European Stocks to Drift Lower; Debt in Focus

European stocks were expected to open lower Monday after falling to their sharpest weekly loss in two and a half months on Friday in response to weak US jobs data.

Share Price chart
Adam Gault | OJO Images | Getty Images
Share Price chart

The FTSE 100 was expected to open 15 points lower, the DAX in Germany was called 7 points lower and the CAC 40 is predicted to be down by 10 points.

European shares, however, pared losses late in the session on Friday as Greece said it successfully concluded talks with an EU/IMF inspection team, potentially paving the way for new loans to the debt-stricken country and fuelling a recovery rally in Greek shares.

In Asia, Australian and Japanese stocks were hit as weak US jobs data prompted investors to adopt a defensive stance.

The euro reached its highest level in more than four weeks at $1.4656 as the US dollar slid to a fresh one-month low against a basket of currencies on Monday.

The single currency was helped by the news that Greece will probably receive a vital tranche of aid, while the dollar index fell to 73.71, a low not seen since May 5.

In politics, German chancellor Angela Merkel will begin a two-day tour of the United States on Monday.

She will attend a dinner hosted by President Obama in Washington at 7pm local time.

Acting IMF head John Lipsky arrives in London on Monday for a two-day visit, before going to Tokyo on June 8 and China 9-10 June.

Former IMF head Dominique Strauss Kahn will return to court on Monday on charges related to the alleged assault of a maid in a New York hotel on May 14.

In Portugal, Socialist leader Jose Socrates announced late on Sunday that he will immediately resign as the head of his party after Pedro Passos Coelho’s Social Democrats won the general election by 38.6 percent of the vote to the Socialist’s 28.1 percent.

Mr Coelho vowed to ensure that Portugal will honor the terms of an EU bailout.

EU PPI data for April will be available from 10:00 am London time on Monday and April industrial production figures for Spain are due out at 8:00.

Key corporate releases on Monday include IG Group which is due to release fourth quarter trade data, along with insurance giant Prudential.

German low-cost airline Air Berlin announced a 3.9 percent rise in traffic numbers for May at 6:00 am.

In the US, Apple CEO Steve Jobs will introduce iCloud at the company’s annual conference for software developers.