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.