European Factors to Watch-Shares to extend losses, focus on data

LONDON Thu Nov 15, 2012 2:40am EST

LONDON Nov 15 (Reuters) - European shares were set to extend the previous day's losses on Thursday, with data expected to show the euro zone slipped back into recession and on concerns over likely tough U.S. budget negotiations.

Futures for Euro STOXX 50, Germany's DAX and France's CAC were 0.5 to 0.8 percent lower. žFinancial spreadbetters earlier predicted Britain's FTSE 100 to fall as much as 0.7 percent.

The FTSEurofirst 300 index fell 1 percent to 1,088.43 points on Wednesday, while U.S. shares fell 1.3-1.5 percent after President Barack Obama reiterated his call for the wealthy to pay higher taxes, setting the stage for a battle over fiscal policy with Congressional Republicans.

The two sides seemed to be hardening their positions on the so called ' f iscal cliff' , w hich will likely create an uneasy backdrop to trading through the Christmas holidays.

"There is a lot of uncertainty about the U.S. 'fiscal cliff'. Negotiations are going to be hard and could linger on. It will be a shame if we get into another recession in the United States just because of a failure at the talks," Koen De Leus, senior economist at KBC, in Brussels, said.

"Hopefully the U.S. lawmakers will find a compromise and settle the issue before it's too late."

Focus on Thursday will be on macroeconomic numbers. First-time claims for U.S. jobless benefits for the week ended Nov. 10 are expected to rise to 375,000 from 355,000 in the previous week, while forecasts show the euro zone's economy, which generates a fifth of global output, shrank 0.2 percent in the third quarter.

Data showed German economic growth slowed to 0.2 percent quarter-on-quarter in the July-September period, while France posted surprise economic growth of 0.2 percent as household consumption bounced back and manufacturing grew.

Investors will keep a close eye on the third-quarter earnings. Dutch supermarket chain Ahold posted weaker-than-expected operating results due to a difficult market environment in the United States and higher costs in the Netherlands and remained cautious about the rest of the year.

According to data from Thomson Reuters StarMine, 91 percent of the companies on the STOXX Europe 600 index have announced results so far, with 57 percent beating or meeting expectations. Utility companies have been the worst hit, with 67 percent of them missing forecasts.

* Stocks retreat on U.S. fears, yen boosts Nikkei

* Nikkei extends gains as Japan's Abe backs sub-zero rates

* US STOCKS-Wall St drops on deficit, Middle East concerns

* Yen falls as Japan opposition leader calls for BOJ easing

* Brent crude steady above $109 as Mideast tensions escalate

* Gold slips as oil pares gains;eyes on Middle East

* Copper flat as brighter China economy supports

* Bond prices hold firm on 'fiscal cliff' jitters

COMPANY NEWS

AHOLD

Dutch supermarket chain Ahold posted weaker-than-expected operating results, due to a difficult market environment in the United States and higher costs in the Netherlands.

MERCK

The company lifted its 2012 outlook on Thursday and beat expectations for third-quarter results, capitalising on its strong position in the market for chemicals for flat screens.

ZURICH INSURANCE GROUP

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