Europe Markets

FTSE, CAC, DAX to Open Lower Ahead of EU Summit

European stocks were called to open lower on Monday as European government heads meet in Brussels for their first summit of 2012.

The FTSE is called 13 points lower, the DAX in Frankfurt is expected to be down by 23 points and the CAC 40 is called lower by 18 points.

European Union leaders are due to approve plans for greater fiscal unity within the EU when they meet on Monday and Greece is likely to top the agenda as it attempts to reach a deal with private bondholders over losses they are willing to incur on their Greek debt holdings.  Reports out early on Monday suggested a deal with private bondholders was imminent and could ensure Greece avoids a default in March when a number of bond redemptions come due.

UK Prime Minister David Cameron is expected to be the only EU leader to oppose plans for greater European fiscal integration after he used hi veto to oppose the Franco-German proposals for fiscal integration and tighter budgetary rules at a summit last December.

The FT reported over the weekend that Germany was pushing for greater scrutiny of Greek tax and fiscal affairs as a condition of  the country receiving a second 130 billion euro ($171.3 billion) bailout package and was keen for the Greek budget to be overseen by a euro zone commissioner.  However, Greek Finance Minister Evangelos Venizelos dismissed the claims and stressed that the Greek government would maintain control over its budget.

In Asia overnight, stocks were broadly lower as investors remained cautious ahead of the summit of European leaders in Brussels and amid concerns that the Greek government might not reach a deal with private debt holders.

French President Nicolas Sarkozy announced on Sunday that his government would move to introduce a financial transaction tax in August if he is re-elected to the presidency following two rounds of presidential elections in April and May.

Sarkozy, who is trailing his Socialist rival Francois Hollande in most opinion polls, told French TV that a 0.1 percent levy on financial transactions would be imposed by France regardless of whether the rest of the European Union chose to follow suit.

"We hope the tax will generate 1 billion euros ($1.3 billion) of new income and thus cut our budget," he said in an interview. 

The French President also promised to raise VAT and implement measures to ease France's youth unemployment problems.

German Chancellor Angela Merkel became the French president's most high profile backer on Sunday when a Christian Democrat (CDU) party spokesman claimed that the German leader will "actively support" Sarkozy as he campaigns for re-election, and Merkel will join her French counterpart at a number of campaign appearances in the Spring.

Italy and France will both hold bond auctions on Monday just days after credit rating agency Fitch downgraded Italy's credit rating from A-plus to A-minus. The auction of long term Italian bonds is due to take place at 10:00am  London time.  France will hold its weekly t-bill tender at 1:30pm London time.

Italian Prime Minister Mario Monti will meet with a Merkel and Sarkozy on Monday morning ahead of the arrival of other European heads of government in Brussels, scheduled for 1pm London time.

A team from the International Atomic Energy Agency (IAEA) will continue its visit to Iran on Monday to discuss allegations that the Iranian government is secretly developing nuclear weapons.

In London, the UK Treasury Committee will hear evidence from the Chairman and Chief Executive of the Financial Services Authority over the regulator's report into bailed out British bank Royal Bank of Scotland. 

Dutch electronics firm Philips reported fourth quarter core profit of $662.3 million on Monday, down from $1.2 billion a year earlier. 

Low cost airline Ryanair increased its full year profit forecast by 9 percent on Monday after reporting revenue growth of 13 percent in the last quarter.