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 initial enthusiasm sparked by a surprise drop in the U.S. unemployment rate fades while worries over the outlook for earnings and the global economy resurface.

At 0630 GMT, futures for Euro STOXX 50

, for Germany's DAX and for France's CAC were down 0.6-0.7 percent. Wall Street's S&P 500

ended slightly lower on Friday, breaking a four-session winning run, while the MSCI broad index of Asia Pacific shares outside Japan

was down 0.9 percent on Monday.

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

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

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

Spain will be in the spotlight again after thousands of people demonstrated across the country on Sunday to protest against austerity measures, with Spanish labour unions saying they will call a general strike if the government does not hold a referendum on unpopular spending cuts.

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

The euro zone's blue chip Euro STOXX 50

index surged 3.1 percent last 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 selling pressure on every rebound," Aurel BGC chartist Gerard Sagnier said.

"As long as the long-term resistances are not crossed, the risk of consolidation and correction remains, and the downward potential is around 3 to 5 percent."

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

MARKET SNAPSHOT AT 0630 GMT LAST PCT CHG NET CHG S&P 500 1,460.93 -0.03 % -0.47 MSCI ASIA EX-JP 518.67 -0.82 % -4.31 EUR/USD 1.2976 -0.4 % -0.0052 USD/JPY 78.53 -0.15 % -0.1200 10-YR US TSY YLD 1.743 -- 0.00 10-YR BUND YLD 1.487 -- -0.04 SPOT GOLD $1,769.39 -0.62 % -$11.09 US 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 BAE Systems if key "red line" priorities are not met, defence minister Philip Hammond said on Sunday, just three days before a deadline for detailing the deal.

BAE Systems insists there is "no magic number" for French and German government shares in a possible merger with EADS, but U.S. experts say anything over 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 Fnac and online fashion store La Redoute, Le Journal du Dimanche wrote, as part of a strategy to concentrate on luxury and sports brands.

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


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

The drugmaker said the results of a late-stage study of its Zaltrap drug showed a "statistically significant improvement in overall survival" in patients with colon cancer.


UBI Banca has begun selling part of its 1.2 percent stake in Intesa Sanpaolo, 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 on the market or to institutional investors, Il Sole 24 Ore said on Saturday.


Julius Baer announces details of the rights offering in connection with the partial financing of the acquisition of the international wealth management business of Bank of America Merrill Lynch outside the United States and Japan.

EFG INTERNATIONAL EFG International's subsidiary, EFG Financial Products launches IPO, shares priced at 40-50 francs per registered share. HEIDELBERGCEMENT

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


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

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

RCS shareholder Diego Della Valle aims to raise his stake in the publisher to 12-15 percent, Il Messaggero said on Saturday.


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


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


It will be "hardly feasible" to keep results stable in 2013 compared with 2012, CEO Christian Dreyer told Frankfurter Allgemeine Sonntagszeitung in an interview, adding the third-quarter was in-line with the company's expectations.


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


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

(Reporting by Blaise Robinson; Editing by James Regan)

(( Messaging: