Morning all.

BREAKING NEWS - MONDAY
* Emergency law in Iraq ahead of planned attack; rebel-held Falluja said to be isolated as US and government forces get ready - FT
* MARKS & SPENCER expected to announce completion of the 762 mln stg sale of its financial services arm to HSBC when it unveils its first-half results tomorrow - FT
* TESCO becomes the latest entrant in the music downloading market - a 25 mln stg a year business dominated by Apple's iTunes - Telegraph
* FIRST CHOICE HOLIDAYS, one of Britain's biggest tour operators, sacks two senior aircraft engineering staff after uncovering an alleged 6 mln stg scam in its charter airline, First Choice Airways - Times

MONDAY PRESS COMMENT
FT
THE LEX COLUMN comments on the battle between HARMONY and GOLD FIELDS (before voting for the deal, shareholders should consider that so far the only winners are the arbitrageurs), Telecom companies, Hedge funds
Independent
SMALL TALK: Stephen Foley comments on KRYSO, GALLEON (on the verge of a fund raising), DELLING (to announce it has become the global distributor for iTAG), SOHO CLUBS & BARS (touring fund managers in the hope of raising up to 7 mln stg with a flotation that would value the company at up to 20 mln stg), High tide for floats (SOVGEM, AFRICAN COPPER, DAT)

STOCKWATCH BA reiterated 'buy' at Merrill Lynch post results

LONDON (AFX) - Shares in British Airways PLC were reiterated a 'buy' at Merrill Lynch after the national carrier's second quarter figures came in at the top end of expectations, dealers said.
In a note to clients, the broker said operating profit of 240 mln usd compared with its forecast of 203 mln and range of 201-215 mln, boosted by the fuel surcharge and hedging.
Looking to the future, the broker said its current year operating profit forecast of 450 mln "looks unlikely to be altered materially", subject to meeting with managament later today.
Merrill said this is principally because the Q2 out-performance was driven by lower fuel costs than it had expected, due to the timing of hedges at
specific levels, and therefore looks likely to be offset over the
course of the remainder of the financial year.