DJ EUROPEAN MIDDAY BRIEFING FROM DOW JONES NEWSWIRES

AMERICAN MARKETS OUTLOOK: U.S. stock markets are set to open lower Monday on North Korea's nuclear test announcement and caution ahead of the start of the third-quarter earnings season.

Martin Slaney at GFT Global Markets, said the situation in North Korea could cause an overall increase in volatility in the markets. But, he added, "unless we see additional nuclear tests, then the markets could well brush this aside and focus instead on the much more direct impact of the start of the third-quarter earnings season."

Slaney says a decent string of earnings over the next few weeks will lay the foundation for a strong end to the year for stocks.

GFT Global Markets is calling the Dow Jones Industrial Average to open down 25 points at 11,825, the S&P 500 to open down 3.5 points at 1346 and the Nasdaq 100 to open down 3.5 points at 1680.3.

EUROPEAN MARKETS: European markets are mostly lower midday on reports of North Korea's nuclear weapon test and with Friday's weak close on Wall Street weighing on sentiment, although strength in the oil sector has lifted London stocks.

London's FTSE 100 is up nearly 0.5% at 6030.10 on oil and gas sector gains. Deal speculation has also helped boost steelmaker Corus Group. Shire Pharmaceutical is up 9.3% on news that the U.S. FDA has granted conditional approval to its hyperactivity drug NRP104.

Frankfurt's DAX is down 0.4% at 6063.06, with sentiment nervous on the North Korean nuclear test situation, traders said. They also point to negative trading indications from the Asian markets.

Paris' CAC 40 is down 0.2% at 5273.63.

Bunds and gilts are mixed but holding in narrow ranges, with both U.S. and Japanese investors absent due to public holidays. Bunds are modestly lower on the lingering impact of last week's U.S. payrolls data, dealers say. At 1025 GMT December bunds were down 0.11 at 117.75 and the December gilt was up 0.06 at 109.78.

North Korea's announcement that it had conducted its first ever nuclear test has knocked the yen down against the dollar in Europe. The dollar also continued to get support from last Friday's surprisingly strong upward revisions to U.S. non-farm payrolls. By 1025 GMT, the dollar was up at Y119.10, the euro was flat at $1.2600 and the pound weakened to $1.8671.

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TOP STORIES:

NORTH KOREA SAYS IT HELD FIRST-EVER NUCLEAR TEST: North Korea said it performed its first-ever nuclear weapons test, claiming it set off a successful underground blast in a "great leap forward" that defied international warnings against the communist regime. (AP)

RUSAL, SUAL, GLENCORE CONFIRM ALUMINUM MERGER DEAL: Russian Aluminum, or Rusal, smaller peer Sual Group and Switzerland's Glencore International AG confirmed that they have signed an agreement to create United Company RUSAL by merging their respective aluminum and alumina assets.

GERMAN AUG INDUS PRODUCTION ABOVE FORECASTS: German industrial production surprised on the upside in August, thanks to a healthy rise in manufacturing output, data from the Economics Ministry showed Monday. (By Nina Koeppen)

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INSIGHT & ANALYSIS FROM DOW JONES NEWSWIRES:

=FOREX FOCUS: The euro could still make it back to $1.30 or more but after last week's European Central Bank meeting this move could take longer than originally anticipated. (By Nicholas Hastings)

=FOCUS: Misys PLC (MSY.LN) Chairman Sir Dominic Cadbury survived the beleaguered U.K. software firm's annual shareholder meeting in London last Wednesday, but the descendent of the chocolate dynasty has much to do to make the company palatable to shareholders again. (By Daniel Thomas and Angela Henshall)

=ASSET CLASS: The carry trade could be about to hit the fan. (By Alan Mattich)

=THE SKEPTIC: The boldness of Ryanair's bid for Aer Lingus, and the major impediments to its success, have obscured the business logic of the tie-up, and Ryanair's shrewd tactics in moving now. (By Matthew Curtin)

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STILL TO COME

COUNTRY PERIOD

ET/GMT
N/A EU Euro Group, ECOFIN meeting in Luxembourg
N/A US U.S. bond market closed for Columbus Day
holiday; stock market open
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OTHER NEWS:

GlaxoSmithKline PLC (GSK) said it's filing its promising breast cancer drug Tykerb with European regulators, following a similar move with the U.S. Food and Drug Administration last month. (By Elena Berton)

Roche Holding AG (RHHBY) said that the U.S. Food and Drug Administration has lifted the import alert for the sale of Accu-Check insulin pumps, clearing the way for launching the products in the United States. (By Anita Greil)

Germany's trade surplus in August narrowed slightly more than expected, data released by the Federal Statistics Office showed. (Data Snap by Roman Kessler)

U.K. pharmaceutical company Shire PLC (SHPGY) has gained conditional approval from U.S. regulators to market its new hyperactivity drug NRP104, which is expected to replace older treatment Adderall XR as its main growth driver. (By Elena Berton)

Lonmin PLC (LMI.LN), the world's third-largest platinum producer, confirmed it will invest $1 billion in South Africa over the next three to five years, following the successful switch of its old mining licenses into new rights as part of the country's black economic empowerment program. (By Adam Smallman)

British Airways PLC (BAB) said that two executives embroiled in an investigation over alleged cartel activity have resigned with immediate effect. (By Rod Stone)

The consortium bidding for U.K. utility AWG Group PLC (AWG.LN) increased its offer after weekend media reports hinted at the possibility of a bidding war for the company. (By Alex MacDonald)

YouGov PLC (YOU.LN), the U.K. online research agency, unveiled a fourfold increase in full-year pretax profit driven by business in the Middle East and said it has seen a good start to the current financial year. (By Athos Larkou)

U.K. producer price inflation eased further in September as both output and input prices fell on the month. (Data Snap by Ilona Billington)

Shares of corporate travel specialist Hogg Robinson Group (HRG.LN) opened at 96 pence in London, comfortably above the initial public offering price of 90p. (By Elizabeth Cowley)

Activist fund Cevian has bought 72 million shares in Swedish telecom operator TeliaSonera AB (TSLN.SK) over the last three months and aims to seek a seat on its board, Cevian Managing Partner Lars Foerberg said Monday. (By Magnus Hansson)