Europe Factors to Watch-Shares set to reverse Friday's gains

PARIS, Oct 8 (Reuters) - European stocks are set to fall on Monday,surrendering a big chunk of the previous session's strong gains as the initialenthusiasm sparked by a surprise drop in the U.S. unemployment rate fades whileworries over the outlook for earnings and the global economy resurface.

At 0630 GMT, futures for Euro STOXX 50

, for Germany's DAXand for France's CACwere down 0.6-0.7 percent.Wall Street's S&P 500

ended slightly lower on Friday, breaking afour-session winning run, while the MSCI broad index of Asia Pacific sharesoutside Japan

was down 0.9 percent on Monday.

Investors turned cautious ahead of the third-quarter earnings season, set tostart with Alcoa Inc

on Tuesday, and after the World Bank cut itseconomic growth forecasts for the East Asia and Pacific region, warning aboutrisks the slowdown in China could get worse and last longer than expected.

"The euphoria after U.S. payrolls was short lived," a Paris-based tradersaid. "Things might be slightly improving in the United States, but the mainfocus now is China."

Spain will be in the spotlight again after thousands of people demonstratedacross the country on Sunday to protest against austerity measures, with Spanishlabour unions saying they will call a general strike if the government does nothold a referendum on unpopular spending cuts.

In a meeting on Monday, euro zone finance ministers will formally launch theeuro zone's permanent, 500-billion-euro bailout fund European StabilityMechanism (ESM), to be used to lend to distressed euro zone sovereigns such asdebt-stricken Spain.

The euro zone's blue chip Euro STOXX 50

index surged 3.1 percentlast week, but remains in a short-term downward trend started in mid-September.

"All in all, buying pressure during every pull-backs is offset by sellingpressure on every rebound," Aurel BGC chartist Gerard Sagnier said.

"As long as the long-term resistances are not crossed, the risk ofconsolidation and correction remains, and the downward potential is around 3 to5 percent."

Japanese financial markets were closed for a public holiday.--------------------------------------------------------------------------------

MARKET SNAPSHOT AT 0630 GMTLAST PCT CHG NET CHGS&P 5001,460.93 -0.03 % -0.47MSCI ASIA EX-JP518.67 -0.82 % -4.31EUR/USD1.2976 -0.4 % -0.0052USD/JPY78.53 -0.15 % -0.120010-YR US TSY YLD1.743 -- 0.0010-YR BUND YLD1.487 -- -0.04SPOT GOLD$1,769.39 -0.62 % -$11.09US CRUDE$88.81 -1.19 % -1.07

> GLOBAL MARKETS-Asia shares fall as earnings caution sets in

> S&P 500 dips after four days of gains; earnings eyed

> FOREX-Dollar dips vs yen, pulls back from 2-week high

> Gold dips as upbeat US jobs data saps buying interest

> LME copper down as dollar firms after US jobs data

> Brent slips below $112 as weak economy offsets supply worries


Britain will block the proposed $45 billion merger between EADS and BAESystems if key "red line" priorities are not met, defence minister PhilipHammond said on Sunday, just three days before a deadline for detailing thedeal.

BAE Systems insists there is "no magic number" for French and Germangovernment shares in a possible merger with EADS, but U.S. experts say anythingover 10 percent could ruin the chances of winning approval from U.S. regulators.


The French luxury group is preparing to sell its book and CD retailer Fnacand online fashion store La Redoute, Le Journal du Dimanche wrote, as part of astrategy to concentrate on luxury and sports brands.

Le Figaro added that it would involve a spin-off in which PPR shareholderswould receive shares of a newly listed company, FNAC, on the French stockexchange.


The drugmaker's plan to restructure its research operations in France couldlead to more job losses than the 900 layoffs mooted by the company, unionrepresentatives said.

The drugmaker said the results of a late-stage study of its Zaltrap drugshowed a "statistically significant improvement in overall survival" in patientswith colon cancer.


UBI Banca has begun selling part of its 1.2 percent stake in IntesaSanpaolo, whose shares have now risen above the price 1.11 euros on UBI's books,La Repubblica said on Saturday. The stake could be sold in several tranches onthe market or to institutional investors, Il Sole 24 Ore said on Saturday.


Julius Baer announces details of the rights offering in connection with thepartial financing of the acquisition of the international wealth managementbusiness of Bank of America Merrill Lynch outside the United States andJapan.

EFG INTERNATIONALEFG International'ssubsidiary, EFG Financial Products launchesIPO, shares priced at 40-50 francs per registered share.HEIDELBERGCEMENT

The economy would recover fast should Greece exit the euro zone, thecompany's Chief Financial Officer Lorenz Naeger told Boersen-Zeitung in aninterview published on Saturday, adding that "everyone" was prepared for such amove.


Billionaire investor Nicolas Berggruen said a merger of his retail chainKarstadt and Metro's

Kaufhof department stores would still "make a lotof sense", he was quoted by the WAZ newspaper group.RCS

RCS shareholder Diego Della Valle aims to raise his stake in the publisher to12-15 percent, Il Messaggero said on Saturday.


Etihad Airways, Abu Dhabi's flag carrier, will announce a code shareagreement with Air France-KLM on Monday, the Financial Times reported.


Private equity fund Pai could bid 300 million euros for 30 percent of theeyewear maker and delist the company, Il Sole 24 Ore said on Sunday.


It will be "hardly feasible" to keep results stable in 2013 compared with2012, CEO Christian Dreyer told Frankfurter Allgemeine Sonntagszeitung in aninterview, adding the third-quarter was in-line with the company's expectations.


The troubled Franco-Belgian bank is working on raising cash, its chiefexecutive told Belgian business newspaper L'Echo.


The Dutch food group said it has agreed to buy 75 percent of fish andshrimp-feed company Gisis for 78 million euros from Latin American companyExpalsa.

(Reporting by Blaise Robinson; Editing by James Regan)

((blaise.robinson@thomsonreuters.com)(+33.1.4949.5269)(Reuters Messaging:blaise.robinson.thomsonreuters.com@reuters.net))