Europe Shares Seen Lower; Gold Hits Record High
European stocks were expected to open lower Monday as unease about debt issues maintains its grip on both sides of the Atlantic, pushing gold to a new record high.
The FTSE was expected to open lower by 25 points, the CAC-40was seen down by 25 points and Germany's DAX was set to lose 28 points in the week's first session.
Gold hit another record high on Monday, with investors spooked by debt problems. Spot gold rose to an all-time peak of $1,598.41.
Investors are afraid that the impasse in talks on raising the US debt limit may lead to a default while in Europe stress test results on 90 banks were better than expected but investors are still worried about contagion of debt problems in the euro zone.
Both the euro and the dollar hit record lows against the Swiss franc as investors looked for a safe haven from the debt problems.
The bank test results from Friday revealed five Spanish banks, one Austrian and two Greek banks failed. European leaders are expected to meet Thursday to discuss Greece and the sovereign debt crisis.
Although the stress tests were designed to allay fears of another financial crisis, the markets remain troubled by the failures as critics argued that the stress tests were not tough enough.
Banking stocks are not expected to be hit too hard as the banks that failed were relatively small and nearly all untraded, analysts said.
Italy, which has been the focus of sovereign debt fears in the euro zone over the last week, faces further turmoil on Monday as Prime Minister Silvio Berlusconi's trial resumes in Milan on charges that he abused his office and paid for sex with an underage prostitute at one of his homes last year.
The second quarter earnings season gets into full swing this week with earnings expected from Halliburton and IBM on Monday while Philips shocked the markets with a 1.3 billion euros quarterly net loss on Monday blaming a slower than expected recovery and impairment charges.