European Factors to Watch-Shares head for 11th month of gains

Tue Apr 30, 2013 2:50am EDT

LONDON, April 30 (Reuters) - European shares were set to rise on Tuesday and
stay on track for an 11th month of gains, with expectations of a rate cut by the
European Central Bank and the continuation of easy U.S. monetary policy boosting
sentiment.
    The ECB is expected to lower the euro zone's main interest rate by 25 basis
points at its meeting on Thursday, while the combination of soft demand and
benign inflation should allow the U.S. Federal Reserve to continue on its
ultra-easy monetary path when it meets on Tuesday and Wednesday.
    Analysts said investors should be cautious in trading shares as pinning too
much hope on the central banks could be risky.
    "Markets are expecting that the ECB will cut interest rates. That bears the
risk for a disappointment, should the ECB decide to postpone such a step," said
Christian Stocker, equity strategist at UniCredit in Munich.
    He said investors will keep a close eye on earnings as results from some
major banks could support the market.
    UBS posted a better-than-expected first quarter profit on Tuesday
as it saw a surge in trading income from its investment bank. Deutsche Bank
 unveiled forecast-beating results, while Lloyds reported a
jump in first-quarter profits on the back of improved margins and lower costs.
    According to Thomson Reuters StarMine data, half of the STOXX Europe 600
 companies that have announced results so far have met or beaten
analysts' forecasts.
    The index, which has seen results from 39 percent of its companies so far,
lags the United States, where more than half of S&P 500 constituents have
reported, with 74 percent meeting or beating predictions.
    At 0641 GMT, futures for Euro STOXX 50, UK's FTSE 100,
Germany's DAX and France's CAC were 0.3 to 0.7 percent higher.
    The market is also expected to track gains in Asia and the United States,
with the S&P 500 index ending at an all-time high on Monday and MSCI's
index of Asia-Pacific shares outside Japan climbing 1.1 percent
on Tuesday.
    The pan-European FTSEurofirst 300 index ended 0.5 percent higher on
Monday at 1,202.89 points, the highest close in about four weeks. The index, up
1.2 percent this month, headed for its 11th straight month of gains to post the
longest winning run since its launch.
    According to spreadbetters, Italy's FTSE MIB was seen opening 0.4
percent higher. It rose 2.2 percent on Monday after new Prime Minister Enrico
Letta promised to push for a change to Europe's focus on austerity and pursue
growth. The index is up more than 10 percent this month. 
    The euro zone's blue chip Euro STOXX 50 index closed 1.3 percent
higher at 2,717.38 points in the previous session. The latest rally has seen it
surging by nearly 7 percent in seven sessions to a one-month high.
    "While this is positive on the face of it, the fact that the advance is
largely based on hopes of action from the ECB suggests that many in the market
will be looking to take profits on the confirmation of a rate cut - and short
heavily in the absence of such a move," Bill McNamara, technical analyst at
Charles Stanley, said.
    "In the meantime, a run up to the March peak at 2,744 suddenly looks
possible, although it is not easy to see what would be the driver for a move
beyond that level in the near term."
    Petra von Kerssenbrock, analyst at Commerzbank, said the index headed
towards the resistance at 2,750, the annual highs.
    "This is the resistance of the consolidation it has been stuck in since the
beginning of this year. This medium-term consolidation has a trend-confirming
character to the upside. A breakout to the upside should pave the way towards
the resistance area 3,050-3,080."
   
--------------------------------------------------------------------------------
     MARKET SNAPSHOT AT 0647 GMT                                 
                                                LAST    PCT CHG   NET CHG
     S&P 500                                1,593.61     0.72 %     11.37
     NIKKEI                                13,860.86    -0.17 %    -23.27
     MSCI ASIA EX-JP                          551.07     0.81 %      4.41
     EUR/USD                                  1.3082    -0.11 %   -0.0015
     USD/JPY                                   97.77     0.02 %    0.0200
     10-YR US TSY YLD                          1.668         --      0.00
     10-YR BUND YLD                            1.207         --      0.01
     SPOT GOLD                             $1,463.86    -0.81 %   -$11.93
     US CRUDE                                 $94.27    -0.24 %     -0.23
 
    * Central bank stimulus hopes underpin Asian shares          
    * Nikkei eases, still heads for best April in 20 years       
    * S&P 500 closes at record, led by energy, tech shares       
    * Dollar subdued as low inflation alters Fed calculus        
    * Brent holds under $104, heads for worst month since May    
    * Copper slips, policy easing hopes stem fall                
    * Gold slips as ETF holdings hit lowest since Sept 2009      
    * Bonds firm as Fed meeting, payrolls data in focus          
    
    COMPANY NEWS
    UBS 
    UBS posted a better-than-expected first quarter profit on Tuesday as it saw
a surge in trading income from its investment bank and more fees from wealthy
clients. 
    
    UNILEVER 
    Anglo-Dutch consumer goods giant Unilever will pay as much as $5.4 billion
to raise its stake in its Indian unit, Hindustan Unilever, to up to 75
percent in a bet on fast-growing spending power in Asia's third-largest economy.
 
    
    BP 
    BP profits outperformed expectations by almost $1 billion in the first
quarter of 2013 thanks in part to the high margin nature of new production that
came on stream at the end of 2012 and a strong performance from its trading
division. 
 
    SWATCH 
    The world's biggest watchmaker Swatch Group still sees double-digit sales
growth in China this year for its mid and entry price brands, its chairwoman
said. 
   
    DEUTSCHE BANK  
    Germany's largest lender said late Monday it will beef up its balance sheet
with a 2.8 billion euro ($3.67 billion) capital increase as it unveiled
forecast-beating quarterly results thanks to aggressive cost cuts.
 
    Separately, the chairman of Monte dei Paschi di Siena said on Monday a
lawsuit by the Italian bank against Nomura and Deutsche Bank over
loss-making derivatives deals is well founded. 
    
    LLOYDS BANKING GROUP 
    State-backed Lloyds reported a jump in first-quarter profits on the back of
improved margins and lower costs on Tuesday, and raised the amount it expects to
save from shrinking the bank. 
    
    DEUTSCHE BOERSE  
    Deutsche Boerse late Monday reported a greater-than-expected 26 percent drop
in operating profit for the first quarter as low interest rates and reduced
equity market volatility dented the exchange operator's revenue. 
    
    ANHEUSER-BUSCH INBEV 
    The world's largest brewer cut its outlook for full-year growth in its
second-biggest market, Brazil, on Tuesday after first-quarter earnings fell
short of expectations. 
 
    DEUTSCHE TELEKOM  
    The European Commission has decided against setting specific fees for
telecoms firms seeking access to traditional copper networks as it would mean
consumers paying more in 10 EU countries, according to a draft EU document.
 
    
    FRESENIUS SE 
    The diversified healthcare group posted first-quarter adjusted net income
slightly below market expectations on healthcare budget cuts in the United
States. 
    
    FRESENIUS MEDICAL CARE 
    First-quarter net income at Fresenius Medical Care, the world's largest
dialysis provider, dropped to a worse-than-expected $225 million, hurt by
austerity measures in the United States, its most important market.
 
       
    TELEFONICA, BT GROUP 
    Telefonica and BT are making progress on several agreements to share
networks and services in the British market in a move to gain ground over
landline and wireless competitors, Expansion reported on Tuesday. 
        
    ABERTIS 
    Infrastructure company Abertis reports results for the first quarter before
the market opens on Tuesday.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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