US Markets - A weaker Yen helped Wall Street claw back some losses this week but fears about the possible collapse of a big subprime mortgage lender yet again checked resurgent investor confidence.

Although many analysts expected a small recovery – or technical bounce – after the plunge in global equities last week, the strength of the rallies took some bears by surprise.

Materials, financials and cyclical stocks that had suffered particularly steep losses during the market turmoil made a neat about-turn on Tuesday to help stage the biggest one-day rally since July. The advance was led by Ford, the carmaker, Nucor, the steelmaker, and Lehman Brothers, the bank.

However bouts of alarm about subprime mortgage lenders, triggered by New Century Financial’s apparent slide towards baNKruptcy, once again punctuated the week. Each sell-off in the sector reverberated around the market and soured the mood.

An unexpected fall in the jobless rate helped to give the market an early lift on Friday. But stocks later sagged as investors reduced their holdings in anticipation of a testing week ahead.

The S&P 500 closed 0.1% higher at 1,402.85, up 1.1% this week. The bounce recouped about a third of the S&P’s losses since February 23. Yet many analysts remained cautious.

The Dow Jones Industrial Average rose 0.1% to 12,276.32 to stand 1.3% stronger this week. The Nasdaq Composite was flat at 2,387.55 on Friday.

The unwinding of the global carry trade – the practice of borrowing in currencies with low interest rates such as the Yen and reinvesting in higher yielding currencies – was regarded as one of the most important factors behind the sell-off.

The weaker Yen this week, which made the carry trade more attractive once more, helped to ease concerns.

Under pressure from its creditors, New Century Financial said it would no longer make new loans. Its shares fell 78% to $3.21 this week.

This put a brake on the mid-week advance of companies active in the mortgage sector. But shares in Lehman Brothers still rose 6.6% this week to $75.83 while Morgan Stanley, which lends to New Century, was 6.1% up at $76.

Ford stock was in demand after Credit Suisse analysts raised their rating on the group from “underperform” to “neutral”, saying the carmaker’s first-quarter loss might be smaller than expected. The shares made additional gains on Friday on reports that it was close to selling Aston Martin, the luxury car brand. Ford stock rose 4.5% to $7.93.

Steelmakers returned to form after a gloomy fortnight. Upbeat remarks from Nucor on expected demand for steel products lifted the entire sector, with Nucor stock jumping 11% to $64.26 and US Steel rising 6.1% to $91.24.

Goodyear continued to race ahead. Hardly dented by the stock market sell-off, shares in the tyremaker have climbed a further 4.5% to $28.51 this week, up 25% on the year. Analysts said the surge was helped by data that showed Americans were replacing their tyres more frequently.

Retail sales in February were largely weak. Costco stock slid 2.5% to $54.34 after its underlying sales figures and profit disappointed analysts.

In deal news, the battle to buy Caremark heated up after Express Scripts and CVS raised their rival bids for the US drug benefits management group. Shares in Caremark rose 1.4% to $61.90.

Shares in Yahoo slipped 5.2% to $29.12 on Friday after reports that it was in talks with AT&T that could lead to big changes in their partnership.

Deere & Co stock made big advances on optimism about sales of farming equipment rising with demand for ethanol. Shares in Deere were up 7.4% at $113.00.

European Markets - European equity markets climbed this week, as investors put the turbulence of recent sessions behind them and focused on merger activity and earnings news.

The FTSE Eurofirst 300 gained 1.3% over the week to end at 1,489.47 on Friday, but still more than 4% off the six-year high hit late last month

So let's go to the main players and starting with Germany where markets closed slightly higher as Wall Street traded in positive territory, helped by upbeat US employment data, and as positive news from Volkswagen boosted automotive stocks.

At the close, the DAX 30 index was 3.29 points or 0.05% higher at 6,716.52, after trading between a low of 6,665.73 and high of 6,745.06.

The MDAX ended down 56.33 points or 0.58% at 9,724.08, while the TecDAX was 0.51 points or 0.06% lower at 826.09.

DAX futures were up 21.50 points or 0.32% at 6,723.50, while bund futures slipped 0.32 points or 0.27% to 116.47.

Volkswagen added 3.05 Eur or 3.05% to 103.05 Eur after the carmaker released preliminary unit sales data for the beginning of 2007 and reiterated its goal of reaching a pretax profit of at least 5.1  billion Eur in 2008.

VW said deliveries in January-February totaled 862,000 units, up 8.3% on the same period of last year as it managed to offset the negative effect of a VAT increase in its home market.

Automotive peer DaimlerChrysler gained 0.53 Eur or 1.01% to 52.83, while MAN shares were up 1.28 Eur or 1.55% at 83.73.

BMW, on the other hand, dropped 0.19 Eur or 0.45% to 42.25 after WestLB downgraded its stance on the stock to 'hold' from 'add' and lowered its target price to 43 Eur per share from 49.

Elsewhere among the blue chips, Lufthansa gained 0.40 Eur or 1.97% to 20.73. The German flag carrier said its overall load factor in February rose 0.7%age points from a year earlier, reaching 71.1%.

The overall load factor measures how much an airline has sold of its total available capacity -- both seats and cargo.

Henkel and Postbank led decliners on the DAX, dropping 1.18 Eur or 1.14% to 102.65 and 0.71 Eur or 1.14% to 61.77 respectively.

Infineon, down 0.12 Eur or 1.04% at 11.37 and ThysseNKrupp, down 0.36 Eur or 0.95% at 37.43, were among other declining stocks.

