TRAVIS PERKINS DOWNGRADED TO 'HOLD' FROM 'BUY' BY CITIGROUP SMITH BARNEY

Alliance & Leicester downgraded to 'equalweight' by Morgan Stanley

The FTSE 100 is expected to open almost unchanged, as Wall Street and Asia both closed mixed, and with little news to spark much interest, dealers said.
Spread betting group IG Index is flagging the FTSE 100 to open around 1 point lower from yesterday's close at 4,731.1.
Overnight on Wall Street, stocks ended mixed as blue chips gained, but the Nasdaq fell, as investors questioned whether markets might already have seen the traditional year-end rally.
The Dow Jones Industrial Average closed up 11.68 points, or 0.1 pct, at 10,661.

MARKETS
FTSE 100 4,731.1, up 34.3
FTSE 250 6,789.9, up 22.5
DJIA 10,661.60, up 11.70
Nasdaq Comp 2,127.85, down 7.35
S&P 500 1,194.65, up 0.45
Tokyo: Nikkei 11,125.92, up 22.50
Hang Seng midday 14,213.16, down 0.88
Gold 443.25 usd (438.27 usd)
Oil - Brent Feb 42.45 usd (43.39 usd)

BREAKING NEWS
* Government departments face an unprecedented spending squeeze in the lead-up to the election, after official figures show public borrowing so far this financial year at its highest level in 10 years - FT
* Lloyd's of London insurance building to be sold this week by Deka, the troubled German fund manager, to a Commerzbank fund for close to 257 mln stg - FT
* Shares in CAMBRIDGE ANTIBODY jump 13 pct after the High Court rules in its favour in a dispute over royalties with Abbott Laboratories
* DIAGEO buys Chalone Wine for 260 mln usd
* Biggest investor in CORUS, Brandes, reveals it has cut its stake in the company as the Anglo-Dutch steelmaker distances itself from the idea of a merger with rival ThyssenKrupp - FT
* FSA close to settlement on splits - FT

PRESS COMMENT
FT
THE LEX COLUMN comments on the Yukos saga, Tobacco mergers, Lazard
Mail
TRADING EXCHANGE (rumours of an imminent reverse takeover) - BRIXTON (rumours of a bid approach refuse to die down)
Telegraph
QUESTOR: TRAVIS PERKINS (WOLSELEY still looks a better pick), MISYS (avoid), TULLOW OIL (probably time to lock in some of those profits)
Independent
Tobacco sector fired up by talk of takeovers - GENUS (talk it will launch a new veterinary product next year)
Guardian
LONDON INTERNATIONAL (Genting Berhad takes stake to just over 16.2 pct) - GAMING VC HOLDINGS (start trading on AIM this morning)
Times
DIRECTORS' DEALINGS: THE INNOVATION GROUP (chief executive sells stock for 720,000 stg) - ALEXON (concerns it may emerge as one of the casualties of poor pre-Christmas trading) - TEMPUS: TULLOW OIL (hold), UNIQ (hold), SDL (buy)
Express
WHO'S DEALING: SLOUGH ESTATES (chief executive picks up 10,000 shares at 512 pence; finance director exercises options over 96,853 shares before selling them at 511-3/4 pence) - SHARE WHISPER: SSL INTERNATIONAL (suggestions it could be on the shopping list of German cosmetics group Beiersdorf) - BROKER'S VIEW: KINGFISHER (Goldman Sachs positive)

Shares in Smith & Nephew PLC are expected to drop by as much as 3 pct in opening deals after the orthopaedic devices group warned last night it will be hit by an exceptional charge of 80 mln stg, dealers said.

The group said the charge comes as two of its secondary insurers refused to cover their share of the liability costs arising from its macrotextured femoral knee component implant product.

In response, Merrill Lynch, and UBS reiterated their 'neutral' stance on the stock.

Separately, JP Morgan initiated the group with a 'neutral' rating, with a price target of 561 pence.

Meanwhile, Morgan Stanley said the estimate of 80 mln stg of further liability is 'reasonable'.

The broker said the figure includes 12 mln stg which has already been agreed with patients, but which is being disputed by the insurance companies.

Boutique broker CODE said if the charge is confirmed, this would reduce its

pretax forecast for 2004 from 244 mln stg to 164 mln and its EPS forecast from

20.6p to 12.1p.

UK and European brokers' recommendations issued today, as collated by AFX News from a range of market sources.


CITIGROUP SMITH BARNEY
Downgrade hold from buy Travis Perkins, ups target to 1,800 pence from 1,575 -- Logistics review: Downgrade Sell from hold Wincanton, ups target to 240 pence from 220; Reiterate Sell TDG, ups target to 190 pence from 180; Hold Christian Salvesen, cuts target to 60 pence from 62; Buy Exel, target 829 pence -- Reiterate Hold AstraZeneca, cuts target to 37.34 usd from 43.25

UBS
Upgrade Buy from neutral Mediobanca -- Upgrade Neutral from reduce Cambridge Antibody -- Downgrade Neutral from buy PHS -- Reiterate Neutral Slough Estates, ups target to 550 pence from 530 -- Neutral Misys, cuts target to 230 pence from 235 -- Neutral Lonmin, cuts target to 875 pence from 1,125

DEUTSCHE BANK
Downgrade Hold from buy EDP

MERRILL LYNCH
Downgrade Sell from Neutral Travis Perkins -- Upgrade Buy from hold Cambridge Antibody

MORGAN STANLEY
Downgrade Equal-weight from overweight Alliance & Leicester, favour Northern Rock and RBoS -- Reiterate Overweight Misys, cuts target to 213 pence from 226

LEHMAN
Upgrade Overweight from equal-weight KPN, ups target to 8.0 eur from 7.7

CSFB
Downgrade Underperform from neutral CNP -- Reiterate Outperform AGF, ups target to 60 eur from 57 -- Underperform Heineken, cuts target to 22.5 eur from 23.5

JP MORGAN
Downgrade Neutral from Overweight Woolworths, removes from Analyst Focus List, cuts target to 47 pence from 57, reduces estimates -- Initiate Neutral Smith & Nephew, target 561 pence -- Initiate Underweight Linde, price target 44 eur -- Reiterate Overweight Liberty International, ups target to 980 pence from 960, raises estimates --- Neutral Brixton, ups target to 340 pence from 315 -- Underweight Shaftesbury, ups target to 315 pence from 245, raises estimates

SG SECURITIES
Downgrade Hold from buy BMW

ING
Downgrade Hold from buy Acciona -- Downgrade Hold from buy ACS -- Downgrade Hold from buy Dolmen -- Downgrade Hold from buy AstraZeneca -- Reiterate Buy mm02, ups target to 135 pence from 120 -- Hold Statoil, ups target to 101.3 nkr from 99.5

SEYMOUR PIERCE
Downgrade Underperform from hold JJB Sports, cuts estimates

NUMIS SECURITIES
Downgrade Reduce from buy Whittard of Chelsea, cuts target to 170 pence from 230 -- Downgrade Sell from hold Clinton Cards, cuts target to 80 pence from 90

EVOLUTION SECURITIES
Downgrade Reduce from add Brown & Jackson, target 59 pence

Off for a few days hols. Have a great Christmas everybody.

One of my elves will be starting the Traders Thread for me until I get back. :-)