Europe Economy

FTSE, CAC, DAX to Open Higher, US Economic Data Improves


European stocks were called slightly higher on Friday tracking Asia overnight where shares and the euro climbed as investors were calmed by better-than-expected economic data from the US.

Close-up of a pen on stock price chart

The FTSE is called 27 points higher, the DAX in Frankfurt is expected to open up by 17 points and the CAC 40 is called higher by 6 points.

Gains on Wall Street were modest following news that regional factory activity had exceeded performance expectations and unemployment had fallen slightly.

FedEx also reported better than predicted results on Thursday.

However, credit rating agency Fitch brought bad news late on Thursday when it announced the downgrade of seven major Europe and US based banks.

Fitch claimed that "increased challenges" in financial markets had led to the downgrade of Goldman Sachs, Deutsche Bank, Barclays, Credit Suisse, Bank of America, BNP Paribas and Citigroup. The rating agency also singled out "a myriad of regulatory changes" as another challenge banks would face in 2012.

The FT reported on Friday that German lender Deutsche Bank will sell its global asset management business for around 2 billion euros ($2.6 billion), with sources claiming 50 institutions had registered interest so far.

The sale is expected to take place in the spring of 2012 and Wells Fargo, Royal Bank of Canada and Ameriprise Financial have all expressed an interest, according to the report.

There was mixed news for the euro zone on Thursday as S&P cut its ratings on ten Spanish banks, but EU leaders extended an olive branch to Britain by inviting representatives to discussions on the new European fiscal pact.

The British government confirmed it had been asked to attend discussions and would attend in the New Year, despite vetoing an EU-wide treaty change at a summit in Brussels last week.

The FT reported that the UK might be relegated to "observer status", but any new agreement might have to make use of EU-wide institutions to work effectively.

However, comments made by Bank of France governor Christian Noyer that Britain should lose its triple-A credit rating before France does gave some indication that relations between the two countries are not yet back on track.  France faces an imminent downgrade according to news reports.

The FT also reports that the latest draft prospectus for the European Financial Stability Facility (EFSF) bailout fund includes stark warnings to investors that the euro currency area could break up or even "the cessation of the euro as a lawful currency" altogether.

Having seen the latest draft prospectus, the newspaper reports this is the most alarming of a series of warnings to investors.

The lower house of the Italian Parliament will vote on the government's latest round of austerity measures on Friday, with a Senate vote planned for a later date.

Mario Monti's government is seeking a vote of confidence for a $39 billion package of tax increases and spending cuts.

ECB President Mario Draghi will chair an event on monetary systems in Italy on Friday, with Bank of England governor Mervyn King expected to attend.

At the World Trade Organization ministerial conference in Geneva, ministers are expected to approve Russia's membership of the WTO after 18 years of negotiations.

Russian President Dmitry Medvedev will hold annual Indo-Russian talks in Moscow with Indian Prime Minister Manmohan Singh during his three day official visit to the country.

Economic data to watch includes EU third quarter foreign trade figures at 10:00am UK time and brewer SABMiller's acquisition of Foster's Group will be completed on Friday after Foster's shareholders approved the deal earlier this month.