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FTSE, DAX, CAC, to Open Higher; Merkel and IMF's Lagarde to Meet

Tuesday, 10 Jan 2012 | 1:05 AM ET

European stocks were called to open higher on Tuesday ahead of a meeting in Berlin between German Chancellor Angela Merkel and IMF chief Christine Lagarde.

The FTSE is called 36 to 49 points higher, the DAX in Frankfurt is expected to be up by 37 to 69 points and the CAC 40 is called higher by 23 to 28 points.

Merkel and French President Nicolas Sarkozy turned their attention to private holders of Greek debt and the possible introduction of a Europe-wide financial transaction tax when they met in Berlin on Monday.

The German Chancellor stressed that a quick solution was needed to ease Greece's debt burden and private investors must take losses on their Greek bondholdings to ensure Greece receives the next tranche of EU-IMF bailout aid.

The European Union's Economic and Monetary Affairs Commissioner Olli Rehn said on Monday that discussions with private holders of Greek debt were in their final stages and he expected the level of losses incurred by creditors to remain at the agreed 50 percent level.

There was broad agreement between the French and German leaders over the introduction of a financial transaction tax, which France had warned it was prepared to press ahead with alone, but Merkel acknowledged there was not yet a consensus among her center-right coalition over the introduction of a so-called 'Tobin Tax'.

Britain remains strongly opposed to the introduction of a tax on European financial transactions and British Prime Minister David Cameron has said he would be willing to use his veto to oppose its introduction, but Merkel said on Monday that euro zone nations should press ahead with plans even if other EU member states remain opposed.

In Asian trade overnight, shares and the euro rose tracking Wall Street where markets ended Monday higher ahead of earnings season. However, concerns linger over the European debt crisis and key bond auctions this week are set to be closely followed by investors.

There was bad news for two of Europe's best known banks on Monday as Reuters reported that the Royal Bank of Scotland could cut between 3,000 and 4,000 investment banking jobs when it announces a review of its Global Banking and Markets (GBM) division on Thursday.

The news agency also reported that French bank Societe Generale is forecasting a "significant" drop in its 2012 investment banking revenue according to an internal memo sent to employees. The memo, seen by Reuters, outlines plans for SocGen to reduce expenses and its activities in property, shipping, aircraft financing and physical energy trading in North America.

IMF Managing Director Christine Lagarde will meet German Chancellor Angela Merkel at 7:00pm London time after a separate meeting with German Finance Minister Wolfgang Schaeuble in Berlin on Tuesday.

The meeting will follow a series of European bond auctions, starting with a 2.5-3.5 billion euro ($3.19-$4.47 billion) sale of Dutch 2015 bonds at 9:00am London time. Austria will hold an auction at 10:00am, followed by Hungary where up to $185.7 million in 3-month treasury bills will be tendered.

In Greece a 1.25 billion euro ($1.59 billion) sale of 6-month treasury bills will also take place.

In corporate news, British retailer Marks & Spencer will announce its third quarter trade results and construction firm Balfour Beatty will also release trading data.

Economic releases to watch include German manufacturing turnover for November, available from 7:00am UK time and French industrial production data out at 7:45am.

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CAC 40
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