On the MDAX, Krones added 4.54 Eur or 3.36% to 139.54 as dealers said a broker note from Citigroup Thursday continued to boost the share price.

Into France now where Share prices closed slightly higher but there was a sharp fall for EADS after a disappointing outlook from the struggling aeronautics group.

The CAC-40 index finished up 13.58 points or 0.25% at 5,537.84. Volume for CAC-40 shares was 5.5  billion Eur.

Among CAC-40 stocks, 25 closed higher and 15 closed lower. On the Matif, March CAC-40 futures were trading up 18.0 or 0.33% at 5,544.0.

On the broader indices, the SBF-80 index closed up 2.69 or 0.04% at 6,852.04 while the SBF-120 ended 8.70 or 0.21% higher at 4,056.61.

EADS dominated the news with its full-year results and outlook.

The stock ended down 1.09 Eur or 4.60% at 22.60, making it the biggest faller on the CAC-40, after it disappointed investors with its outlook for 2007 and the years ahead.

In 2007, group sales are seen growing in single-digit%age points after a 15% surge in 2006 and EBIT is seen stable versus the 399  million Eur posted in 2006, which was down 86% on 2005.

The struggling Airbus division, meanwhile, is expected to post a 'substantial loss' this year, following its net loss of 1.722  billion Eur in 2006.

Citigroup called the 2007 group guidance 'very weak' and long-term guidance for Airbus 'awful', while Exane BNP Paribas said that EADS' expectation that Airbus sales will be hurt by worsening product mix and pricing 'is probably the most worrying statement in the report.'

On the upside, the strongest blue-chip climber was Carrefour, which rose 1.41 or 2.70% to 53.59.

The stock had fallen in the two previous sessions as takeover speculation died down after new shareholders Groupe Arnault and Colony Capital said they planned to work with the Halley family, Carrefour's largest shareholder.

But in a note this morning, Societe Generale analysts welcomed both the company's full-year report yesterday, which they said showed 'operational recovery is underway', and also the arrival of new shareholders, which they see leading to an 'intelligent spin-off' of Carrefour's property assets.

Auto stocks Peugeot, up 1.06 or 2.12% at 51.10, and Renault, 1.27 or 1.42% higher at 90.45, added to gains throughout the week.

The French car makers may have benefitted from disappointment with BMW's fourth-quarter results and 2007 outlook, one dealer said, which led WestLB to downgrade the German company to 'hold' from 'add'.

Peugeot was also lifted earlier in the week by the same broker's decision to upgrade it to 'add' from 'hold', maintaining it as top pick among European car makers, as well as CEO Christian Streiff's comments that restructuring may cut jobs and production levels to make the company more competitive.

Vallourec fell 4.53 or 2.52% to 174.98, shedding most of yesterday's gains that had been fuelled by a report that the company is interested in acquiring Grant Prideco Inc in the US, a story rejected by Vallourec.

Arcelor Mittal, down 0.58 or 1.44% at 39.72, suffered from profit-taking after its strong gains in recent weeks.

Market heavyweight Total rallied from an earlier drop to close up 0.18 or 0.36% at 50.53.

PPR added 2.52 or 2.18% to 118.18. Oddo Securities raised its target price on the stock to 138 Eur from 130.

Other risers included Accor, 0.58 or 0.84% higher at 69.53, which continued gains following strong full-year results on Wednesday.

Outside the CAC-40, Thales gained 0.56 or 1.46% to 38.93 thanks to 2006 results ahead of analyst expectations and guidance for a higher operating margin in 2007 and again in 2008.

Pernod Ricard, finally, recouped only a fraction of its heavy losses yesterday that followed disappointing half-year results. The drinks group closed up 1.17 or 0.78% at 105.57 after plunging 4.61% yesterday.

In Belgium , Brussels Shares closed flat in low-volume Friday afternoon trade for lack of a clear lead from Wall Street on mixed US data.

Metals group Umicore fell 2.63 Eur or 1.97 to 130.69, while utility Suez lost 0.46 Eur or 1.22% to 37.24.

Financials were mixed. Fortis was down 0.13 Eur or 0.40% at 32.57, after the group's real estate unit said last night it is in talks to buy a stake in real estate group Agridec at around 204 Eur per share.

Peers Dexia fell 0.03 Eur or 0.14% to 21.65, whilst KBC rose 0.42 Eur or 0.45% to 92.93.

In positive territory, Ackermans & van Haaren reversed earlier losses to finish up 0.82 Eur or 1.29% at 64.59 after posting a rise in full year headline profits broadly in line with forecasts, plus a higher-than-expected rise in its dividend payout.

Telecoms provider Belgacom finished up 0.31 Eur or 0.98% at 32.01.

Outside the Bel 20, Kinepolis rose 0.60 Eur or 1.20% to 50.50 after the cinema group posted strong full year results.

Shares in Electrabel were down 0.51 Eur or 0.09% at 583.50 after the utility soared in afternoon trading yesterday, rising over 15% following news that parent company Suez is buying out minority Electrabel shareholders at 590 Eur per share.

In The Netherlands , Amsterdam markets closed higher after trading down for most of the day following the release of better-than-expected US employment figures that sustained Wall Street's bullish market.

The AEX closed up 1.32 points or 0.27% at 490.35, after opening at 489.04 and trading in a range 486.16-492.02.

Ahold led the AEX up 1.43% at 7.78, followed by Akzo Nobel, which gained 1.24% at 46.41 amid news the initial public offering of its Organon subsidiary is expected on March 27, with book-building expected to start Monday.

