Europe Factors to Watch-Shares set to rally on Cyprus deal

Mon Mar 25, 2013 3:26am EDT

PARIS, March 25 (Reuters) - European stocks are set to rally at the open on
Monday after Cyprus reached a deal with international lenders for a 10 billion
euro bailout, averting a collapse of the island's banking system.
    At 0722 GMT, futures for Euro STOXX 50, for Germany's DAX,
for France's CAC and for UK's FTSE 100 were up 0.5-1.6 percent.
    As part of the bailout plan, Cyprus will shut down its second largest bank,
Popular Bank of Cyprus, also known as Laiki, and inflict heavy losses
on uninsured depositors. 
    The euro currency and Asian shares surged on the deal - without which the
European Central Bank said it would have cut off emergency funds to the banks,
triggering a meltdown of the Cyprus's banking system and potentially pushing the
small country out of the euro currency bloc.
    "With the deal described as a banking restructure with haircuts imposed, it
doesn't have to be voted on by the Cypriot parliament, effectively taking the
decision out of the people's hands and into Brussels'," IG market strategist
Evan Lucas wrote in a note.
    European stocks fell last week, with the euro zone's blue chip Euro STOXX 50
 index dropping 1.6 percent on the week, as the initial plan to
rescue Cyprus involving a levy on bank deposits sparked fears of bank runs in
the euro zone's most indebted countries.
    Despite the overall positive reaction expected on Monday following the
latest deal, IG's Lucas warned of long-term impact on sentiment across the euro
zone.
    "This deal calls into question the safety of bank deposits, as the next time
one of these countries asks the ECB for funding, the bank could come back and
tap them on the shoulder with a similar deal Cyprus has now agreed to."
    European equities have strongly recovered since mid-2012 - with the Euro
STOXX 50 gaining about 30 percent - a rally fuelled 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 recently stalled, with investors spooked by the return of
concerns over political risks in Europe such as a political impasse in Italy
following last month's election, a corruption scandal in Spain and Cyprus's
escalating debt crisis.
              
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 MARKET SNAPSHOT AT 0722 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,556.89   0.72 %    11.09
 NIKKEI                             12,546.46   1.69 %   207.93
 MSCI ASIA EX-JP                       539.09   1.17 %     6.23
 EUR/USD                               1.3024   0.32 %   0.0041
 USD/JPY                                94.75   0.26 %   0.2500
 10-YR US TSY YLD                       1.963       --     0.04
 10-YR BUND YLD                         1.408       --     0.03
 SPOT GOLD                          $1,606.96  -0.06 %   -$0.99
 US CRUDE                              $94.21   0.53 %     0.50
 
  > GLOBAL MARKETS-Euro, Asian shares rise on revamped Cyprus deal 
  > Wall St rises on hopes for Cyprus deal, but dips for week 
  > Tokyo's Nikkei share average rises 2.04 pct 
  > TREASURIES-bonds drop on relief over Cyprus bailout 
  > FOREX-Euro pushes higher on news of rescue deal for Cyprus 
  > PRECIOUS-Gold edges up, after hitting 1-week low on Cyprus deal 
  > METALS-Copper climbs as Cyprus deal boosts risk appetite 
  > Brent climbs above $108 after Cyprus rescue plan approved 
    
    COMPANY NEWS:
    
    FRENCH BANKS   
    The outlook for France's banking system remains negative despite
improvements and reflects Moody's expectations that French banks will continue
to face difficult operating conditions in 2013 amidst recessionary trends in
Europe, Moody's Investors Service said on Monday.
        
    BANCO POPOLARE 
    Ratings agency Standard & Poor's cut its long-term credit ratings on the
Italian mutual bank Banco Popolare by one notch to the non-investment grade
level of 'BB+', citing concerns over credit losses amid Italy's economic
downturn.
    
    BANKIA 
    Spain took the last steps to clean up nationalized lender Bankia on Friday,
valuing its shares at a bare minimum of 0.01 euro, while pressing ahead with a
partial merger of the bank that could slow its recovery. 
    
    DEUTSCHE BANK 
    Deutsche Bank is bracing for more than 300 million euros ($390 million) in
charges linked to suspected violations of U.S. sanctions on Iran, magazine Der
Spiegel reported without specifying its sources. 
    
    AXA 
    The French insurer is to reap a 200 million-euro ($259.94 million) capital
gain from a management buyout of its private-equity unit, it said on Friday.
 
    
    THYSSENKRUPP 
    The steelmaker was surprised by the low value of bids for its Cia
Siderurgica do Atlantico mill in Brazil and is seeking talks with bidders to
raise the offer prices, the Agencia Estado news agency reported, citing a source
with access to the negotiations. 
    
    ABERTIS 
    Spanish infrastructure companay Abertis is finalising an accord to acquire
10-15 percent of satellite operator Hispasat from the Spanish government for
around 200 million euros, online newspaper El Confidencial reported, citing
financal sources.
    
    FRANCE TELECOM 
    France Telecom will remain an owner of video sharing website Dailymotion
even as it searches for a partner to help the Youtube GOOG.O competitor expand
in the United States, the telecom operator's chief executive told Le Figaro
newspaper. 
    
    EADS 
    Japan Airlines Co 9201.T may buy about 20 A350 jets from EADS subsidiary
Airbus for around 400 billion yen ($4.23 billion), the Nikkei daily reported on
Sunday, a move that would reduce its reliance on Boeing BA.N. (Full Story)
    
    SWISS BANKS  
    The Swiss government on Sunday denied a newspaper report that the country
had reached a deal in principle with the United States over undeclared funds
hidden by wealthy Americans in Swiss offshore bank accounts.
    
    NOVARTIS 
U.S. health regulators approved on Friday a hand-held inhaler made by Swiss drug
maker Novartis AG to treat a type of bacterial lung infection that often affects
cystic fibrosis patients. 
    
    ROCHE 
    Roche Holding AG's Japanese subsidiary Chugai said on Monday that Japanese
health regulators have approved a new formulation of its rheumatoid arthritis
drug Actemra. 
    
    HOCHTIEF 
    Two of the three executive board members at Hochtief's Solutions unit are
stepping down as the management shakeup at the German construction group
continues, weekly Wirtschaftswoche cited sources on the company's supervisory
board as saying.
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