UK MARKET TALK ROUNDUP: BROKERS COMMENTS

16th Jun 2010 09:56

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] 0856 GMT [Dow Jones] BP (BP.LN) shares -0.8% at 339p. President Obama Tuesday accused the company of recklessness in an address Tuesday, reiterating that he expects the company to side aside cash to cover costs related to the oil spill. However, says Panmure Gordon, the speech revealed little that was new in the Administration's thinking and it did not specify the amount of money BP is expected to deposit in an escrow account. "This will probably be negotiated when he [President Obama] meets up with the BP chairman [at 1415 GMT]," Panmure says. Meanwhile, Dolmen Stockbrokers keeps a buy rating on BP, but remains cautious for the short term. It says the political pressure the company faces is unlikely to abate until the spill is controlled. ([email protected]) 0855 GMT [Dow Jones]--Greece/10-year bund spread widens to 660 bps from an open of 645 bps Wednesday amid thin turnover of about EUR15M on the local HDAT trading platform. "There is currently little risk appetite for the Greek sovereign and I expect spreads to stabilize at these high levels in the absence of negative news flow," says a senior local trader. ([email protected]) 0843 GMT [Dow Jones] Gilts show little reaction to better-than-expected UK unemployment figures, and are still close to session highs as debt troubles in the euro zone persist. Jobless claims in the U.K. fell 30,900 in May vs forecasts for a drop of 20,000. September gilts up 0.44 at 119.28, and the 10-year benchmark gilt is up at 110.161 to yield 3.506%. ([email protected]) 0838 GMT [Dow Jones] USD/PHP lower late as risk appetite picks up following strong rebound on Wall Street overnight, EUR's recovery in Asian trade; traders say central bank suspected of buying in early session to stem PHP's rise. Central bank may have bought around $100 million near 46.15-46.18, say local bank traders. Pair last at 46.15 vs 46.35 late Tuesday in heavy volume. Pair may head back towards 46.50 resistance Thursday if EUR weakens in Europe, NY sessions. "I'm not sure but a follow-through selling could be expected tomorrow.. it all depends on what happens overnight," says one trader; next support eyed at 46.00. ([email protected]) 0837 GMT [Dow Jones] Treasurys rise in London as equities in Europe pare gains. Attention shifts back to the debt troubles in the euro zone, as yield spreads of countries with shaky finances start to widen again. "Core bond markets appear better bid this morning as the southern European outlook becomes bleaker. Reports in the Spanish press this morning appear to back up earlier reports, angrily denied at the time, of an impending Spanish aid request to the EU," says Chris Clark at ICAP. There's also a flurry of economic release in the U.S., including housing starts and PPI at 1230 GMT and industrial production figures at 1315 GMT. Fed Chairman Bernanke and Philadelphia Fed's Plosser also speak. The 2-year note is up at 100-00+/32, to yield 0.738%, the 10-year is higher at 102-31/32, to yield 3.263%, while the 30-year bond is up at 103-04/32 to yield 4.191%. September bunds are up 0.11 at 128.41 and September gilts are 0.48 higher at 119.32. ([email protected]) 0835 GMT [Dow Jones] Sterling ticks higher after the May unemployment numbers come in better than expected, with nearly 31,000 less claimants against expectations of a 20,000 drop. The unemployment rate fell to 4.6% against the expected 4.7%, which was also the previous figure. GBP/USD, which dipped to the day's low of 1.4753 just before the data, now trades at 1.4775, while EUR/GBP is at 0.8312 from 0.8318 prior the data. ([email protected]) 0829 GMT [Dow Jones] Commerzbank expects an above-average retention rate compared to the offer size, in a EUR5 billion auction of Bund 3% July 2020 Wednesday. The bank calculates average retention rate in 10-year bund auctions in 2010 has been around 18.3% year to date, while the Bundesbank retained almost 24% of the offer at the previous auction of 10-year bunds, May 1, when the outright yield levels were way above current ones. July 2020 bund currently yields 2.66% versus 2.75%-to-2.77% on the day of its previous auction.