Among financials, ABN Amro closed up 0.83% at 27.81, having performed well throughout the day, bucking the general downward trend. Aegon rebounded up 0.33% at 15.20, and Fortis also recovered, advancing 0.9% at 32.73. ING rose 0.28 at 31.93.

With oil prices remaining steady, Shell ascended 0.40% at 24.87 after sustaining losses early in the day, while SBM Offshore closed up 0.30% at 26.79. Oil services group Fugro closed 1.10% lower on the Midcap at 35.98 after trading down throughout the day following solid but uninspiring full year results.

Profiting from the bullish afternoon rally, AEX heavyweight Philips stepped up 0.93% at 28.25 while Unilever went up 0.66 at 19.70 on reports of an upgrade from Dutch broker ING.

TomTom led decliners at close, down 1.65% at 30.40 while Arcelor Mittal, which led decliners for much of the day, closed 1.37% lower at 39.70 after leading decliners throughout trading.

Vopak was a standout success on the Midcap, rising 6.43% at 40.53 after the company came out with 'stellar' full year results and a 'stupendous' outlook, analysts said.

Corio also performed well at the end of the day, advancing 1.50% at 68.97 while Wereldhave moved up 1.30% at 68.97.

ASMI lost 1.23% at 16.88, giving back opening gains as remarks from the company's CEO during today's conference call failed to assuage concerns about the equipment manufacturer's back-end activities as outlined by yesterday's full-year results.

Into Switzerland now where Zurich Share prices closed down slightly but off intraday lows, tracking gains on Wall Street.

At the close, the Swiss Market Index was 21.83 points lower at 8,933.87, while the Swiss Performance Index was up 2.35 points to 7,126.88.

The Euro rose against the Swiss franc to 1.6174 SFr, and the Dollar firmed to 1.2334 SFr.

Top faller was Novartis, down 1.50 SFr or 2.1% at 69.30, going ex-dividend today, while sector peer Roche was also lower, last down 0.60 SFr at 215.60, on news that the NHS will not fund treatment with cancer drug Tarceva in the UK.

Fellow heavyweight Nestle was up 2 SFr at 474, recovering from earlier losses.

Also in demand were shares of luxury goods groups, with Richemont gaining 1.5% or 1 SFr to 67.40, and Swatch firming 4.25 to 302.25 SFr.

Swisscom added 5 SFr at 458.75 SFr, continuing its recent good run, after announcing it will cut charges for fixed-line to mobile calls.

Losers included Clariant, last down 0.10 SFr at 19.65 SFr, and Lonza off 1.20 at 111.70 SFr.

Among banks, UBS was down 0.50 to at 71.90, while Credit Suisse was off 0.10 SFr at 88 SFr.

Julius Baer was up 1.6% or 2.50 to 160.50 SFr, making it the market's biggest gainer.

Among mid-caps, Sika shed 38 SFr to 2,077 on profit-taking after initially well-received full year results.

Into Scandinavia where Sweden 's markets closed marginally higher, led by Electrolux and Volvo.

The OMX Stockholm index closed up 0.06% at 387.51, while the OMX Stockholm 30 index gained 0.14% to close at 1,188.88.

Volvo was up 1.25% at 568.00 SKr. Chevreux hiked its target price on the share to 670 SKr from 640.

Electrolux gained 2.75% to 168.00.

Elekta added 2.45% to 136.00, after yesterday's 11% decline. Carnegie reiterated its 'outperform' rating but removed the share from its Carnegie Mover list of most attractive shares.

Elekta said it will repurchase 100  million SKr in shares, corresponding to 1% of the total number of outstanding shares.

Saab shed 0.27% to 188.00. The group's unit Saab Space said it has won an order to supply 204 antennae for use in Boeing Space and Intelligence System's new Mobile Satellite Venture (MSV) system satellites.

NCC was flat at 200.00 SKr. The company said it has won an order worth 710  million SKr from Varma Mutual Pension Insurance Company, to build a shopping centre in Tornio, Finland.

Ericsson was down 0.41% at 24.50, while TeliaSonera was flat at 59.25 SKr.

TeliaSonera AB and LM Ericsson AB said they have won an order from nuclear power plant operator OKG AB, to build an internal enterprise mobile network covering the three nuclear power stations in Oskarshamn, Sweden, that OKG operates.

Into Denmark where Copenhagen Share prices also closed slightly higher, led by Vestas Wind Systems and Codan.

The OMXC20 index closed 1.00 points higher at 456.44 and the OMXCB Benchmark index added 1.23 points to 434.53.

The OMXC All Share index closed 0.70 points higher at 436.39 on turnover of 5.36  billion DKr.

Vestas Wind Systems was up 5.50 DKr at 275.50. The company's market share in China grew to 23.4% in 2006 from 14.7% in 2005, Windpower Monthly reported, according to Direkt.

Codan gained 15 DKr to 525.00 after the group was upgraded to 'neutral' from 'underperform' at Carnegie.

AP Moller-Maersk shed 400 DKr to 58,300. The group's market share in the US has declined sharply after the 17  billion DKr acquisition of the shipping group P&O Nedlloyd in 2005, daily Borsen reported.

AP Moller-Maersk's market share in the US has dropped steadily from 17.1% in September 2005 to 13.6%, marginally higher than the 13.2% held before the acquisition of Nedlloyd, Borsen said.

In other news, workers on Lindo shipyard, owned by AP Moller, went on strike today, according to Borsen.

