Europe Markets

FTSE, DAX, CAC Seen Flat; Greek Debt Talks Progress


European stocks were called to open flat to lower on Friday tracking Asia overnight where shares rose to two-month highs following successful European debt auctions on Thursday and mixed earnings data from the US.

Close-up of a pen on stock price chart

The FTSE is called 7 points lower, the DAX in Frankfurt is expected to be down by 9 points and the CAC 40 is also called lower by 6 points.

Ongoing talks between Greece and private creditors made progress on Thursday when the group leading the negotiations on behalf of private holders of Greek debt, the Institute for International Finance (IIF) said in a statement that talks had been "productive".

Greek Finance Minister Evangelos Venizelos echoed the IIF's statement, saying talks on the terms of a planned debt restructuring had progressed and will resume at midday on Friday.

Reuters reported that the latest version of the EU's fiscal draft includes a clause that euro zone member states refusing to ratify December's fiscal pact will not be entitled to assistance from the European Stability Mechanism permanent bailout fund.

According to reports, the draft treaty specifies that from March 2013 "the granting of assistance in the framework of new programs under the European Stability Mechanism will be conditional on the ratification of this Treaty."

UK newspaper the Daily Telegraph reported on Thursday that the International Monetary Fund has slashed its global growth forecast for 2012 according to a leaked draft of the fund's World Economic Outlook seen by the paper.

The Daily Telegraph claims that the euro zone will contract by 0.5 percent this year with Italy's economy shrinking by 2.2 percent and Spain by 1.7 percent.

The IMF has also cut its global growth outlook for the year from 4 percent to 3.3 percent and the paper adds that the onus will be on the European Central Bank to boost liquidity in the euro zone in coming months. The IMF report is due to be published next week.

There will be no bond auctions on Friday after a successful tender of Spanish long term bonds on Thursday. France also held an auction of medium term bonds on Thursday where demand was strong.

Friday marks the deadline for European banks to submit their plans on how they will strengthen capital positions and raise capital if necessary to the European Banking Authority (EBA). The EBA will then give banks until June to put their plans into place.

The banking authority said in December that Europe's banks would need to raise 114.7 billion euros ($148.7 billion) in capital and banks in Italy, Germany and Spain had the biggest shortfalls.

French Budget Minister Valerie Pecresse will meet British Chief Secretary to the Treasury in London on Friday, while Hungary's Minister for National Development Tamas Felligi is due to hold a meeting with European Commissioner for Economic Affairs Olli Rehn.

German industrial firm ThyssenKrupp will hold its AGM on Friday and economic data to watch includes German PPI data at 7:00 London time.

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