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Europe Factors to Watch-Shares set to dip; EADS, BAE eyed

Wednesday, 10 Oct 2012 | 2:38 AM ET

PARIS, Oct 10 (Reuters) - European stocks are set to fall on Wednesday, losing ground for the third straight session on mounting worries over corporate results as the earnings season gets under way.

At 0630 GMT, futures for Euro STOXX 50

, for Germany's DAX and for France's CAC were down 0.1-0.4 percent.

Asian shares dropped on Wednesday, with Japan's Nikkei average

down

2 percent and hitting a two-month low, hurt by fears sluggish global growth will be reflected in corporate earnings.

Late on Tuesday, U.S. aluminium major Alcoa

kicked off the earnings season, posting a quarterly profit before exceptional items and beating analyst expectations despite weak aluminum prices, although the company said it had noticed a "slight slowdown" in some regions and end markets.

"We know results and outlooks won't be upbeat. The question is: 'how bad it will be?', so a lot of people stay on the sidelines to avoid negative surprises," a Paris-based trader said.

"That said, there's been a wave of forecast downgrades, so chances are we might get a number of companies beating expectations."

Analysts expect quarterly earnings for S&P 500

companies to fall by about 2.3 percent from the year-ago period, according to Thomson Reuters data, which would be the first drop in U.S. quarterly earnings since 2009.

EADS and BAE Systems

will be in the spotlight on Wednesday as the two companies have until 1600 GMT on Wednesday to declare their intentions and either drop their merger plans or ask UK regulators for more time to finalise a deal.

Several sources close to the negotiations said German Chancellor Angela Merkel had opposed the proposal to combine the two companies, and shares of EADS and BAE traded in Frankfurt

were down 0.5 percent and 1.8 percent respectively in early trading.

The euro zone's blue chip Euro STOXX 50

index has lost 2.4 percent in the past two sessions, as fears over the upcoming earnings season and simmering worries over whether debt-stricken Spain will request a bailout spooked investors.

The index's next support level is at 2,450 points, representing a low hit earlier this month. --------------------------------------------------------------------------------

MARKET SNAPSHOT AT 0628 GMT LAST PCT CHG NET CHG S&P 500 1,441.48 -0.99 % -14.4 NIKKEI 8,596.23 -1.98 % -173.36 MSCI ASIA EX-JP 513.86 -0.7 % -3.64 EUR/USD 1.2849 -0.27 % -0.0035 USD/JPY 78.22 -0.01 % -0.0100 10-YR US TSY YLD 1.717 -- 0.00 10-YR BUND YLD 1.475 -- -0.02 SPOT GOLD $1,760.30 -0.19 % -$3.35 US CRUDE $91.89 -0.54 % -0.50

> GLOBAL MARKETS-Shares fall, dollar rises, amid earnings gloom

> Wall St falls in tech-led sell-off, Alcoa up late

> Nikkei hits 2-month low on corporate earnings concerns

> FOREX-Euro slips near 200-day average as risk sentiment hurt

> Gold steady but pressured by stronger dollar, growth worries

> London copper firms on bargain-hunting; euro zone eyed

> Brent falls below $114 as sluggish economy outweighs supply risk

COMPANY NEWS: EADS EADS and BAE Systems

are making one last effort ahead of a 1600 GMT deadline to breathe life into a troubled $45 billion aerospace merger, as doubts grow over German backing for the deal.

SAFRAN

Hedge fund Children's Investment Fund has criticised the French aerospace manufacturer over its acquisition policy in a letter sent to the company's two most senior executives and has called for the appointment of new independent board members, the Financial Times reports.

DEUTSCHE BANK

A German judge has renewed a push for Deutsche Bank and the family of late media mogul Leo Kirch to reach a settlement, the latest effort to settle one of Germany's longest-running corporate disputes.

THYSSENKRUPP

The steelmaker has received bids from at least five parties for its steel mills in Brazil and the U.S., with POSCO

, ArcelorMittal , JFE Steel Corp and Vale expected to be in the running after the first round, Die Welt reported. PPR

The French retail and luxury group confirmed plans to spin off its Fnac unit and seek a separate listing for the music and books retailer in 2013 as part of long-running efforts to refocus its business on luxury and sports brands.

ENI

Italy's state investment holding company, Cassa Depositi e Prestiti (CDP), completed the sale of a 3.3 percent stake in oil group Eni

on Tuesday for 2.1 billion euros to help fund the acquisition of a controlling stake in gas network company Snam.

UBS

Alleged rogue trader Kweku Adoboli exposed Swiss bank UBS to billions of dollars of hidden market risk for weeks on end, peaking at nearly $12 billion on Aug. 8 last year, a London court heard on Tuesday.

For more, click on CGG VERITAS

The company said its vessel availability rate rose to 93 percent in the third quarter from 91 percent a year earlier. The vessel production rate fell to 90 percent from 93 percent.

TELIASONERA

TeliaSonera's chief executive Lars Nyberg may resign before his term ends amid allegations of wrongdoings during its purchase of a 3G licence in Uzbekistan in 2007, daily Dagens Nyheter reported, quoting sources.

A.P. MOLLER-MAERSK

The Danish oil and shipping group could sell an increasing amount of bonds to finance significant expansion plans within its oil business, Maersk Oil, daily Berlingske Tidende reported.

� SPANISH BANKS

Unlisted Spanish bank Ibercaja said on Tuesday it would not go ahead with a merger with Liberbank after an independent audit showed a joint venture including bank Caja 3 would have capital needs of 2.1 billion euros.

(Reporting by Blaise Robinson; Editing by James Regan/Sudip Kar-Gupta)

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

Keywords: MARKETS EUROPE FACTORS/

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