Europe Markets

FTSE, DAX, CAC to Open Higher; EU FinMins to Meet


European stocks were called to open higher on Monday ahead of a meeting between European finance ministers in Brussels where they are set to discuss the latest offer from private holders of Greek debt on losses they are willing to incur.

Close-up of a pen on stock price chart

The FTSE is called 18 to 20 points higher, the DAX in Frankfurt is expected to be up 7 to 15 points and the CAC 40 is called higher by 5 to 7 points.

In Asia overnight trade was mixed in very thin trade as markets in South Korea, China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia were closed for the Chinese New Year celebrations.

Investors remained cautious following comments made by Institute of International Finance (IIF) chief Charles Dallara on Sunday that private creditors had reached their limits in what they were willing to lose on Greek debt holdings.  The IIF has been leading negotiations with the Greek government on behalf of private bondholders and Dallara said the onus was now on the EU and IMF to examine the plan and decide whether it went far enough to cut Greece's debt.

Euro zone finance ministers are due to decide on Monday whether they find the latest offer acceptable.  Reports last week suggested that private creditors could lose between 65 and 70 percent of their Greek debt holdings. Ministers will also discuss the European permanent bailout fund and the European Stability Mechanism (ESM). The meeting is due to start at 1.30 pm London time.

EU governments are expected to agree on fresh economic sanctions against Iran on Monday, including the imposition of an oil embargo.  US President Barack Obama has already signed a US embargo into law over concerns about Iran's nuclear program.

In corporate news, Mercedes Benz could cut up to 1.5 billion euros ($1.9 billion) in costs per year according to a report in German weekly Automobilwoche.  Thomas Weber, head of research and development at Mercedes told the paper that reductions would be made by cutting the number of vehicle platforms and using common parts across segments.

The FT reports that Swedish furniture retailer IKEA will withhold its entry into India due to rules on sourcing local products.  In an interview with the paper CEO Mikael Ohlsson said the requirements were an impediment to its investment and suggested they should be reviewed.

France and Germany will both hold bond auctions on Monday with Germany expected to tender 3 billion euros in 12-month bonds at 10:30am London time. France will hold an auction of 13-week, 24-week and 50-week treasury bills at 1:50 pm London time.

In Berlin, Angela Merkel will meet European Commission President Jose Manuel Barroso and President of the European Council Herman van Rompuy ahead of a European Council Summit on January 30. 

IMF chief Christine Lagarde will give a speech at the German Council on Foreign Relations in Berlin on global economic challenges in 2012 and British Finance Minister George Osborne is due to meet EU Internal Market Commissioner Michel Barnier in London.

Corporate releases to watch include full year results from French hospitality group Sodexo , due to be announced at the firm's AGM on Monday.

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