William Demant was down 3.00 DKr at 486.50. The group was upgraded to 'neutral' from 'underweight' at Sydbank on expectations for increased market share and a strong newsflow regarding its new high-end hearing aid.

Jyske Bank reiterated its 'accumulate' rating for William Demant, while Credit Suisse, according to RB Borsen, raised its target price for the group to 450 DKr from 415 DKr.

Lundbeck shed 2.75 DKr to 158.75. According to Borsen, the group will re-launch its anti-psychotic drug Serdolect in the US.

Among other shares, Novo Nordisk was up 7.50 DKr at 483.00, NKT Holding shed 9.00 DKr to 455.50, Sydbank was down 4.00 DKr at 292.00, and East Asiatic Co fell 8.00 DKr to 245.00.

In Finland Helsinki Share prices closed little changed as positive US data helped blue chips climb out of afternoon lows.

The OMX Helsinki 25 index finished up 0.04% at 3,046.96 and the OMX Helsinki ended down 0.18% at 10,149.86. Volume was about 1.3  billion Eur.

Metso advanced 1.58% to 38.60 Eur, UPM-Kymmene 0.66% to 19.94 Eur and YIT 0.77% to 24.79 Eur as better-than-expected US labour data reassured investors.

Wartsila, up 2.08% to 48.64 Eur, and Neste Oil, up 1.67% to 26.11 Eur, also posted solid gains.

Alma Media was the biggest faller, giving up 7.48% to 9.52 Eur, after going ex-dividend.

Helsinki-based investor Kai Makela has grown his stake in the company to close to 15%, the online edition of Kauppalehti reported today.

Also trading ex-dividend were KCI Konecranes, off 2.09% to 24.81 Eur, and Amer Sports, down 3.51% to 16.21 Eur.

Amer's US-based rival Quiksilver, owner of winter sports brand Rossignol, last night posted a drop in first-quarter earnings due to warm weather, and also lowered its fiscal 2007 guidance.

Nokia shed 0.30% to 16.60 Eur.

Down to the Med' now and starting in Athens where Greek shares closed higher, lifted late in the day by gains on Wall Street - as much of Europe was yesterday.

The ASE general index closed 0.5% higher at 4,556.6 points.

The blue chip index also closed up by 0.6% to 2,461.5 points. Mid caps and small caps gained 0.4% at 5,538.0 points and 0.7% at 882.2 points respectively.

The session closed with 149 advancers, 102 decliners and 68 unchanged in below-average trading volume of 349  million Eur.

National Bank of Greece gained 1.2% to close at 39.50 Eur after Credit Suisse raised its target price to 47.4 Eur from 42 Eur, citing its better-than-expected 2006 full-year results and realistic three-year business plan.

OPAP and EFG Eurobank gained 2.7% to 28.58 Eur and 2.3% to 28.96 Eur respectively on improved market sentiment, rebounding from heavy selling pressure earlier in the week.

Heracles Cement gained 1.1% in todays session to close at 15.98 Eur after Euroxx Securities initiated the company with an 'outperform' rating and a 19 Eur 12-month target price, citing its appealing valuation and high dividend yield.

Greek metals holding company Halcor rose 4.9% to 5.96 Eur on sources saying Viohalco intends to place about 15-20% of the company at between 5.8 and 6 Eur per share.

Folli Follie dipped 2.9% to close at 26.30 Eur in late selling. In separate news, AFX consensus forecasts see full-year net up 20.9% year on year to 67  million on robust sales and the first full-year consolidation of Hellenic Duty Free Shops.

Hellenic Telecomms (OTE) closed down 0.8% to 21.72 Eur in heavy volume, having outperformed the market yesterday.

In Italy Milan shares were lower with market players waiting for US employment and trade deficit data for clues on the state of the US economy, with Telecom Italia in focus as it presents its 2007-2009 business plan.

The Mibtel Index was down 0.63% at 31,580 while the S&P/Mib index was down 0.65% at 40,632, on volumes worth some 2.074  billion Eur.

Telecom Italia was down 1.6% at 2.1225. The company earlier cut its forecasts for 2007-2009 sales growth to 1-2% per year from a previous 3-4% and said it would resume talks with Telefonica to discuss areas of cooperation but it was open to deals with other operators.

The group also said from 2008 it will reduce its dividend payout to 80-85% of consolidated net profit from a previous 90%.

Pirelli, which owns 18% of Telecom Italia through Olimpia, was down 2.17% at 0.762 hit by the dividend cut, the failed attempt to sell a stake in Olimpia to Telefonica and a growing rift with Telecom Italia management.

Also a leading loser was Lottomatica, down 2.3% at 29.3, after the release of disappointing full-year results which followed a business plan that according to one dealer was already 'too prudent'.

Pirelli Real Estate was down 1.28% at 54.61 ahead of the release of full-year results which are expected to show a modest rise in net profit with an acceleration in the fourth quarter.

Rounding out Europe this week is Spain where Shares closed higher regaining their buoyancy after the morning's losses following positive key US economic data that lifted sentiment on the economic outlook.

The IBEX-35 index closed up 63.20 points at 14,257.2 after trading in a range of 14,098-14,306, on turnover of 5.4  billion Eur.

The March future on the Ibex-35 closed at 14,258.0 up from 14,186 at Thursday's close, on around 26,044 contracts.

Bankinter, up 1.15 Eur or 2.04% at 57.45 led gainers amid rumours surrounding stakebuilding by core shareholder Ramchand Bhavnani announced yesterday.