([email protected]) 0828 GMT [Dow Jones] The Hungarian forint is steady in lackluster trade, with the EUR/HUF unchanged at 278.80 from late Tuesday. Raiffeisen Bank warns the recent forint strengthening has been slow paced, which could reflect that HUF gains could be limited. The HUF could continue to strengthen cautiously, toward 276 in quiet trade for the rest of the day, Commerzbank says, or to 277, Takarekbank says. Next Monday's rate decision may bring some spark, although the market generally holds the view that the central bank will keep the policy rate on hold. ([email protected]) 0826 GMT [Dow Jones] USD/MYR lower late at 3.2600 vs 3.2670 Tuesday; local dealer says pair staying within tight range for most of day in absence of fresh leads, though stronger local stock market (KLCI last +0.8%) offering MYR some support. Still, "the euro-zone problems have not gone away... the trend is still for the ringgit to weaken," says dealer. Tips 3.2500-3.2700 range Thursday. ([email protected]) 0821 GMT [Dow Jones] Polish zloty is expected to be soon back on an upward trend, thanks to rising risk appetite, BZ WBK says. "The markets were positively affected among others by news that debt auctions in Belgium, Ireland and Spain were well bid," the bank says. EUR/PLN now trades at 4.07 from 4.0675 late Tuesday, USD/PLN at 3.3144 from 3.31. ([email protected]) 0818 GMT [Dow Jones] EUR/USD falls to the day's low of 1.2273, with peripheral euro-zone bond spreads widening. The 10-year German/Spain spread pushes to a lifetime high as attention turns to Spain's government debt worries. Equities also pare some of the morning's gains, adding to the EUR/USD tension. ([email protected]) 0812 GMT [Dow Jones] Societe Generale expects an auction of EUR5 billion of Bund 3% July 2020 Wednesday "to go well enough," noting an almost continuous rise in yields since June 8 to near 2.7% from just over 2.5%. And Nordea notes the current yield below 2.70% is still notably below the 4.15% average achieved since the introduction of the euro and much lower than this year's 3.05% average. "The current levels thus offer value only if one believes in a 'double dip' in the economy, followed by a long recession or a period of very subdued growth," says Nordea analyst Jan von Gerich.([email protected]) 0856 GMT [Dow Jones] BP (BP.LN) shares -0.8% at 339p. President Obama Tuesday accused the company of recklessness in an address Tuesday, reiterating that he expects the company to side aside cash to cover costs related to the oil spill. However, says Panmure Gordon, the speech revealed little that was new in the Administration's thinking and it did not specify the amount of money BP is expected to deposit in an escrow account. "This will probably be negotiated when he [President Obama] meets up with the BP chairman [at 1415 GMT]," Panmure says. Meanwhile, Dolmen Stockbrokers keeps a buy rating on BP, but remains cautious for the short term. It says the political pressure the company faces is unlikely to abate until the spill is controlled. ([email protected]) 0810 GMT [Dow Jones] Panmure Gordon raises RPC Group (RPC.LN) price target to 330p from 310p following the company's FY results. Notes profit, dividend, and net debt were all better than anticipated, with the benefits of the recent improvement program coming through strongly despite pressure on volumes throughout the year. Expects further progress from the RPC '10 improvement program still to come, regardless of market conditions, and says early signs of volume improvements bode well for this year and next. Reiterates buy recommendation. Shares flat at 241p. ([email protected]) 0803 GMT [Dow Jones] Singer Capital Markets downgrades Home Retail Group (HOME.LN) to fair value from buy, and reduces its target price to 215p from 342p. Says the 1Q sales performance at the group's Argos business has been disappointing, however trading at the Homebase business has been robust and remains encouraging. Still, "the weakness of trade at Argos and our concerns about exposure to an increasingly cash strapped consumer prompts us to downgrade [pretax profit] estimates by 6.9% [to GBP285M] in the current year and by 8.2% next year [to GBP300M]," it adds. Shares +0.4% at 231p. ([email protected]) 0720 GMT [Dow Jones] J Sainsbury's (SBRY.LN) 1Q trading statement is good, says Shore Capital, judging against the backdrop of tough comparatives, low inflation and a subdued consumer. Shore says, whilst modest, like-for-like sales growth is in-line with that of Tesco (TSCO.LN) and Morrison (MRW.LN) for the same period, reflecting well on Sainsbury's ability to adjust to market conditions and eke out a respectable performance. Nevertheless, "the stock is somewhat 'stuck' in the doldrums at present and we see the need for the new space to make an even stronger contribution to the residual core chain." Hold rating. Shares +0.9% at 327p. ([email protected]) 0658 GMT [Dow Jones] Citigroup lifts Fresnillo (FRES.LN) target price to 1225p from 860p, derived by a combination of price to net present value and enterprise value to Ebitda valuations. Maintains a buy rating on the stock, saying it's one of its favored precious metal stocks at the moment, especially as it is not subject to the current challenges of South African mining, as is the case with the platinum producers. Adds as a silver producer with a large gold production component, the company has been a big beneficiary of the gold activity during the euro sovereign debt crisis. Shares closed at 1070p. ([email protected]) (MORE TO FOLLOW) Dow Jones Newswires June 16, 2010 04:56 ET (08:56 GMT)