Europe Economy

FTSE, CAC, DAX Seen Lower Ahead of EU Budget Meeting

European stocks were called to open lower on Friday after Asian shares fell for the fourth day running in overnight trading as concerns grew over European borrowing costs.

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The FTSE is called 50 points lower, the DAX in Frankfurt is expected to open down by 60 points and the CAC 40 is called lower by 30 points.

The Spanish government was forced to pay the highest borrowing costs since 1997 on Thursday at an auction of 10-year bonds, where yields were 1.5 points above the average paid for similar sales this year.

Concerns that fund tightness may spread to Asia were heightened when euro/yen interest rate futures fell to an eight - month low on Friday on concerns that strains in dollar money markets could see non-Japanese banks increase the rate of the Japanese currency.

Italy's new Prime Minister Mario Monti unveiled sweeping economic reforms on Thursday, warning the indebted nation that it was confronting a "serious emergency".

Monti won a vote of confidence in the Italian Senate on Thursday by 281 votes to 25 and he is expected to win another confidence vote in the Chamber of Deputies on Friday.

The new national unity government in Greece, headed by Prime Minister-delegate Lucas Papademos, has so far not enjoyed the support of his Italian counterpart and 50,000 Greeks took to the streets of Athens on Thursday to protest at austerity measures as a condition of EU/IMF aid.

IMF, EU and European Central Bank officials arrive in Athens on Friday for discussions on what must be done for Greece to secure the next tranche of aid, but the refusal of Antonis Samaras, head of the conservative New Democracy party to sign a commitment to do whatever is necessary to secure the bailout is likely to remain problematic.

In Brussels, EU finance officials will meet on Friday to discuss the next EU budget for 2012.

If an agreement is reached, the European Parliament and European Council have to formally approve it within 14 days.

British Prime Minister David Cameron will meet with German Chancellor Angela Merkel in Berlin on Friday, with a press conference scheduled for 12.45 London time.

Cameron has come under criticism from some within Angela Merkel's CDU party who have accused him of acting solely in the interests of Britain at the expense of the wider European Union.

Economic data of note on Friday includes German PPI figures for October, out at 7:00 London time.

Italian industrial turnover for September is available from 9:00.

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