Other banks were also in demand, with BBVA up 0.17 to 18.47, SCH 0.06 higher at 13.87 and Popular ahead 0.06 to 14.68.

Energy groups were in focus after the Spanish and Portuguese governments announced a series of long-awaited agreements related to administration of a single Iberian energy market.

Gas Natural was up 0.42 to 33.27, Enagas climbed 0.21 to 18.15, REE gained 0.37 to 35.45 while Repsol was 0.20 higher at 24.02.

Among utilities, Union Fenosa rose 0.34 to 39.52 after JP Morgan hiked its stance to 'neutral' from 'underweight', improving its price target to 42.50 Eur from 38.50.

Telefonica, up 0.04 to 16.13 was also under scrutiny ahead of the sale of its 75% stake in Endemol and amid speculation about possible foreign strategic deals.

Inditex outperformed to put on 0.55 to 44.45 ahead of full year 2006 to January 2007 results due out this month.

Among broadcasters, Antena 3 was down 0.11 to 16.83 and Telecinco was up 0.04 to 20.84 after announcing a 1.28 Eur per share total gross dividend against 2006 results.

Cintra was down 0.13 to 13.42, FCC lost 0.75 to 78.20 and Gamesa slipped 0.03 to 22.89 on profit taking after recent gains.

UK Market - Leading shares ended a volatile session higher as confirmation of a bid for drug retailer Alliance Boots underpinned M&A hopes in the high street and added to a cautiously optimistic start on Wall Street.

At the close, the FTSE 100 index was 17.5 points firmer at 6,252.2, having swung in and out of losses through out the day, with the broader indices mixed.

Volume was solid with 3.0  billion shares changing hands in 508,055 deals.

Alliance Boots ended the day the top riser, up 115 pence at 930 after the drugs retailer confirmed it received a preliminary but 'highly conditional' approach.

Previously the international health and beauty group, created from the merger of Boots Group and Alliance UniChem last July, was mooted to having received a 1,000 pence per share private equity bid.

Wm Morrison was also higher, 13 to the good at 320-1/2, boosted by hopes of consolidation in the sector, with house broker ABN Amro pushing the stock ahead of next week's results.

The broker said the group should confirm the ongoing recovery and highlight significant opportunities that lie ahead.

The broker also estimates the market value of group's estate at 7.8  billion stg, but does not believe management is under any pressure use its estate to alter the shape of its balance sheet.

Peer Sainsbury was also on the up, 7-1/2 higher at 544, on rumours Qatar Investment Authority has offered 620 pence per share for the family stake in group.

At the same time, Deal Reporter wrote a source at the Qatar Investment Authority confirmed the group is in talks with Sainsbury but would not comment further.

Peers gained in sympathy with DSG International 6-1/4 better at 175-1/2, Next 7-3/4 firmer at 257-1/2, Kingfisher gained 7-3/4 257-1/4, and Home Retail Group rose 9 at 426.

M&A hopes also buoyed Prudential, 12-1/2 firmer at 683, after a report in the Daily Mail said hedge fund activists, including Tosca, have secretly built stakes in the group and are intending to push for its break-up.

And national carrier British Airways took on 7-1/2 at 528-1/2 amid hopes of consolidation in the the European airline industry after the CEO of German peer Lufthansa said: 'We will not be onlookers in Europe...we have the money to invest'.

Elsewhere, broker comment lifted Anglo American, 17 better at 2,467, after HSBC upgraded the miner to to 'neutral' from 'underweight' as the house said it expects platinum prices to drive EBIT contributions in 2007.

But in contrast, mining peers were generally lower as most metals failed to hold onto recent gains.

Xstrata was the main casualty, down 64 at 2,405 after Exane BNP Paribas downgraded its recommendation to 'neutral' from 'outperform' on valuation grounds.

The broker said, given the noticeable return of volatility in the equity markets, it has lowered its discount cash flow valuation to 2,490 pence, and its target to 2,600 pence, from 2,800.

GlaxoSmithKline was also under the cosh, down 14 to 1,435 after Goldman Sachs downgraded the pharmaceutical giant to 'sell' from 'neutral' and cut its stance on the European pharma sector to 'neutral' from 'attractive'.

The broker told clients GSK faces major challenges through 2007 amid the loss of US patents for four products, continued weak US scrip trends for Advair and Avandia, comPounded by a tough currency environment.

On the second line, Bovis added 43 at 1,145 on talk housebuilding peer Persimmon could offer 1,300 pence per share for its smaller peer.

The Financial Times reported rumours Persimmon has removed ABN Amro as its joint broker. ABN is house broker to Bovis.

In earnings, Catlin Group was up 29-1/2 at 510 after the Lloyd's of London insurer, which took over rival Wellington Underwriting last October, published full-year results above expectations.

This morning, the group said pretax profit for the combined group came in at 521  million usd in 2006, easily beating expectations of 455  million usd.

In response, UBS raised its price target on the group to 590 pence, from 570, as it reiterated its 'buy' advice.

Among broker changes, Ladbrokes was 5-1/4 firmer at 417-1/4, thanks to an HSBC upgrade to 'overweight' from 'neutral' as the broker revised forecasts following full-year results last month.

In a note out this morning, HSBC revised its EBIT forecasts for full-year 2007 2.7% lower, while revenue for the same period is expected to come in 5.5% higher.

In contrast, Gyrus Group lost 6-1/4 at 440, after being downgraded to 'neutral' from 'outperform' by Credit Suisse on valuation as the broker said the stock is now anticipating most of the growth prospects for 2007.

