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FTSE, DAX, CAC Seen Lower on Bailout Disagreement Report

Stocks are expected to open sharply lower on Wednesday following two days of very strong gains on hopes of a solution to the euro zone debt crisis.

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With the Dow Jones Industrial Average trading as much as 300 points higher on Tuesday, a report from the Financial Times pointing to divisions on expanding the European Financial Stability Fund saw Wall Street pare gains to end around 1 percent higher.

The FT report indicated some members of the euro zone wanted private creditors to take bigger losses on Greek bond holdings. It followed the approval of a controversial property tax by lawmakers in Athens as Angela Merkel met with the Greek prime minister in Berlin.

At that meeting Merkel suggested that Greece’s international lenders could reopen the July 21 deal that included a debt swap for bond holders. Any changes would, according to the Chancellor, be decided by the IMF, European Union and European Central Bank inspectors who are expected back in Athens this week. "We have to wait and see what the troika ... finds and what it will tell us (whether) we will have to renegotiate or not," Reuters quoted Merkel as saying.

In an interview with Dow Jones Newswires on Tuesday Bill Rhodes, the former Citigroup executive who played a lead role in the financial restructurings in Asia and Latin America during the 80s and 90s said the IMF should take a much more assertive role in the crisis. Christine Lagarde, the IMF boss could in Rhodes' view sidestep the political paralysis in the EU.

Overnight Reuters news agency reported that French bank Societe Generale has put its futures unit, Newedge up for sale as it seeks to de-risk its balance sheet. "Newedge is definitely for sale" the source told Reuters.

At 09:00 CET European Commission President Jose-Manuel Barroso is expected to make a speech to the European Parliament in which he is expected to unveil plans for a transaction tax, something that is strongly opposed by the United Kingdom.