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Good Morning ShareCrazies

This Morning in London … Data from the Office of National Statistics released today, shows that UK consumer inflation reached its highest level in 13-months, driven by high food and fuel costs. The Consumer Prices Index (CPI) hit 3% on a yearly basis in April, up from 2.5% in March. The monthly inflation rate was 0.8%, the biggest leap since May 2001. The Retail Prices Index hit 4.2% from 3.8%. The release of this information will probably preclude the Bank of England from cutting interest rates in the near term.

Shares in Alliance & Leicester were sharply lower after the mortgage bank unveiled a further hit as a result of the credit crunch, and announcing a greater-than-expected retrenchment in the mortgage market, incurring a £192-million write-down and impairment loss against debt-backed securities held in its Treasury division through the first 4-months of the year, compared with £185-million in write-downs for 2007 as a whole

The bank also said it had reined-in its mortgage lending, with total balances falling to £41.2-billion as of 30th April, a decrease of £1.5-billion from the end of December. The shares are off 60.875p at 449.625p at 11:06, as further depressing news filtered through that the analysts’ conference call had not gone too well either.

At 11:06 the FTSE-100 was down 65.6 at 6155.0, as the weakness in banking impacted the major index (all but HSBC up 4.5p at 886.5p).

BROKER RECOMMENDATIONS

ABN has issued a review of European Food Producers, which includes a downgrade for Unilever to sell from hold

The broker has upgraded Chaucer Holdings to buy from hold and ITE Group to buy from add (raising the price target to 180p from 175p)

ABN reiterates buy Rexam (raising the price target to 525p from 500p and estimates) and says hold Robert Wiseman Dairies (cutting the price target to 410p from 435p)

Cazenove reiterates outperform on Alliance & Leicester, the broker expect to cut the current year’s EPS estimates by 3%

Collins Stewart says sell Alliance & Leicester (450p target)

The broker says buy Group 4 Securicor (313p target) and says hold TUI Travel (which is its preferred stock in the holiday sector)

Collins Stewart says buy Jetion

Credit Suisse has downgraded Royal & Sun Alliance to underperform from neutral (146p target price)

Deutsche reiterates buy Enterprise Inns (860p price target) and says buy TUI Travel (raising the price target to 390p from 370p and raising estimates)

Evolution reiterates buy Enterprise Inns (690p price target) and says buy GKN (400p price target), Emerald Energy (420p target), Paddy Power (€26 target) and Tullow Oil (1129p price target)

The broker says add VT Group (725p target price)

Finncap reiterates sell Robert Wiseman Dairies (401p target)

Goldman has downgraded ITV to sell from neutral (66p price target)

WH Ireland has an outperform on Dignity and has market perform RM Group

Lehman has upgraded Yell to equal-weight from underweight

Merrill reiterates buy VT Group (825p target) and says buy Babcock (655p target)

The broker has neutral on Enodis, Galliford Try, Redrow, Travis Perkins and Enterprise Inns and buy and 145p fair value for Premier Foods, a buy and 500p target for Serco and a buy and 400p target for TUI Travel

Merrill Lynch is neutral on Alliance & Leicester

JP Morgan has downgraded Smith & Nephew to underweight from neutral (cutting the price target to 585p from 680p)

Panmure Gordon says sell Alliance & Leicester (450p target) and says hold Carluccio’s (170p target) and Enterprise Inns (575p target)

The broker says sell Galliford Try (55p target) and buy Keller (750p price target) for Keller and sell Kofax (159p target)

Panmure says buy Lookers (113p target price) and hold Premier Foods (raising target to 135p from 100p)

The broker says buy PZ Cussons (225p target), Redrow (331p target), VT Group (800p target) and WPP (680p target)

Seymour Pierce says buy African Eagle (23p target), G4 Securicor (250p target), Serco (520p target) and Tertiary Minerals and hold Travis Perkins (1000p target)

SG Securities has reviewed the European Airlines and reiterates its neutral sector recommendation, while cutting targets and estimates

UBS has downgraded Land Securities to neutral from buy (cutting the price target to 1600p from 1735p)

LAST NIGHT IN NEW YORK

Shares closed higher with investors cheered by a report that Hewlett-Packard was closing in on a deal to buy Electronic Data Systems for as much as $13-billion, as well as oil's retreat from record highs.

The Dow Jones closed up 130.43-points at 12876.31, the Nasdaq added 42.97-points to 2488.49, while the S&P put on 15.30-points to finish at 1403.58.

ON THIS DAY

1997 The official report into the 1996 Channel Tunnel fire severely criticised the safety procedures run by the operators, Eurotunnel.
1996 Over 600 people were killed by a tornado in the northern Bangladesh district of Tangail.
1994 Palestinian police took over control of Jericho from Israeli soldiers.
1993 Ezer Weizman was sworn in as Israel's 7th President. He was a nephew of Israel's first president Chaim Weizmann, in 1948.
1992 Three American astronauts from the US space shuttle Endeavour, walked simultaneously in space for the first time, retrieving and repairing the Intelsat-6 satellite, in a walk lasting almost 8-and-a –half-hours.
1981 Pope John Paul II survived an assassination attempt outside St Peter's Church in Rome.
1968 Talks between North Vietnamese and American negotiators began in Paris, aimed at ending the Vietnam War.
1965 Israel and West Germany agreed to establish diplomatic relations, forcing several Arab nations to break ties with Germany.
1957 The BBC began its regular television schools programmes.
1949 The first Great British produced jet bomber, the Canberra, made its first test flight.
1943 The Italian Commander-in-Chief in Tunisia surrendered his forces, a day after his German counterpart. The Allies were now holding some 250,000 prisoners of war in North Africa.
1941 World War II: Martin Bormann, was named head of the Nazi Party Chancellery in Germany, following Deputy Fuhrer Rudolf Hess' mysterious flight to Scotland.
1940 World War II: After setting up Great Britain's wartime Coalition Government, Prime Minister Winston Churchill told Parliament he could offer ' nothing but blood, toil, tears and sweat.'
1927 'Black Friday' in Germany, signalling the collapse of its economic structure.
1888 Brazil's parliament decided to abolish slavery.
1846 United States of America declared war on Mexico.
1830 The founding of the Republic of Equador with Juan Jose Flores as President.
1787 The first fleet of ships carrying convicts to the new penal colony of Australia left England. They arrived in January 1788.
1607 Captain John Smith landed on the coast of Virginia and began the first permanent English settlement in the New World calling it Jamestown.
1568 Mary Queen of Scots was defeated by the pro-English Earl of Moray at the Battle of Langside in Glasgow

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Compiled in association with HB PLC and WH Ireland Ltd