The broker also said it does not expect any major surprises at next week's full-year results, given the medical devices company published a full-year update in January.

And Taylor Nelson Sofres slipped 3-1/4 lower to 235 after Collins Stewart downgraded the stock to 'hold' from 'buy' on valuation grounds after this week's full-year results.

The broker said investors breathed a sigh of relief when Monday's preliminary results showed TNS had met updated guidance.

But Soco was the top casualty, off 42 at 1,320 after the oil and gas explorer said it is preparing to plug and abandon the Ca Ong Doi 2X in Vietnam after disappointing test results.

Japan & Asia Pacific - In Japan The Nikkei share average gained 0.43% on Friday, as machinery stocks such as Fanuc Ltd. rose on upbeat machine orders data, while a weak Yen lifted shares in Canon Inc. and other exporters.

Investors also bought back recently battered shares in consumer lenders such as Credit Saison after a newspaper report on a stake sale in OMC Card sparked speculation of consolidation in the industry.

Shares in Nikko Cordial jumped 3.1% to 1,410 Yen after major Nikko shareholder Southeastern Asset Management said on Friday Citigroup's $10.8 billion offer to buy Nikko undervalues the Japanese brokerage. 

But the market's overall advance was limited by caution about US jobs data due later in the day.

Investor confidence hurt by global market sell-offs has not yet fully recovered, and investors' cautious stance will likely cap the Nikkei at around 17,500 Yen next week.

The Nikkei closed up 73.73 points at 17,164.04, after booking its largest daily%age gain since October in the previous session. On the week the Nikkei gained 0.43%.

Hong Kong blue chips swung to a 0.2% loss in a choppy session on Friday, as heavyweight China Mobile's shares fell ahead of a revision to the Hong Kong main stock index next week.

China plays advanced 0.8%, boosted by mostly firm mainland financial plays and higher resource issues.

Hong Kong's main stock index, the Hang Seng, ended down 1.6% for the week after closing the day at 19,134.88, down 40.29 points.

The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 71.75 points to end at 9,231.21 for a weekly gain of 2.7%.

Mainboard turnover was HK$63.0 billion, up from Thursday's HK$49.9 billion, with analysts attributing the sharp rise to activities in connection with the Hang Seng index rebalancing.

The index revision will cut China Mobile's weighting to about 16%, down from roughly 21%. HSBC's weighting will be trimmed to 20%, down from the current 23%.

South Korean stocks closed slightly lower Friday, snapping a three-day winning streak, as institutional investors unloaded blue chips for profit taking.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.31 point, or 0.02%, to 1,423.58. Volume was moderate at 223.3 million shares worth 3 trillion Won (US$3.2 billion), with losers outnumbering winners 403 to 346.

Recovering from the fallout from last week's tumble in Chinese stocks, the main index rose nearly 50 points in the past three sessions.

In mainland China , A-shares in Shanghai and Shenzhen closed mixed after weak morning trading with banks and steelmakers in demand from institutions.

The Shanghai A-share Index was up 10.77 points or 0.35% to 3,087.02 while the Shenzhen A-share Index was down 2.88 points or 0.36% at 793.65 on turnover of 46.27 billion RMB.

Philipine share prices rose 2.36% on Friday, buoyed by overnight gains in Wall Street and strong exports data for January.

The 30-share Philippine Stock Exchange index added 71.45 points to close at 3,099.82.

A total of 6.08 billion shares worth 4.53 billion pesos (93.4 million Dollars) were traded. Advancers led decliners 102 to 19, while 35 stocks were unchanged.

Market sentiment was improved due to government data showing that exports surged 27.3% year-on-year in January, the fastest rise since September 1999.

Thailand 's shares fell 0.12% Friday, as comments by new Finance Minister Chalongphob Sussangkarn failed to inspire buying.

The Stock Exchange of Thailand's benchmark SET Index lost 0.81 points to close at 671.17. A total of 1.2 billion shares worth 7.9 billion baht were traded.

Precious Shipping PCL, the most active stock, fell 4.1% to 46.75 baht as the company opted to sell ahead of deadline stock bought earlier under a treasury stock program if it let the deadline pass, those issues will be voided.

Its rival Thoresen Thai Agencies PCL rose 0.9% to 29.25 baht as investors considered its stock valuation more attractive, said Kim Eng Securities.

Indonesian shares ended down 0.4% at 1,764.58, down from earlier high of 1,784.05, as investors realized gains after main index rose 4% in previous three sessions.

Malaysian shares rose 0.1% at 1,188.83 in moderate trade, down from intraday high of 1201.45 as pre-weekend profit-taking cuts earlier gains that were result of bottom fishing.

Singaporean shares closed modestly higher, with gains led by property stocks. The benchmark Straits Times index closed up 21.22 points, or 0.7%, at 3,143.71.

Taiwanese shares edged down slightly, with traders cashing gains in technology companies. The Weighted Price Index of the Taipei Stock Exchange slipped 5.67 points, or 0.07%, to 7,568.20.

Into India where the market continued to be on a roller-coaster ride on Friday. Bulls failed to sustain the previous day’s momentum as inflation resumed its northward journey after showing signs of a climdown last week.

The Sensex and Nifty shed over a% each to end the day at 12885 (down 164 points) and 3718 (down 44 points), respectively.

