Europe Factors to Watch-Shares set to dip; Cyprus vote eyed

Tue Mar 19, 2013 3:41am EDT

PARIS, March 19 (Reuters) - European stocks are set to inch lower on
Tuesday, adding to the previous session's losses, as a controversial plan for a
bailout of Cyprus involving a levy on bank deposits keep investors on edge.
    Investors awaited a parliamentary vote on Tuesday on the plan, part of a 10
billion euro bailout by the European Union. Late on Monday, euro zone ministers
urged Cyprus to let smaller savers escape the tax. 
    At 0728 GMT, futures for Euro STOXX 50, for Germany's DAX 
and for France's CAC were down 0.2-0.3 percent.
    Euro zone shares sank on Monday, with the euro zone's blue chip Euro STOXX
50 index losing 0.7 percent and Spain's IBEX falling 1.3
percent, as Cyprus's bailout plan unveiled at the weekend revived fears of bank
runs in the euro zone's most indebted countries.
    "The overall figure of this bailout plan is very small, but its the return
of the systemic risk that's spooking investors, which explains yesterday's
violent reaction," FXCM analyst Nicolas Cheron said.
    "Once more, it's about confidence, so euro zone officials have some damage
control to do now."
    Italian banks will be in focus after Fitch slashed its ratings on Italy's
biggest lenders Intesa Sanpaolo and UniCredit, citing a
domestic recession that is deeper than previously thought. 
    Miners will also be in focus after Rio Tinto Ltd said it expects
iron ore prices to come under pressure in the second half of the year on slower
growth in steel demand from top customer China and increased supply.
    On the macro front, investors will keep an eye on Germany's ZEW economic
sentiment indicator, due at 1000 GMT.
    European equities have strongly rallied since mid-2012 - with the Euro STOXX
50 surging about 30 percent - propelled by the European Central Bank's pledge to
safeguard the euro, which eased fears of a break-up of the region's currency
bloc.
    However, the rally has been dented by the recent return of concerns over
political risk in Europe, with a political impasse in Italy following last
month's election, a corruption scandal in Spain and Cyprus's bailout plan.
    Despite yesterday's losses, charts show the European equity market rally is
still intact, Aurel BGC chartist Gerard Sagnier said.
    The Euro STOXX 50 tested a key support level on Monday, its 50-day moving
average, before bouncing back in late trade, sending a positive technical
signal.
    "Every pull-back is used as a buying opportunity. Yesterday was just a quick
technical correction. The Euro STOXX 50 is still on its way to reach 2011
highs," Sagnier said.
    The chartist sees the index's next support levels at 2,675 points and 2,600
points, and the next resistance levels at 2,730 and 2,755.
    
--------------------------------------------------------------------------------
 MARKET SNAPSHOT AT 0727 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,552.10  -0.55 %     -8.6
 NIKKEI                             12,468.23   2.03 %    247.6
 MSCI ASIA EX-JP                       538.03   0.27 %     1.44
 EUR/USD                               1.2944  -0.08 %  -0.0010
 USD/JPY                                95.52   0.34 %   0.3200
 10-YR US TSY YLD                       1.953       --     0.00
 10-YR BUND YLD                         1.397       --    -0.01
 SPOT GOLD                          $1,604.06  -0.05 %   -$0.74
 US CRUDE                              $93.71  -0.03 %    -0.03
 
  > GLOBAL MARKETS-Asian shares rebound from Cyprus bailout scare 
  > Wall St ends lower on angst about Cyprus bailout plan 
  > Tokyo's Nikkei share average closes up 2.03 pct 
  > Cyprus bailout fears drive euro to near 3-month low vs dlr 
  > Gold hovers above $1,600/oz on Cyprus concerns 
  > Copper steadies above four-month lows; buyers wary on Cyprus 
  > Brent edges down toward $109 ahead of Cyprus bailout vote 
    
    COMPANY NEWS:
    
    UNICREDIT, INTESA SANPAOLO 
    Ratings agency Fitch on Monday cut its ratings on Italy's biggest lenders
Intesa Sanpaolo and UniCredit following its recent downgrade
of the country's sovereign debt. 
    
    MINERS
    Rio Tinto Ltd said it expects iron ore prices to come under pressure
in the second half of the year on slower growth in steel demand from top
customer China and increased supply. 
    
    VOLKSWAGEN 
    The carmaker sharply pared its growth outlook in Brazil for this year, a
senior executive said on Monday, adding that the pace of investments in local
factories will hinge on sales in the coming months. 
    
    THYSSENKRUPP 
    German daily Handelsblatt cited company sources as saying the steelmaker was
preparing a capital increase, which will dilute the holdings of its main
shareholder, the Krupp Foundation. ThyssenKrupp declined to comment. 
    
    ILIAD ILD.PA 
    France's upstart telecom operator Iliad saw a drop in its net profit last
year because of the ongoing cost of building its new mobile network, but said it
would propose a stable dividend of 0.37 euros per share. 
    
    EADS EAD.PA 
    Airbus' record order from Indonesian budget carrier Lion Air on Monday was
already incorporated in its 2013 target of 700 to 750 plane orders, its
commercial director told Reuters on Monday. 
    
    BOURSORAMA, SOCIETE GENERALE 
    The online banking and stock broking unit of French lender Societe Generale
has appointed Marie Cheval as its new chief executive to succeed Ines Mercereau,
who is stepping down for personal reasons. 
    
    L'OREAL 
    Lindsay Owen-Jones, who headed L'Oreal for almost 20 years, is preparing to
leave the French cosmetics giant, the company said in a statement on Monday.
Honorary chairman of L'Oreal since 2011, Owen-Jones wrote in a letter to Chief
Executive Jean-Paul Agon that he planned to "pass the baton" and step down from
the board on April 26. 
    
    TALVIVAARA  
    The head of the Finnish miner told Reuters in an interview on Monday that
the company was likely to turn cash flow positive next year as it recovers from
a pollution accident last year. 
    
    BALOISE 
   Swiss insurer Baloise BALN.VX cut its return-on-equity target and proposed an
unchanged dividend, after reporting full-year profits that beat expectations.
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Comments (1)
Remote wrote:
Attention: according to a reliable info from a top manager within Cyrpus based arm of a Global Big 4 consulting firm, Cyprus government, while being not a fool and not an enemy to its own people, is in very difficult situation. Cypriots clearly understand that Germany wants to kill two birds with one stone: Send jitters across EU to undermine banks in “weak” EU countries to make a money run into German banks, penalize Russia and destroy inconvenient small island that used to have a life of its own before it was lured into EU. To protect a welfare of Cypriot nation dependent on tourism and financial services Cyprus is considering urgent securitization of its gas reserves (which are actively disputed by Turkey). This is the topic of negotiations between Cyprus and Russian financial ministers which are underway in Moscow as we speak. Israel considered as stand-by partner in the gas deal if Russian talks fail. Cyprus is also ready to pledge its gold reserves (about 4B euro)to stabilize banks and avert destruction of its financial industry.

Frau Merkel is playing a very dangerous game risking Europe future and global political stability.

Mar 19, 2013 12:24pm EDT  --  Report as abuse
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