Europe Factors to Watch-Shares seen flat to lower; Italy in focus

Mon Mar 11, 2013 3:36am EDT

PARIS, March 11 (Reuters) - European stocks were seen flat to lower on
Monday, taking a breather from the previous week's sharp rally, as Italy's
credit downgrade and mixed macro data from China dent investors' appetite for
risky assets.
    At 0728 GMT, futures for Euro STOXX 50 were down 0.22 percent, for
Germany's DAX up 0.06 percent and for France's CAC down 0.07
percent.
    Italian stocks will be in focus after Fitch downgraded the country's credit
rating by one notch to BBB-plus, with a negative outlook, citing political
uncertainty following last month's inconclusive election.
    "The increased political uncertainty and non-conducive backdrop for further
structural reform measures constitute a further adverse shock to the real
economy amidst the deep recession," Fitch said. 
    The downgrade, which came after most European stock markets' closing bell on
Friday, knocked Italian bond futures on Friday. The futures extended
their losses on Monday morning, trading at 108.63 at 0728 GMT, down 74 ticks
from Friday's close. 
    In China, data showed inflation at a 10-month high in February, while data
for factory output and consumer spending came weaker than expected, dragging
down Chinese shares. 
    European stocks hit their highest level in 4-1/2 years on Friday after
robust U.S. jobs data fuelled expectations of a pick-up in global growth while
central banks' keep policy supportive.
    Euro zone's blue chips were among the top gainers, with the Euro STOXX 50
 index posting a weekly gain of 4.3 percent, its biggest weekly rise
in nearly four months.
    Despite the sharp rally, data from EPFR Global showed European equity funds
posted modest outflows in the week ended March 6. Bucking the trend was Italy
equity funds, enjoying over $90 million in inflows, the data showed.
    However, most of the money going into Italian stocks went into
exchange-traded funds, Cameron Brandt, EPFR Global's Director of Research,
warned.
    "So there's a chance these inflows represent short interest rather than
faith in a good outcome to the political bargaining," he wrote in a note.
--------------------------------------------------------------------------------
  MARKET SNAPSHOT AT 0721 GMT
                                                        
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,551.18   0.45 %     6.92
 NIKKEI                             12,349.05   0.53 %    65.43
 MSCI ASIA EX-JP                       556.35  -0.15 %    -0.82
 EUR/USD                               1.3017   0.09 %   0.0012
 USD/JPY                                96.05   0.03 %   0.0300
 10-YR US TSY YLD                       2.061       --     0.01
 10-YR BUND YLD                         1.506       --    -0.02
 SPOT GOLD                          $1,582.46    0.3 %    $4.72
 US CRUDE                              $91.86   -0.1 %    -0.09
   
  > GLOBAL MARKETS-Dollar near highs vs yen, Asian shares steady 
  > Wall St climbs on jobs, S&P up for 9th week out of 10 
  > Nikkei at 4-1/2-yr high on U.S. data, weak yen; financials lead 
  > FOREX-Dollar holds upper hand after stellar U.S. jobs growth 
  > PRECIOUS-Gold bounces from 2-week low as stimulus seen to continue 
  > Copper climbs on arb differential; patchy China recovery weighs 
  > Brent slips further below $111; China shows uneven recovery 
    
    COMPANY NEWS:
    
    ROCHE 
    A single dose of an experimental Roche biotech drug that blocks inflammation
reduced damage to the heart during artery clearing angioplasty procedures,
according to data from a midstage trial presented on Sunday. 
    
    SANOFI 
    The U.S. Department of Justice (DoJ) is investigating disclosures to the
Food & Drug Administration (FDA) about the variable response that certain
patients may have to blood-thinner Plavix, the company said. 
    
    GECINA 
    Investment group Blackstone BX.N has increased its holdings of the French
real-estate group's debt by 160 million euros, French newspaper Les Echos
reported.
    
    ATLANTIA, GEMINA 
    The company has agreed to buy Gemina in an all-share deal to create one of
the biggest European motorway and airport groups with businesses in Italy and
Latin America. Under the deal, Atlantia will issue 1 new share for every 9
Gemina shares. 
    
    EDF 
    Britain is close to signing a 35-year deal with French energy group EDF to
build the first of a new wave of nuclear power plants after reaching an
agreement on subsidies, the Independent newspaper reported. 
    
    BMW 
    The world's largest luxury-car maker will in future offer one plug-in hybrid
vehicle per model line, magazine Wirtschaftswoche reported on Saturday, citing
purchasing chief Klaus Draeger. Chief Executive Norbert Reithofer reaffirmed a
goal to increase vehicle deliveries to a new record this year, Welt am Sonntag
reported, citing an interview. 
    
    THYSSENKRUPP 
    Former Henkel CEO Ulrich Lehner could become chairman at Germany's largest
steelmaker as part of a broader overhaul of the company's supervisory board that
may see two more members leaving, Euro am Sonntag reported.
    
    RWE, ALLIANZ 
    German insurer Allianz and Canadian infrastructure investor Borealis are
expected to buy Czech gas transmission system operator Net4Gas from RWE after
being awarded preferred bidder status, banking sources said. 
    
    E.ON 
    Germany's biggest utility denied that it is planning to spin off its
renewable-energy business as part of its debt-reducing disposal programme.
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