European Factors to Watch-Shares seen up as Fed defends stimulus
LONDON, Feb 27 (Reuters) - European stock index futures were slightly higher on Wednesday after markets fell sharply in the previous session, helped by the U.S. Federal Reserve's defence of its stimulus programmes for the economy, although concerns over the euro zone may limit gains. The March futures contract for the euro zone's blue-chip Euro STOXX 50 index was up by 0.7 percent, while futures contracts for Germany's DAX and France's CAC were both up by around 0.6 percent. U.S. stock markets rose overnight while Asian equity markets advanced on Wednesday after Federal Reserve chief Ben Bernanke strongly defended the Fed's monetary stimulus initiatives, easing financial market worries that it may be about to ease off its bond-purchasing programmes. Nevertheless, traders said worries over the euro zone's sovereign debt crisis, which were heightened this week by elections in Italy which produced a political stalemate, and looming U.S. budget cuts - referred to as "sequestration" - could weigh on equity markets in the near term. Central Markets senior broker Joe Neighbour saw the potential of a 5-6 percent fall on European equity markets in the coming month, but added that measures by world central banks to strengthen the global economy would continue to support equities in the long run. "A five to six percent correction would be fairly normal within the context of a bull market environment," said Neighbour. He also said most investors were more likely to focus on the Fed rather than Italy's political problems, which could hamper economic reforms in Italy and drive up its borrowing costs and impact Spain as well, which has also been hit hard by Europe's debt crisis. "With Europe, many people have factored in more problems in the likes of Spain and Italy. The U.S. is the driving force for global markets, and if they're doing well, then people feel better," said Neighbour. Worries over Italy caused the euro zone's blue-chip Euro STOXX 50 index to close down 3.1 percent at 2,570.52 points on Tuesday, its lowest finish since Nov. 28. The broader, pan-European FTSEurofirst 300 fell 1.4 percent to 1,150.25 points. However, both the Euro STOXX 50 and the FTSEurofirst 300 index are between 20-25 percent above their 2012 lows, since a pledge last year by the European Central Bank (ECB) to protect the euro currency from the area's debt crisis did much to bolster investor confidence in the region. BCA Research wrote in a note that the full-year outlook for global equities remained positive, given the backdrop of a gradual improvement in the world economy and the fact that equities offer more than cash or bonds, where returns have been hit by record low interest rates. "This creates a 'sweet spot' for equity investors - modest growth, low inflation and negative real rates will support corporate earnings and embolden risk taking," wrote BCA Research. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0737 GMT LAST PCT CHG NET CHG S&P 500 1,496.94 0.61 % 9.09 NIKKEI 11,253.9 -1.27 % -144.84 7 MSCI ASIA <.MIASJ0000P 549.74 0.49 % 2.70 EX-JP US> EUR/USD 1.3079 0.14 % 0.0018 USD/JPY 91.70 -0.29 % -0.2700 10-YR US TSY 1.872 -- -0.01 YLD 10-YR BUND YLD 1.451 -- -0.01 SPOT GOLD $1,610.3 -0.17 % -$2.81 0 US CRUDE $92.88 0.27 % 0.25 > GLOBAL MARKETS-Asian shares recover after Bernanke calms nerves > US STOCKS-Wall Street rebounds on Bernanke comments, data > Nikkei falls as exporters and financials retreat; Italy vote uncertainty > TREASURIES-Yields near 1-month lows as Bernanke defends bond buys > FOREX-Yen holds gains as investors await Italian bond sale > PRECIOUS-Gold holds near 1-1/2-week high as Bernanke backs stimulus > METALS-Copper climbs after Fed reassures on stimulus > Brent holds steady above $112 on Bernanke assurance; EU woes weigh COMPANY NEWS: AB INBEV : Anheuser-Busch InBev, the world's biggest beer maker, forecast a weak start to the year in the United States and Brazil after slightly lower earnings than expected in the final months of 2012. AMADEUS : Spanish travel technology company Amadeus IT Holding said on Wednesday it was "cautiously optimistic" after reporting solid full-year results for 2012. BOUYGUES : The French construction-to-telecoms conglomerate said on Wednesday that 2012 net profit slumped 41 percent to 633 million euros ($827 million), reflecting a tough mobile telecoms market and a challenging economy. EADS : European aerospace group EADS predicted higher profit in 2013 as it confirmed an upswing in 2012 driven by efforts to halt excess costs and by strong deliveries of passenger jets. HOLCIM : Swiss cement maker Holcim said it expects demand in North America, Asia and Latin America to offset a sluggish Europe and drive higher cement sales in 2013, after restructuring charges pushed it to a fourth-quarter loss. ITV : ITV, Britain's largest free-to-air broadcaster, posted a 13 percent rise in 2012 earnings, helped by growth in non-advertising revenues, and said it would pay shareholders a 156 million pound ($236 million) special dividend. SWISS LIFE : Swiss Life's 2012 net profit tumbled 85 percent to 93 million Swiss francs ($99.8 million) as a hefty but expected fourth quarter writedown on its German advisory arm took some of the shine off strong investment income. VODAFONE /KABEL DEUTSCHLAND : Vodafone Group Plc has suspended plans to approach Kabel Deutschland Holding AG about a takeover bid, Bloomberg News cited three people familiar with the matter as saying.
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.