Europe Markets

FTSE, DAX, CAC to Open Lower; Euro Woes Persist


European stocks were called to open lower on Wednesday after ending the day sharply higher on Tuesday boosted by Wall Street where US shares climbed to five month highs, buoyed by a positive outlook from bellwether aluminum producer Alcoa.

The FTSE is called 16 points lower, the DAX in Frankfurt is expected to be down by 26 points and the CAC 40 is called lower by 11 points.

Asian shares hit a month-high in overnight trade on Wednesday, tracking Wall Street and reflecting renewed investor sentiment over the pace of a US recovery, but the euro faltered amid persistent concerns over sovereign debt.

Following German Chancellor Angela Merkel's warning on Monday that Greece must reach a deal on debt restructuring with private bondholders to ensure the country receives the next tranche of EU-IMF aid, a euro zone government official told Reuters that a deal could be announced early next week. 

The news agency also quoted a European Union official who said that any agreement would first be assessed by EU finance officials at the end of this week.  Both sources claimed private holders of Greek debt would likely take a 50 percent haircut on their holdings as agreed by Greece, the EU and the IMF last October.

There was mixed news for other EU countries on Tuesday when credit rating agency Fitch said it does not expect to downgrade France's triple-A rating this year, but Belgium, Spain, Slovenia, Italy, Cyprus and Ireland remain on negative watch and could face downgrades in coming months.

Standard and Poor's warned in December that most euro zone countries were under threat of a credit rating downgrade, including Germany and France and that agency is expected to announce its review of euro zone ratings in the next few weeks.

A proposed merger between NYSE Euronext and Deutsche Boerse was dealt a blow on Tuesday when Joaquin Almunia, the European competition commissioner said he would reject the deal, concerned about the power the merged exchanges might have in derivatives trading. 

IMF chief Christine Lagarde will meet French President Nicolas Sarkozy in Paris on Wednesday with discussions expected to focus on the sovereign debt crisis in the euro zone and problems for the global economy. Their meeting will begin at 11:00am UK time.

In Berlin, Italian Prime Minister Mario Monti will meet the German Chancellor a day after credit rating agency Fitch warned of an imminent downgrade for Italy. A press conference with the German and the Italian leaders is due to take place at 12:00 UK time.

Merkel, German Finance Minister Wolfgang Schaeuble and World Bank head Robert Zoellick are then all expected to attend a conference on 'The Future of Europe; The Future of the Euro' in the German capital.

A 4 billion euro ($5.09 billion) auction of German 5 year bonds is scheduled for 10:30am UK time on Wednesday and key economic data before the open includes German provisional GDP data at 7:00am.

Corporate releases include first quarter sales data from French food services firm Sodexo and a third quarter trading statement from UK retailer Sainsbury's . 

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