Cement stocks were the major casualties after cement companies agreed to absorb all rise in input costs and not hike prices. Gujarat Ambuja Cements, ACC, Grasim, India Cement, Mysore Cement and Shree Cement were all down between 2% and 10%. The government’s proposal of a dual excise structure for the sector has rattled investors and has wiped out nearly a quarter of the market cap of most cement companies.

The Australian stock market managed a slightly higher close on Friday despite falling away in afternoon trading.

The main banks and key resources stocks were mixed. At the close, the S&P/ASX200 was 7.9 points firmer at 5830.2, while the all-ordinaries gained 10.6 points to 5810.2.

On the Sydney Futures Exchange, the March share price index contract was up nine points at 5826, on a volume of 39,995 contracts.

BHP Billiton was up 5c at $A27.47, while Rio Tinto retreated 55c to A$74.50.

Takeover target and uranium explorer Marathon Resources jumped 46c to A$3.76 as Hong Kong-based investment bank Crosby Capital Partners sweetened its takeover offer of the company.

Oil producer Woodside Petroleum was down 17c at A$35.79, and Santos lifted 4c at A$9.71.

National Australia Bank fell 34c to A$39.98, the Commonwealth Bank lost 40c to A$49.85, Westpac was steady at A$25.75 and ANZ rose 4c to A$29.05.

Telco Telstra was 4c higher at A$4.24, and Optus-owner Singapore Telecommunications added 4c to A$2.80.

The top-traded stock by volume was minerals explorer Jervois Mining, with 111.02 million shares worth A$3.85 million changing hands. It was 0.4c lower at 3.3c.

Turnover was 1.52 billion shares worth A$6.1 billion, with 683 stocks up, 508 down and 339 unchanged.

In New Zealand also, the sharemarket ended the week on a relatively flat note, as investors tentatively headed back to equity markets.

The NZSX-50 index up just 0.2% or 10.56 points to 4079.97 on turnover worth nearly $162 million.

Telecom Corp was flat at 478, and Fletcher Building fell 13c to 1086 after Thursday's interest rate hike aimed at cooling the resurgent housing market.

Other stocks which lost ground during last week's global equities selloff were clawing their way back: TrustPower was up 10c at 818 and Mainfreight was up 10c to 725.

Volume was high in casino operator Sky City, which edged up a cent to 474 on 5.4 million shares, much of it a large crossing.

Commodities - Oil prices slipped in late trade on Friday but remained within the trading range established over the past two weeks.

ICE Brent for April delivery fell 79 cents to $61.54 a barrel in late afternoon London trade.

The fall also wiped out any gains made over the week, with Brent ending last Friday at $62.08 a barrel.

April West Texas Intermediate dropped 85 cents to $60.78 a barrel in late morning trade on the New York Mercantile Exchange. April WTI is down about one% on the week – it ended last Friday at $61.64.

Traders were also factoring in a no-change to the production policy of the Organisation of the Petroleum Exporting Countries, which meets next week in Vienna.

The oil cartel has announced output cuts totalling 1.7m barrels a day at its recent meetings.

Because of the production cuts, markets have tightened and stockpiles fallen in the US, the world’s largest oil consumer.

Gold prices were marginally higher at $651.00/$651.75 a troy ounce. Gold rose about $8 on the week, recovering more than a third of the losses it had suffered in the previous week.

Nickel prices remained near record highs, hitting $43,000 a tonne at one point on Friday, just $200 below its record reached on Thursday. But the three-month nickel price fell in late trading to $42,550 a tonne, down $300 on the day but up more than 3.6% on the week. Tightness in nickel markets has pushed the cash price of the metal above $45,000.

Copper prices fell more than 2% to $6,125 a tonne on the London Metal Exchange but were up more than $100 on the week and have recovered most of the losses sustained in the past fortnight.

Grain prices traded in a narrow range after the latest monthly global crop production forecasts by the US Department of Agriculture.

The USDA said US beef output would dip by 65m Pounds and chicken by 125m Pounds, with total red meat and poultry production forecast at 90.68bn Pounds.

Producers had sent fewer animals to slaughter, the USDA said, because feed prices had increased along with those of corn, soyabean and wheat.

The USDA kept its global corn, wheat and soyabean production and stockpile forecasts largely unchanged from the previous month.

Chicago Board of Trade corn futures were two cents lower at $4.10 a bushel and its wheat futures were 4 cents higher at $4.68 a bushel. Soyabeans were flat at $7.45 a bushel.

Currencies - There were signs that calm was returning to currency markets at the end of a week at whose volatile start the Yen had hurtled to a three-month high against the Dollar.

Having climbed more than 3% against the Dollar the previous week, it soared 1.5% to a 12-week high of Y115.16 on Monday as investors unwound carry trades amid a continued sell-off in global equities.

Investors shied away from carry trades, in which the low-yielding Yen is sold to fund the purchase of riskier higher-yielding assets.

The Yen posted particularly sharp gains against high-yielding currencies on Monday, rising 2.6% to Y221.15 against the Pound, climbing 3.1% to Y88.52 against the Australian Dollar and gaining 3.6% to Y77.46 against the New Zealand Dollar.

Such was the extent of Yen selling prior to its recent rally that there were fears that it would post even stronger gains.

Given the extreme short Yen positioning in the market, there was even talk that Dollar/Yen was on the cusp of a move on the scale of October 1998, when it collapsed from Y130 to Y112 in just two days as carry trades unwound.

But, as global stock markets stabilised, the Yen came under renewed selling pressure later in the week.

That was given further impetus on Friday as the US employment report for February came in stronger than expected.

