Europe Economy

European Stocks Seen Lower, Franco-German Summit Disappoints

European stocks were expected to open lower on Wednesday after a highly anticipated meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel failed to calm markets.

The European leaders rejected the notion of issuing euro bonds and claimed the current EU bailout fund was sufficient to deal with the debt crisis in the periphery, fueling investor concerns.

Britain's FTSE 100 was seen opening as much as 35 points, or 0.7 percent lower; Germany's DAX was seen as much as 53 points or 0.9 percent lower and France's CAC was seen as much as 6 points, or 0.2 percent lower, according to financial bookmakers.

US stocks ended the day lower on Tuesday despite staging a late comeback after falling to session lows following the announcement by Sarkozy and Merkel that they would consider proposals for a tax on financial transactions.

Investor fears over the euro zone were evident in cautious Asian trade on Wednesday following Wall Street's lead and the euro fell 0.2 percent after weaker-than-expected German GDP data on Tuesday and the disappointing outcome of the Sarkozy-Merkel meeting.

Attention will turn to Switzerland on Wednesday when Swiss policymakers meet to discuss the strength of the franc and the possibility of pegging it to the euro in an effort to curb its strength.

Gold remained close to a record high on Wednesday after the Franco-German summit failed to allay investor fears over the euro zone, compounding the safe-haven status of the precious metal.

Key corporate releases out on Wednesday include Carlsberg second quarter results, which the brewer warned will be lower than expected, and first half earnings for Danish shipping container firm Moller Maersk.

Moller Maersk CEO Nils Smedegaard Andersen will join CNBC's Squawk Box at 7:40am London time, followed by Carlsberg president and CEO Jørgen Buhl Rasmussen on Worldwide Exchange at 9:40am.

Swiss Life earnings for the first half of 2011 are out at 6:00 UK time, followed by German construction giant Hochtief's second quarter numbers at 7:00.

British construction firm Balfour Beatty will also release results for the first six months of 2011 on Wednesday.

Monthly unemployment figures for the UK will be announced at 9:30am.

Related Tags