European Factors to Watch-Shares seen higher, China in focus

Tue Jun 25, 2013 2:40am EDT

LONDON, June 25 (Reuters) - European shares were set to trim recent steep
losses on Tuesday, with investors seeking value in some battered stocks,
although equities remained vulnerable due to concerns about U.S. stimulus and
China's banking sector.
    At 0631 GMT, futures for Euro STOXX 50, UK's FTSE 100,
Germany's DAX and France's CAC were 0.7 to 0.8 percent higher,
indicating a firmer open after sharp declines in the previous sessions.
    The FTSEurofirst 300 has fallen more than 11 percent since a
5-1/2-year high in late May. It closed 1.6 percent lower at 1,114.19 points on
Monday, its lowest finish in seven months, while the euro zone's blue chip Euro
STOXX 50 dropped 1.5 percent to 2,511.83 points.
    Charts suggested the market was also expected to recover on technical
buying, with major stock indexes seen bouncing after they reached an 'oversold'
level not seen since mid-2011.
    The Euro STOXX 50's 14-day relative strength index (RSI), a widely-used
momentum indicator, fell to 25.8 on Monday. A RSI of 30 or below signals
'oversold' conditions. 
    "After the recent price losses, the index shows a short-term oversold
technical situation. Therefore we expect a short-term stabilisation," Sophia
Wurm, technical analyst at Commerzbank, said, adding that support was seen at
2,440 points. 
    "Nevertheless, as long as the short-term downtrend remains in place, the
defensive technical stance against the index should be maintained."
    Analysts said the market was getting some support from comments by
Minneapolis Fed President Narayana Kocherlakota and Dallas Fed head Richard
Fisher. Both downplayed concerns of an imminent end to monetary stimulus and
said late on Monday the market reaction was not yet cause for concern.
 
    Investors' kept a close eye on China as worries about the country's banking
sector have injected further volatility into the market. A recent spike in
inter-bank borrowing costs have raised concerns that strains in the banking
system could further hit the country's slowing growth. China shares hit a
4-1/2-year low on Tuesday. 
    "Whilst the squeeze is seasonal and should dissipate to some extent in July,
it is hard to be sure of a normalisation thereafter. To imagine this isn't
impacting consumer credit is very hard to imagine," Guy foster, head of
portfolio strategy at Brewin Dolphin, said.
    Investors awaited more U.S. data for hints about the Fed's timing to trim
its bond buying operations. Focus will be on durable goods numbers for May, due
at 1230 GMT, Redbook's weekly retail sales data at 1255 GMT, S&P Case/Shiller
Home Price Index for April at 1300 GMT and new home sales for May at 1400 GMT.
    
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    MARKET SNAPSHOT AT 0632 GMT: 
                                              LAST    PCT CHG   NET CHG
     S&P 500                              1,573.09    -1.21 %    -19.34
     NIKKEI                              12,969.34    -0.72 %    -93.44
     MSCI ASIA EX-JP                        481.16    -0.11 %     -0.53
     EUR/USD                                1.3134     0.13 %    0.0017
     USD/JPY                                 97.48    -0.25 %   -0.2400
     10-YR US TSY YLD                        2.503         --     -0.04
     10-YR BUND YLD                          1.787         --     -0.04
     SPOT GOLD                           $1,282.51      0.1 %     $1.22
     US CRUDE                               $95.31     0.14 %      0.13
 
  > China shares extend bear slump, pull down rest of Asia        
  > Wall Street ends down but off lows as bond prices gain               
  > Nikkei reverses losses on weak yen                                   
  > TREASURIES-Prices rebound, yields fall from near 2-year highs      
  > Fed officials put brakes on dollar rally; China markets eyed       
  > Gold inches up as Fed officials downplay stimulus wind-down        
  > Copper edges down to near 3-year low on China growth fears        
  > Brent drops below $101 on China, U.S. demand worries                
    
    COMPANY NEWS
    
    CARREFOUR 
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    ROCHE 
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agreement with Roche Holding AG to sell a generic version of the Swiss
drugmaker' s chemotherapy drug Xeloda. For more, click on: 
    
    VW, BMW, DAIMLER 
    The European Union late on Monday agreed a compromise deal to enforce
stricter rules on carbon dioxide emissions for all new EU automobiles from 2020.
 
    
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make sure demand for growing wireless services is being met, despite opposition
from cash-strapped operators in Europe's biggest mobile market. 
    
    EUROTUNNEL 
    The head of the operator of the Channel Tunnel said he had decided to ask
the market authorities to look into the publication of information relating to a
European Commission statement on its train charges last Thursday. The stock has
since lost 18 percent.