The Dollar rose 0.6% to $1.3105 against the Euro over the week and gained 0.6% to $1.9310 against Sterling.

Meanwhile, the Yen finished the week 1.2% lower against the Dollar at Y118 and down 0.3% to Y154.60 against the Euro as equity markets rallied.

High-yielding currencies even managed to reverse their steep losses against the Yen. The Pound ended the week up 0.5% at Y228.10, the Australian Dollar 0.1% higher at Y91.40 and the New Zealand Dollar 1.4% stronger at Y81.46.

Meanwhile, the Euro was unchanged on the week at £0.6787 after, as widely expected, the European Central Bank raised Eurozone interest rates to 3.75% on Thursday and the Bank of England kept UK interest rates borrowing costs on hold at 5.25%.

Mexico's Peso strengthened to a two- week high on expectations demand for the country's exports will fuel Dollar inflows. The Peso rose 0.2% to 11.1430 per Dollar and earlier reached 11.1082, its strongest since Feb. 26. The Mexican currency has gained 0.6% this week, the third-best performance against the Dollar after the Brazilian Real and the South African Rand.

The South African Rand firmed slightly against the Dollar in late Friday trade, capping a largely quiet day, which saw thin volumes triggering slight volatility. The Rand was R7.3350/US$ at 16:10 compared to R7.3540 at the previous New York close, having swayed between R7.3175/4175 during the session.

Investors were firming positions in the Australian Dollar Thursday night ahead of the latest batch of economic data, which could decide the direction of the US economy.

The Australian and New Zealand Dollars strengthened yesterday, particularly against the Japanese Yen, as a result of the interest rate differentials between the two countries and Japan.

The Australian currency had softened markedly in trade at the start of this week, because of weakness that unfolded in world equity markets.

However, the decision by the Reserve Bank of New Zealand to raise the cash rate to 7.5% prompted renewed activity in the two currencies.

Last night the Australian Dollar had moved from US77.63c to US77.91c, while the New Zealand currency was higher against the US Dollar at US68.78c.

Finally in currencies, here at home the RMB finished at 7.7445 to the Dollar on the over-the-counter market, compared with Thursday's close of 7.7400.

China - The planned corporate tax hike on foreign enterprises operating in China should raise their payments by a total of 43 billion yuan ($5.55 billion) a year, an amount Chinese Finance Minister Jin Renqing said would not significantly impact profits or dampen foreign interest to invest in China.

Jin made his estimates in a briefing in Beijing on Friday with journalists, the full transcript of which was published by the state news agency Xinhua News as part of blanket coverage of the ongoing annual meeting of the National People’s Congress in Beijing.

A bill before the legislature would standardize the corporate tax rate at 25%, with a few exceptions. This would be a hike for foreign companies, which on average pay about 15%, and a cut for domestic companies, which are currently taxed at a 33% rate.

In the initial five years in which the increase would be phased in, foreign companies are expected to pay a total of 8 billion yuan ($1 billion) more each year, Jin said.

“Compared to their abundant profits made in China, this burden would not have a very big impact so as to affect their investment interests,” he added.

Small and medium-size foreign enterprises, which generally are from Hong Kong and Taiwan, would be taxed at a 20% rate, rather than at 25%, Jin said.

Jin said the reduced tax bill for domestic companies would far outweigh the rise in collections from foreign companies, resulting in a decline in tax revenue for the Chinese government of about 100 billion yuan ($12.9 billion).

Also this week, on Thursday China's national legislature began deliberating on a landmark law that would protect private property and a law that would gradually equalise corporate taxes on foreign and domestic corporations.

The two pieces of legislation are a result of years of debate within the Communist Party and are intended to protect private wealth, create more coherence in the tax code and continue the country's market-driven economic reforms.

Both pieces of legislation were introduced on Thursday during the National People's Congress, the annual two-week gathering of the Communist Party-controlled legislative body. Passage, considered a formality, is expected next week.

Approval of the property law had been expected last year, but party leaders tabled the proposal after an unusually public and passionate ideological fight erupted, led by leftist scholars who argued that the law would worsen income inequality, legalise the misappropriation of state assets and undermine the socialist tenet of state ownership of property.

"This will accelerate the loss of state assets," Gong Xiantian, a Beijing University law professor, said in an interview this week. "And it will accelerate the process of turning the country into a place where private ownership is the dominant system."

This year, the professor and other critics tried to continue their fight, but the law's introduction indicates that it will be approved. Wang Zhaoguo, an official in the National People's Congress, said property protections would stimulate the creation of wealth and "promote social harmony".

The property law largely ratifies customary practice and I think it will have little short-term impact on business. The law offers entreprenEurs protection against expropriation of assets but most businesses are more concerned about fees, levies and illegal taxes.

Land in China is owned by the state, but individuals and corporations are now allowed to own buildings, homes or apartments while renting the land below on long-term leases.

Real estate has become a primary engine of the Chinese economy, but also a source of widespread official corruption and illegal land confiscations. Government studies indicate that land has been confiscated from more than 40 million farmers, often by corrupt officials working in concert with developers. Urban residents have been evicted from ageing apartments to make way for development.

Critics have argued the property law would legalise such misappropriations. But Jiang Ping, a scholar involved in drafting the law, said it protected only "legally obtained" property and included protections for farmers against illegal land seizures.

Tax reform has also been under discussion for years. China offers tax incentives and lower rates to foreign corporations. These have helped attract record investment, but caused resentment among domestic companies. Under the new law the rate for all companies will be brought gradually to 25%.