Europe Factors to Watch-Stocks set to rally on new Italian gvt

Mon Apr 29, 2013 2:22am EDT

PARIS, April 29 (Reuters) - European stocks are set to climb on Monday,
adding the previous week's sharp gains with Italian stocks seen rallying after a
coalition government was named over the weekend, putting an end to two months of
political impasse.
    At 0613 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were up 0.2-0.6 percent,
while financial spreadbetters expect Italy's FTSE MIB to surge 178
points, or up 1.1 percent.
    Over the weekend, Italian centre-left politician Enrico Letta was sworn in
as Italy's new prime minister. He named a coalition government, and said his
priorities would be the economy and unemployment, as well as trying to turn
Europe away from austerity to focus more on growth and investment.
 
    Italian shares have been underperfroming this year, with the MIB up 1.8
percent year-to-date while the FTSEurofirst300 is up 5.5 percent, as
February's inconclusive election revived worries over the pace of economic
reforms for the debt-stricken country and weighed on local equities.
    Italian shares feature among the cheapest stocks in Europe, with the broad
MSCI Italy index trading at 9.4 times expected earnings for the
next 12 months, while the STOXX Europe 600 trades at 12.3 times
expected earnings.
    "There has already been a strong move in Italian yields of late, with the
ten-year trading under 4 percent last week. Perhaps you could make a case that
the market was positioning for a favourable political outcome here," IG Chief
Market Strategist Chris Weston wrote in a note.
    The FTSEurofirst 300 index of top European shares surged 3.8
percent last week. It was the index's best weekly gain in five months, lifted by
speculation of an interest rate cut by the European Central Bank at its policy
meeting on Thursday, following lower-than-expected macro data from Germany.
    A Reuters poll of 76 economists showed a narrow majority of 43 expected a
rate cut of 25 basis points, taking the ECB's main refinancing rate to a record
low of 0.50 percent. However, market rates, such as that for bank-to-bank
lending, are already so low that such an easing might have no more than a
symbolic impact. 
    "Interest rates are already extremely low, lowering them further might
improve confidence a bit, but what the European economy needs is measures to
lower taxes and really boost credit," said David Thebault, head of quantitative
sales trading at Global Equities.
    Investors will also keep an eye on further corporate results on Monday, with
earnings from companies including Volkswagen and Luxottica 
due.
    Out of the 34 percent of the STOXX 600 companies that have posted quarterly
earnings so far, only 46 percent have met or beaten earnings forecasts, a sharp
contrast with results from the United States where 74 percent of S&P 500
companies have met or beaten forecasts, according to Thomson Reuters StarMine
data.
    For the bulk of European companies that still have to report results,
StarMine 'SmartEstimates' - which favours top-rated analysts - predict an
average profit miss of 1.6 percent.
    Japanese and Chinese markets were closed for a public holiday on Monday.
    
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 MARKET SNAPSHOT AT 0612 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,582.24  -0.18 %    -2.92
 MSCI ASIA EX-JP                       545.65   0.05 %     0.28
 EUR/USD                               1.3055    0.2 %   0.0026
 USD/JPY                                97.60  -0.47 %  -0.4600
 10-YR US TSY YLD                       1.665       --     0.00
 10-YR BUND YLD                         1.214       --     0.01
 SPOT GOLD                          $1,470.00   0.51 %    $7.50
 US CRUDE                              $92.64  -0.39 %    -0.36
 
  > GLOBAL MARKETS-Shares up; markets look for central bank largesse 
  > Wall Street dips after GDP but finishes week higher 
  > FOREX-Dollar falls broadly after U.S. GDP disappoints 
  > Gold rises 1 percent, holds near one-week high 
  > METALS-London copper drifts down; policy-easing hopes lend support 
  > Brent slips under $103 on murky global economic outlook 
    
    COMPANY NEWS:
    
    MONTE DEI PASCHI 
    Shareholders gather in Siena for their annual meeting. An Italian judge has
rejected an order to seize around 1.8 billion euros of assets from Nomura
 as part of a probe into suspected fraud involving the troubled lender,
legal sources said on Saturday.
    Il Sole 24 Ore said on Saturday the bank could put up for sale its foreign
branches, 17 in France and 8 in Belgium, which have a book value of 160 million
euros. It is not the first time the bank tries to sell these assets, the paper
added. 
    
    SAIPEM 
    The auditors of the oil services company found failings in the internal
control system of the company, according to a letter by the company's internal
audit committee published on the company website on Friday. 
    
    TELECOM ITALIA 
    The telecoms operator could float its valuable Italian fixed-line network on
the stock market to keep it separate from any possible tie-up with Hutchison
Whampoa, an Italian newspaper said in a report on Saturday.
 
    
    SIEMENS 
    Siemens will likely tweak downward its profit outlook when it releases its
quarterly report on Thursday, German daily Handelsblatt said, citing industry
sources. Siemens outlook for 2013 is for a net profit of 4.5 to 5 billion euros
and will likely say on Thursday that the lower end of that range is realistic.
Related news: 
    
    SANTANDER 
    Spain's biggest bank Santander is in exclusive talks with U.S. private
equity firms Warburg Pincus and General Atlantic LLC to sell a stake in
its asset management business, three people familiar with the discussions said.
 
    
    ENEL 
    The company said on Friday in documents for its AGM that if it fails with
plans to sell 6 billion euros of assets by the end of 2014 it could streamline
investments and look at other disposals in order to meet its debt targets.
    
    FINMECCANICA 
    Italian prosecutors investigating allegations of corruption in the sale of
12 helicopters to India believe their evidence is strong enough to warrant an
urgent trial without preliminary proceedings, a legal source with direct
knowledge of the situation said.
    
    DAIMLER, RENAULT 
    Daimler has started talks with French rival Renault on a joint production of
a vehicle at the plant in Duesseldorf, German daily Rheinische Post said on
Monday, citing a Daimler spokeswoman. Related news 
    Renault-Nissan hopes to receive final approval from Beijing by the summer to
build its first Renault plant in China, Chief Executive Carlos Ghosn said.
 
    
    DEUTSCHE TELEKOM, OTE 
    Greece's biggest telecom operator OTE, which is controlled by Deutsche
Telekom, has agreed to sell its Bulgarian unit Globul to Norway's Telenor
 for 717 million euros. 
    
    SABADELL, LLOYDS 
    British bank Lloyds has agreed to swap its Spanish retail banking business
for a 1.5-2.0 percent stake in Banco Sabadell, Expansion reported, citing
unnamed sector sources.
    
    NOVARTIS 
    The U.S. government announced its second civil fraud lawsuit against
Novartis AG in four days, accusing a unit of the Swiss drugmaker of paying
multimillion-dollar kickbacks to doctors in exchange for prescribing its drugs.
 
    
    CREDIT SUISSE 
    Belgium has pared back its public debt with the sale of the structured
credit portfolio held by its 'bad bank', Royal Park Investments, to U.S. private
equity firm Lone Star and Credit Suisse, the finance ministry said.
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