Europe Factors to Watch-Shares seen slipping from 5-yr highs

Thu May 23, 2013 2:28am EDT

LONDON, May 23 (Reuters) - European shares were set to fall sharply on
Thursday, with a poor factory activity survey from China and concerns the U.S.
Federal Reserve could decide to cut its bond purchases in the next few meetings
hurting sentiment.
    HSBC's preliminary survey of purchasing managers showed China's factory
activity shrank for the first time in seven months in May, raising concerns
about a recovery in the world's second-largest economy and its biggest metals
consumer. 
    "The Chinese story is potentially more negative in the sense that markets
have started to discount stronger economic growth somewhere down the road and
that both China and Europe are currently not delivering on that market promise,"
said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
    "There is still plenty of money that has missed the rally sitting at the
sidelines and at some point in time that will start to come in. Expect more
volatility and nervousness over the next couple of days and weeks though, before
this happens."
    The factory survey report from China followed minutes from the latest Fed
meeting, released late on Wednesday, showing some officials were open to
tapering large-scale asset purchases as early as at the June meeting. 
    Fed Chairman Ben Bernanke told a congressional committee in the previous
session the central bank could decide to scale back the pace of bond purchases
at one of the next few meetings. His comments disappointed stock markets, which
had gained after he earlier said the Fed needed to see further signs of traction
in the economy before it tapered stimulus. 
    "Profit taking could be the theme of the day, with a shift into safe havens
as traders were left confused after Ben Bernanke's statement and further
questioning," Tom Robertson, senior trader at Accendo Markets, said.
    "The real appetite for equities will be tested in the near term as sentiment
has been dampened by weaker than expected Chinese manufacturing data."
    At 0614 GMT, futures for Euro STOXX 50, UK's FTSE 100,
Germany's DAX and France's CAC were 1.4 to 1.7 percent lower,
indicating a sharply weaker open after new highs in the previous session and
mirroring steep losses on Wall Street and in Asia.
    U.S. shares   fell 0.5 to 1.1 percent in the previous
session, while Japan's Nikkei average slumped more than 7 percent on
Wednesday following weak factory activity in China, one of Japan's major export
markets.
    The FTSEurofirst 300 index of blue chip European shares closed 0.2
percent firmer on Wednesday at 1,256.28 points, the highest close in five years.
It is up about 10 percent so far this year.
    Charts showed the market was likely to find support after an initial
sell-off. The euro zone's blue chip Euro STOXX 50 index rose 0.5
percent to 2,835.01 points on Wednesday, while its 14-day relative strength
index (RSI) crossed 70, a level which often leads to pullbacks.
    The index was expected to find support at around 2,750, the upper end of the
former consolidation pattern, and any fall below the level was likely to provide
a buying opportunity. It was expected to face strong resistance at 3,040, a high
in 2010 and 2011 on weekly charts.
    Focus will also be on more macroeconomic data from the United States later
in the session for further hints about the market's near-term direction. Data on
U.S. first-time claims for jobless benefits for the week ended May 18 is due at
1230 GMT, with economists forecasting a total of 345,000 new filings, compared
with 360,000 in the prior week.
    Information services company Markit will releases U.S. flash Markit
Manufacturing PMI for May at 1258 GMT. Economists predict a May flash reading of
51.8, versus 52.1 in the final April release. New home sales figures for April
are due at 1400 GMT.   
--------------------------------------------------------------------------------
     MARKET SNAPSHOT AT 0626 GMT                                
                                               LAST    PCT CHG   NET CHG
     S&P 500                               1,655.35    -0.83 %    -13.81
     NIKKEI                               14,483.98    -7.32 %  -1143.28
     MSCI ASIA EX-JP                         547.59    -2.45 %    -13.77
     EUR/USD                                 1.2822    -0.26 %   -0.0034
     USD/JPY                                 101.72    -1.39 %   -1.4300
     10-YR US TSY YLD                         1.991         --     -0.05
     10-YR BUND YLD                           1.364         --     -0.01
     SPOT GOLD                            $1,373.40     0.36 %     $4.86
     US CRUDE                                $93.22    -1.12 %     -1.06
 
  > JGB yields surge, markets spooked by Bernanke remarks           
  > Wall St falters in volatile session on Fed worries                     
  > Nikkei slumps 3.7 pct on weak China data, 10-yr JGB prices turn higher 
  > Yields jump as Bernanke remarks unnerve investors                    
  > Dollar muscles up on Bernanke comments; Aussie under pressure        
  > Gold slips after Bernanke hints at slowing bond purchases            
  > Copper slides more than 2 pct as China factory data disappoints     
  > Brent slips below $102 on weak China data, strong dollar              
    
    COMPANY NEWS
    
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    SWISS LIFE 
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rose 14 percent in the first quarter, helped by strong demand in its biggest
market, Switzerland. For more, click on: 
        
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its Belgian refining and petrochemical complex to boost diesel-making capacity
and cut costs. 
   
    ENI / GDF SUEZ 
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French gas market by GDF Suez and has recruited 50,000 new customers
since October to take its total in France to 220,000.    
    
    KPN 
    Rumours were rife on Wednesday that the Dutch telecom group's major
shareholder Carlos Slim was lining up a cash bid north of 3 euros a share,
according to the Daily Mail market report.
    
    LOGITECH 
    Computer mouse maker Logitech said it was planning to pay a dividend for
2013 and  reiterated its FY 2014 financial outlook announced on April 25, 2013.
For more, click on
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