Europe Factors-Shares set to fall on S&P downgrade

LONDON, Jan 16 (Reuters) - European shares are set to fall on Monday,
after Standard & Poor's downgraded the credit ratings of nine euro zone
countries late on Friday, raising concerns the region might find it more
difficult to borrow funds and see slower growth.
S&P cut the ratings of Italy, Spain, Portugal and Cyprus by two notches and
France, Austria, Malta, Slovakia and Slovenia by one notch each. It put 14
euro-zone states on negative outlook for a possible further downgrade, including
France, Austria, and still triple-A-rated Finland, the Netherlands and
Luxembourg.
Futures for the EURO STOXX 50, for Germany's DAX and for
France's CAC-40 futures fell 0.3 to 0.6 percent. Financial spreadbetters
earlier predicted Britain's FTSE 100 to open as much as 0.4 percent
lower.
"Last year's major theme seemed to have subsided and some traders turned
quite bullish on the glimmers of the U.S. recovery, but the European debt crisis
made a bold appearance on Friday, reminding traders that it was far from being
resolved," said Jonathan Sudaria, dealer at Capital Spreads.
"Concerns now turn to how the EFSF (European Financial Stability Facility)
can maintain its AAA rating, now that two of the original six AAA countries have
been downgraded."
The EFSF's lending capacity is based on guarantees from euro zone
governments. Because only a few governments are now AAA-rated, all member states
have to provide over-guarantees to ensure that the EFSF retains its AAA rating.
A senior euro zone official said the EFSF could retain its AAA rating with
Standard & Poor's through higher guarantees from the euro zone's remaining
triple A countries or lower lending capacity.
Investors will also keep a close eye on Greece as talks stalled over a Greek
bailout, putting Athens under strong pressure to complete a deal with private
bondholders to cut its debt to more sustainable levels or risk a default in
March when it has to redeem huge amounts of bonds.
David Lipton, first deputy managing director at the International Monetary
Fund, said Europe will see a "downward spiral of collapsing confidence" if no
further action is taken.
The pan-European FTSEurofirst 300 index of top shares fell 0.1
percent to close at 1,017.84 points On Friday.
Charts showed the index faced critical resistance at 1,028 - an area where
the 200-day moving average, the medium-term downtrend and a previous
intermediate peak all coincide.
"Throw in the fact that it is also the point at which the index has retraced
the July/August sell-off by 61.8 percent. A reversal from here will look like
failure at resistance, with an initial downside target of around 983," said Bill
McNamara, technical analyst at Charles Stanley.
U.S. markets are closed on Monday for the Martin Luther King holiday.

MARKET SNAPSHOT AT 0715 GMT
LAST PCT CHG NET CHG
S&P 500 1,289.09 -0.49 % -6.41
NIKKEI 8,378.36 -1.43 % -121.66
MSCI ASIA EX-JP -1.25 % -5.96
EUR/USD 1.2654 0.14 % 0.0018
USD/JPY 76.83 -0.35 % -0.2700
10-YR US TSY YLD 1.871 -- 0.00
10-YR BUND YLD 1.760 -- 0.00
SPOT GOLD $1,642.29 0.17 % $2.77
US CRUDE $99.23 0.54 % 0.53

* Shares fall as euro zone downgrades rekindle fears

* Wall St slips on reports of euro-zone downgrades
* Euro debt crisis hits Nikkei; construction firms up
* Euro near 17-mth low vs dlr after mass downgrade
* Brent rises towards $111 as Iran warns Gulf exporters
* Gold steady after S&P downgrades; dollar pressures
* Copper slips as euro zone rating cut spurs growth worry

COMPANY NEWS

RICHEMONT
Sales growth at Richemont held up in the company's third quarter, easing
fears the sector might be in for a marked slowdown this year and allowing the
Swiss luxury goods group to confirm its profit goal for the year.

CARNIVAL CORP.
At least five people died on Friday when a cruise liner, the Costa Concordia
with more than 4,000 people on board, flipped on its side after hitting a rock
close to the island of Giglio, off Italy's west coast. The luxury 114,500-tonne
ship was operated by Costa Crociere, a unit of Carnival Corp, the world's
largest cruise company. [

ROYAL BANK OF SCOTLAND
The bank is in talks to sell its cash equity and mergers and acquisitions
business in the Middle East as part of a global restructuring at the U.K.
lender, two sources familiar with the matter said.

HOLCIM
The cement-maker will book a 775 million Swiss franc ($819 million) charge
in the fourth quarter due to a slump in demand for the construction material in
Europe and the United States and a restructuring at its South African business.

BP
BP is considering possible measures to support cash-strapped European
refiner Petroplus, on which the oil giant relies to supply its UK
refined products retailing network, industry sources said.

LUFTHANSA
Germany's largest airline offered a 3.3 percent pay hike at the start of
tricky wage talks with labour unions in Germany, just as its employees brace for
a further round of cost savings measures.

BNP PARIBAS
France's biggest listed bank could save jobs and soften the pain of its
investment-banking cutbacks by scrapping its dividend for 2011, according to an
auditor's report obtained by Reuters.

EADS
The United States pressed the European Union on Friday for hard evidence
that it has complied with a trade ruling on subsidies to planemaker Airbus in a
showdown that could kick off the next stage in the world's largest and costliest
trade dispute.

LINDT & SPRUENGLI
The chocolates company's 2011 organic sales growth missed expectations as
demand for its products slowed considerably in debt crisis-shaken Southern
Europe.

VINCI
The construction group said it was selected as preferred bidder for a
55-year concession with a total investment of about 750 million euros to design,
finance, build and operate a toll motorway near Strasbourg.
German construction company Hochtief has put the auction of its
airports business on ice after failing to sell the unit in 2011. Vinci was among
the bidders.

NATIXIS
The bank plans to cut 277 jobs at its corporate and investment banking
division, a spokeswoman told Reuters, as banks scale back lending to cope with
the euro zone debt crisis.

BASF
BASF may move the headquarters of BPS, its plant science unit, to the United
States because of Germany's aversion to genetic engineering, weekly paper
WirtschaftsWoche said in an advance copy of its Monday edition.

HOCHTIEF
The German construction company has put the auction of its airports business
on ice after failing to sell the unit in 2011.