European Factors to Watch-Shares seen retreating from 5-yr high

Tue May 21, 2013 2:28am EDT

LONDON, May 21 (Reuters) - European shares were likely to retreat on
Tuesday, with concerns the U.S. Federal Reserve might begin slowing its bond
purchases later in the year seen prompting investors to take profits from a
rally to five year highs.
    Focus will be on Fed Chairman Ben Bernanke's testimony to Congress on
Wednesday, after comments by Fed officials following recent strong data fuelled
speculation the central bank might start to roll back its stimulus measures,
which have helped the stock market to hit multi-year highs.
    Stock index futures pointed to a lower open, with futures for the Euro STOXX
50, UK's FTSE 100, Germany's DAX and France's CAC
 falling 0.1 to 0.2 percent.
    The FTSEurofirst 300 index ended 0.3 percent firmer at 1,252.09
points in the previous session, the highest in five years. The index has gained
move than 10 percent this year on ample liquidity provided by central banks and
recent encouraging data, especially from the United States.
    "The good news for those who remain bullish equities is that investors do
appear to be moving away from defensive stocks and back into cyclical stocks,
which suggests the rally is far from over," Craig Erlam, analyst at Alpari, said
in a morning note.
    The euro zone's blue chip Euro STOXX 50 index ended 0.2 percent
stronger at 2,824.50 points on Monday after hitting a near two-year high. 
    Charts showed the index was technically "overbought", with its 14-day
relative strength index (RSI) touching 70, but some analysts said the benchmark
could add more gains as momentum remained positive.
    "Does the index look overbought? Absolutely, but the key oscillators are not
displaying any sign of divergence," Bill McNamara, technical analyst at Charles
Stanley, said.
    "Although a minor pull-back is possible at any stage now, there is little in
the chart to suggest that a significant corrective phase is looming."
    Analysts said the index was expected to find support at around 2,750, its
peak in March, while the next strong resistance was expected near 3,000, a high
in 2011.
    On the macroeconomic front, focus will be on ICSC/Goldman Sachs data on
chain store sales for the week ended May 18, due at 1145 GMT, and Redbook's
Retail Sales Index of U.S. department and chain store sales for May, scheduled
at 1255 GMT.
    
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     MARKET SNAPSHOT AT 0619 GMT                                  
                                                 LAST    PCT CHG   NET CHG
     S&P 500                                 1,666.29    -0.07 %     -1.18
     NIKKEI                                 15,381.02     0.13 %     20.21
     MSCI ASIA EX-JP                           562.97    -0.09 %     -0.48
     EUR/USD                                   1.2893     0.09 %    0.0011
     USD/JPY                                   102.55     0.28 %    0.2900
     10-YR US TSY YLD                           1.966         --      0.00
     10-YR BUND YLD                             1.371         --      0.00
     SPOT GOLD                              $1,395.86      0.2 %     $2.82
     US CRUDE                                  $96.69    -0.02 %     -0.02
  > Dollar firms as suspense builds, Asia shares dip                 
  > Wall St ends flat on correction worries                                 
  > Nikkei hits 5-1/2-yr high as retail investors pick up bargains          
  > Prices slip in choppy trading as investors await Fed                  
  > Dollar regains ground after Japan minister clarifies yen comments     
  > Gold, silver fall as dollar gains; ETF holdings drop                  
  > Copper sits tight ahead of factory data; U.S. confidence supports    
  > Brent holds near 2-week top at around $105 on supply worries           
    
    COMPANY NEWS
    
    VODAFONE 
    The world's second-largest mobile operator posted its largest ever quarterly
fall in key organic service revenue, prompting it to keep hold of a dividend
from its U.S. arm and reinvest it into the business and not return it to
shareholders. The 4.2 percent fall in organic service revenue was in line with
forecasts. 
    
    MARKS & SPENCER 
    The British retailer posted its lowest annual profit since 2009 as a
struggling general merchandise division dragged on growth in food sales. With a
profit before tax and one-off items of 665.2 million pounds, M&S still managed
to beat consensus of 658 million pounds.   
    
    BURBERRY 
    British luxury group Burberry posted a 14 percent rise in full-year pretax
profit and said profit for the first half of its new fiscal year would be below
last year's as it reduces its wholesale business in favour of retail markets.
 
    
    BAYER 
    Bayer said extended use of its experimental riociguat pill to treat a
life-threatening form of high blood pressure in the lungs was shown to be safe
and effective in a prolonged trial. 
    
    SONOVA 
    The world's largest hearing aid maker said full-year operating profit fell
42 percent, hit by a provision for potential claims against faulty cochlear
implants at its subsidiary Advanced Bionics. 
    
    ROCHE 
    Regeneron Pharmaceuticals Inc said it settled all pending
litigation with Roche Holding AG's unit Genentech on the company's eye
drug, Eylea, and cancer drug, Zaltrap.
    
    ATLANTIA 
    The motorway operator is close to selling its transmission towers to U.S.
investors for almost 100 million euros, a source close to the matter said on
Monday. 
 
    TELECOM ITALIA 
    Franco Bernabe, the chairman of Telecom Italia, met Italian Prime Minister
Enrico Letta on Monday to discuss plans to spin off the group's domestic
fixed-line network, a source familiar with the situation said late on Monday.
 
    
    DANONE 
    France's Danone is aiming for a bigger slice of one of the world's
fastest-growing dairy markets by investing 325 million euros ($417 million) in
two deals with China Mengniu Dairy Co Ltd.
    
    NATIXIS 
    French financial markets regulator AMF has opened an inquiry into an
ownership overhaul at French bank Natixis, French daily Les Echos said on
Tuesday.
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