driven the main index higher despite sporadic selling by local players," says trader at Valbury Securities. BCA (BBCA.JK) +2.8% at IDR5,600, Bank Danamon (BDMN.JK) +2.0% at IDR5,150, car maker Astra (ASII.JK) +3.0% at IDR45,600. Meanwhile, Bakrie Telecom (BTEL.JK) +2.4% at IDR172, while heavyweight Telkom (TLKM.JK) still unchanged at IDR8,000 after sources tell Dow Jones the two companies are nearing deal to merge their CDMA operations. ([email protected]) 0526 GMT [Dow Jones] Spot gold steady in Asia at $1221.30/oz, down 10 cents but could be poised for some volatility later as EUR/USD sitting on 1.22 support level after Moody's downgrade of Greek debt rating late Monday, and ahead of EU summit in Brussels Thursday where Germany, France reportedly to attempt to put on united front with regard to fiscal issues. Gold in euros at EUR1,000.30/oz after dipping below EUR1,000 overnight after strong euro zone industrial production data. Could attract more dip buying after 5% retreat from last week's record highs with many FX analysts still gloomy on medium to long term prospects for EUR, regarding recent EUR rally as counter-trend. ([email protected]) (MORE TO FOLLOW) Dow Jones Newswires June 15, 2010 02:31 ET (06:31 GMT)