Europe Shares Seen Lower as Debt Crisis Worries Persist
Associate Editor, CNBC
European shares were called to open lower on Monday after world leaders backed keeping Greece in the euro zone on Saturday and vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly threatened by Europe's debt crisis.
The UK’s FTSE was seen 8 points lower at 5260, Germany’s DAX was expected to open 8 points lower at 6263 while France’s CAC was called 18 points lower at 2990.
A summit of the G8 leading industrialized nationscame down solidly in favor of a push to balance European austerity—an approach long driven by German chancellor Angela Merkel—with a new dose of U.S.-style stimulus seen as vital to healing ailing euro-zone economies.
But it was clear that divisions remained.
Those divisions were becoming clearer over the weekend as French President Francois Hollande and like-minded euro zone leaders were expected to promote the idea of mutualized European debt at an informal summit in Brussels this week, increasing pressure on the German chancellor to drop her opposition to the proposal.
Senior EU and U.S. officials told Reuters that Hollande raised the topic of euro area bonds—bonds jointly underwritten by all euro zone member states—during the G8 talks and would again push the idea when EU leaders meet in Brussels on May 23.
He is expected to have backing from Italian Prime Minister Mario Monti, Spanish Prime Minister Mariano Rajoy and the European Commission, which has long been a backer of euro area bonds, producing a feasibility study on them late last year before the initiative was pushed to the background.
Meanwhile, a report in German magazine Der Spiegel claimed the Hollande has significant reservations about German Finance Minister Wolfgang Schaeuble becoming the next head of the Eurogroup of euro-zone finance ministers.
Hollande has informed officials in Brussels that it would be "very difficult" for him to accept a German as head of the Eurogroup, according to Der Spiegel.
Greece's conservatives, who support the country's international bailout program, are drawing level in opinion polls with left-wing anti-austerity party Syriza, suggesting the June 17 election is wide open and could yet produce a government that meets Europe's terms for keeping Greece in the euro, according to a report in the Wall Street Journal.
Several opinion polls over the weekend showed support for the conservative New Democracy party climbing to between 23 percent and 24 percent, up from its 18.9 percent result in Greece's May 6 elections.
Some polls suggest that New Democracy could yet win a majority in Parliament when its votes are combined with center-left coalition partners the Socialists, known as Pasok, who are also edging up in opinion polls compared with their 13.2 percent result in the May 6 election.
A survey by PricewaterhouseCoopers shows hedge funds and private equity firms have amassed almost 60 billion euros ($76.6 billion) for future purchases of loans from stricken European banks, the Financial Times reported on its website Sunday.
PricewaterhouseCoopers estimates European bank asset sales will peak next year, and that European banks have almost 2.5 trillion euros of "non-core" assets they could sell, the FT reported.
The Nasdaq Stock Market said on Sunday it had bungled Facebook’s initial public offering, acknowledging that technology problems affected trading in millions of shares.
The trading glitches, coupled with underwhelming investor appetite for Facebook shares on Friday, fueled doubts about Wall Street's ability to handle hot IPOs.
"This was not our finest hour," said Nasdaq OMX Group chief executive Robert Greifeld.
The main problem, he said, was a malfunction in the trading-system's design for processing order cancellations.
Extensive testing Nasdaq had performed ahead of the deal failed to unearth the problem, he said.
Pay was frozen in more than nine out of 10 types of investment banking jobs in the City of London financial district over the past year, according to research published on Monday by financial services recruitment firm Astbury Marsden.
The research, which looked at 142 different investment banking functions, showed there was no increase in the average basic salary in 92 percent of jobs in the year to end of March.
Average pay fell in 3.5 percent of jobs, while 4.2 percent saw an increase in average basic salary.
Bosch and other automotive parts companies have held secret talks with the U.K. government and car makers about opening new U.K. plants, according to a report in the Sunday Telegraph newspaper, citing one unidentified senior industry source.
"Talks with multinational suppliers are understood to be advanced and there is a realistic prospect of hundreds of jobs being created through the opening of a new component plant," according to the report.
Meanwhile, Air France-KLM denied that it plans to cut 5,000 jobs by 2015 through a voluntary redundancy plan, as reported by the website of French daily Le Figaro on Sunday.
Asian markets recovered some ground on Monday after heavy losses last week, but investors remained wary about the euro zone.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, after sliding as much as 3 percent to its lowest level this year on Friday.
It posted its worst weekly performance in nearly eight months with a weekly loss of around 6 percent. World stocks also erased the year's gains on Friday as investors fled risky investments for safe-haven assets on concerns about the euro zone's deepening debt woes.