European shares consolidate gains, await further stimulus
* FTSEurofirst down 0.3 percent * Crucial week ahead with FED, Germany eyed * Miners extend rebound on stimulus hopes * Glencore lays out bid for Xstrata By David Brett LONDON, Sept 10 (Reuters) - European shares trimmed the previous session's gains early on Monday, with investors in consolidation mode awaiting catalysts such as potential stimulus from the United States and a German constitutional court ruling on the euro zone's bailout fund. By 0745 GMT, the FTSEurofirst 300 was down 3.15 points, or 0.3 percent at 1,103.57, having hit a fresh 13-month intraday high on Friday on enthusiasm over the European Central Bank's bond-buying plan. "Our medium term view is still bullish for equity markets but in the short-term we see some consolidation as we await the ESM court decision in Germany, the outcome of elections in Holland and the FOMC meeting in the U.S.," said Achim Matzke, European stock indexes analyst at Commerzbank. Investors will focus on a number of events during the week, including the ruling by Germany's constitutional court on the legality of the euro zone's permanent financial rescue fund, the European Stability Mechanism. Meanwhile, the Federal Reserve, the U.S. central bank, looks set to launch a third round of bond purchases at its Federal Open Market Committee meeting on Thursday, to try to drive borrowing costs lower and revive economic growth. "If we get larger-than-expected QE from the U.S. then it is good for the equity markets and risk assets, but if it is not large enough then momentum in equities could run out of steam," Commerzbank's Matzke said. UBS said it now sees further QE at the Fed's meeting this week, which would trigger a return of capital flows to emerging markets and potentially push miners towards the top of their valuation range with BHP 10-15 percent higher and more upside for mid caps or discounted names. Miners were the main gainers again, up 1.2 percent as expectations brewed for more stimulus in the United States, while weak trade data from the world's biggest consumer of raw materials, China, fuelled further expectations that its government would soon act to stimulate the economy. The sector was in focus too as commodities trader Glencore laid out its revised $36 billion all-share bid for miner Xstrata, raising its offer as expected but warning it would not improve the terms further. M&A factors also drove Marks & Spencer 2.8 percent higher after bankers said late on Friday they are exploring debt packages to back a potential buyout of the UK retailer. MACRO RISK With the main risk events of the German ESM ruling and the FOMC meeting coming late in the week, and a rather empty economic calendar, markets adopted their recent behaviour of treading water until a clear trigger for action emerges. After recent surge, following a long period of underperformance, stocks in Spain, Italy and Portugal faded early on Monday. The three troubled euro zone countries and Greece all made it into the top five performing global equity markets last month, according to Thomson Reuters indexes. Europe equity funds recorded net outflows for the eighth time in the past nine weeks, according to EPFR data for the week to Sept 5 (pre-ECB bond buying plan), though daily data showed the pace of redemptions from Europe Equity Funds ebbing as the week progressed. In a sign investors remained optimistic that policymakers would intervene to stimulate economies, the main drag on indexes came from highly valued defensive stocks such as utilities and food and beverages while riskier assets like banks, miners and financial services rose.
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