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European Factors to Watch-Shares set to halt sell-off

Tuesday, 9 Oct 2012 | 1:35 AM ET

PARIS, Oct 9 (Reuters) - European stocks are set to inch higher on Tuesday, halting the previous session's sell-off as expectations mount of further stimulus measures from China, although gains could be limited by broad worries over global growth and on whether or not Spain will request a bailout.

At 0630 GMT, futures for Euro STOXX 50

, for Germany's DAX and for France's CAC were up 0.2-0.5 percent.

China's central bank injected 265 billion yuan ($42.15 billion) into the country's money markets via reverse bond repurchase agreements on Tuesday morning in a bid to bring money market rates down and boost growth, while traders also mentioned speculation about big infrastructure investments.

"There is talk that China could soon unveil massive investments to revive growth. With the deterioration in the data we've been seeing lately, they will probably do something and they have the firepower to do something big," a Paris-based trader said.

Investors were kept on edge, however, with the IMF saying the global economic slowdown is worsening as it cut its growth forecasts for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

On the euro zone front, Greek Finance Minster Yannis Stournaras said international lenders are considering giving Greece two more years to reach its budget deficit reduction targets, and the extra time could be financed without more money.

Spain will be in focus on Tuesday after German Finance Minister Wolfgang Schaeuble said as he arrived at a euro zone finance minister on Monday that Madrid was not asking for help and did not need it, a message reiterated by other ministers.

Shares in European financial market operators will be in the spotlight as Germany and France are stepping up a diplomatic drive to convince more EU countries to join them in setting up a financial transactions tax.

Investors were also bracing for the earnings season, to be kicked off on Tuesday by U.S. aluminium major Alcoa

.

Analysts forecast third-quarter earnings of Wall Street's S&P 500

companies to fall 2.3 percent from the year-ago quarter, according to Reuters data, which would be the first drop in U.S. quarterly earnings in three years.

According to the data, 91 companies in the S&P 500 have issued negative outlooks versus 21 positive pre-announcements, for a ratio of 4.3, the weakest showing since the third quarter of 2001.

"This has many investors nervous and questioning whether stocks can push higher in this environment, particularly after such strong gains over the previous three months," IG Markets analyst Cameron Peacock wrote in a note.

The S&P 500

has gained 5.8 percent in the third quarter, while the euro zone's blue chip Euro STOXX 50

index surged 8.4 percent over the same period. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0634 GMT LAST PCT CHG NET CHG S&P 500 1,455.88 -0.35 % -5.05 NIKKEI 8,769.59 -1.06 % -93.71 MSCI ASIA EX-JP 519.33 0.38 % 1.99 EUR/USD 1.2983 0.11 % 0.0014 USD/JPY 78.35 0.04 % 0.0300 10-YR US TSY YLD 1.708 -- -0.04 10-YR BUND YLD 1.494 -- 0.02 SPOT GOLD $1,775.64 0.08 % $1.35 US CRUDE $90.10 0.86 % 0.77

> GLOBAL MARKETS-Asian shares rise, growth worries cap

> Wall St drops as investors wary of weak earnings

> Nikkei dips on earnings fears as slowdown fears persist

> U.S. 10-year notes regain footing after sell-off

> Euro under pressure due to uncertainty over Spain bailout

> Gold inches up after two-day slide; growth worries weigh

> London copper rises from one-week low, China data eyed

> Brent rises towards $113 on Syria-Turkey tensions

COMPANY NEWS: ERICSSON , STMICRO

The controlling shareholders of wireless chip venture ST-Ericsson in August hired JP Morgan to explore strategic options for the loss-making joint venture, which could include finding a new partner or breaking it up, daily Les Echos said on Tuesday. ST-Ericsson is a 50-50 joint venture between Sweden's Ericsson

and France's STMicro . FINANCIAL MARKET OPERATORS

Germany and France will step up a diplomatic drive on Tuesday to convince more EU countries to join them in setting up a financial transactions tax, but they remain stubbornly short of the nine needed to push ahead with the plan.

Greece, Portugal, Austria, Slovenia and Belgium have agreed to join Berlin and Paris in the endeavour, and Estonia is expected to sign up on Tuesday, but one more is required to reach the threshold to put the initiative into action.

EADS , BAE

Britain is prepared to explore the possibility of France and Germany both having equal, single-digit stakes in any merger between the defence firm and BAE Systems

, Defence Secretary Philip Hammond said on Monday.

Investors in EADS and BAE Systems are increasingly frustrated at the political wrangling over their proposed, $45-billion merger, concerned they are being frozen out of the decision-making and are unable to run their numbers.

BARCLAYS , ING

Barclays will buy the deposits, mortgages and business assets of ING Direct UK valued at more than 11 billion pounds ($17.63 billion), the British bank said in a statement on Tuesday.

BP

BP's billionaire partners in TNK-BP

, Russia's third-biggest oil producer, said they could sell or list their 50 percent stake in the business, plunging the venture's plans into further confusion, the Financial Times reported on Tuesday.

BHP BILLITON

The top global miner said it plans to cut an undisclosed number of jobs in iron ore, its biggest and most profitable business, as it tries to cope with weaker demand and prices, higher costs and a strong Australian dollar.

GIVAUDAN

Swiss fragrance and flavour maker Givaudan confirmed its mid-term goals on Tuesday as third quarter sales came in at the high end of expectations, helped by a positive currency impact and growth in emerging markets.

JULIUS BAER

Swiss private bank Julius Baer will cut up to around 1,000 jobs as a result of its purchase of part of Bank of America Merrill Lynch's

wealth management business. PSA PEUGEOT CITROEN

The car maker's restructuring is an "internal matter", the French automaker's chief executive told reporters during a factory visit by industry minister Arnaud Montebourg. Philippe Varin's comment on Monday was a rebuff for Montebourg who had said he would wring concessions from the carmaker in talks on its restructuring - Peugeot plans to cut 8,000 jobs and close an assembly plant.

SODEXO

Germany's biggest outbreak of food poisoning, in which more than 11,000 schoolchildren have been laid low by diarrhoea and vomiting, is "very likely" to have been caused by a batch of frozen strawberries received from a subcontractor of the French catering firm, authorities said on Friday.

HERMES

The luxury goods company's Chief Executive Patrick Thomas told the Wall Street Journal that it remains optimistic about the Chinese market and is sticking to a slow expansion plan there aimed at not diluting its brand. Hermes plans to invest "tens of millions of euros" in the coming years to develop boutique label Shang Xia, Thomas was quoted as saying.

VOLKSWAGEN

Europe's largest carmaker said group sales increased 10.6 percent during the first nine months to 6.80 million vehicles.

(Reporting by Blaise Robinson; Editing by Christian Plumb/Sudip Kar-Gupta)

((blaise.robinson@thomsonreuters.com)(+33.1.4949.5269)(Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net))

Keywords: MARKETS EUROPE FACTORS