European Factors to Watch-Shares seen higher, focus on earnings

Tue Jul 9, 2013 2:36am EDT

LONDON, July 9 (Reuters) - European shares were expected to extend gains on
Tuesday, tracking Wall Street and markets in Asia, with growing optimism about
the health of the U.S. economy and a good start to the earnings season boosting
sentiment.
    Alcoa, the largest U.S. aluminum producer, posted a
larger-than-expected adjusted second quarter profit on Monday due to
productivity gains and a strong performance from its engineered products
business. 
    "Alcoa has kicked off the earnings season with a modest beat ... The fact it
sees Chinese aluminium demand growing at 11 percent this year compared to 9
percent in 2012 is positive," IG Markets said in a note.
    According to Thomson Reuters StarMine, top analysts predict that STOXX
Europe 600 companies will beat expectations for the second quarter by
0.4 percent. Consumer staples are seen recording 1.4 percent higher earnings
than estimates, while financials are likely to beat predictions by 0.8 percent.
    At 0625 GMT, futures for the Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were 0.5 to 0.7 percent
higher.
    The euro zone's blue chip Euro STOXX 50 rose 2.1 percent to
2,650.85 points on Monday. The index closed above its 200-day moving average,
now at 2,635, and above its 10-day moving average at 2,605.86.
    "Short-term technical indicators are signalling a positive undertone within
the recovery and should lead the Euro Stoxx 50 to establish itself above the
10-day moving average," Thorsten Grisse, technical analyst at Commerzbank, said.
    However, the index was expected to face resistance at around 2,664 points -
its 23.6 percent retracement of a rally from mid-2012 to May this year and the
uptrend channel in place since June last year. The next resistance was seen at
its 100-day moving average at 2,680.57 points.
    Analysts said sentiment also improved as concerns about some highly
debt-laden European countries eased. Greece secured a lifeline from the euro
zone and the IMF on Monday, while Portugal's coalition partners healed a
internal rift with a cabinet reshuffle that offered some political stability.
  
    However, the International Monetary Fund said the euro zone must take
coordinated action to revive economic growth, saying the region needed to repair
bank balance sheets, advance a banking union and support demand. 
    European shares were expected to mirror gains in other major markets.
Japan's Nikkei climbed 2.4 percent on Tuesday, while U.S. stocks closed
0.2 to 0.6 percent firmer overnight, building on gains sparked by last week's
robust employment data. The FTSEurofirst 300 ended 1.4 percent
stronger.
    On the data front, focus at 0830 GMT will be on UK manufacturing and
industrial output data for May, which is expected to show growth from the
previous month. In the U.S., ICSC/Goldman Sachs will release chain store sales
for the week ended July 6 at 1145 GMT.
    
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     MARKET SNAPSHOT AT 0626 GMT                                   
                                                  LAST    PCT CHG   NET CHG
     S&P 500                                  1,640.46     0.53 %      8.57
     NIKKEI                                  14,472.90     2.58 %    363.56
     MSCI ASIA EX-JP                            497.80     0.91 %      4.51
     EUR/USD                                    1.2884     0.12 %    0.0015
     USD/JPY                                    101.21     0.26 %    0.2600
     10-YR US TSY YLD                            2.655         --      0.02
     10-YR BUND YLD                              1.704         --      0.00
     SPOT GOLD                               $1,257.21     1.73 %    $21.32
     US CRUDE                                  $103.25     0.11 %      0.11
 
  > Asian shares gain but China worries linger, dollar firm          
  > Wall St rises as attention turns to earnings season                     
  > Nikkei rebounds on strong global lead; China market eyed                
  > U.S. bonds rally after post-payrolls selloff                          
  > Dollar claws higher, seen supported by Fed policy view                
  > Gold climbs 1 pct for second day on technical buying                  
  > Copper steady as Fed stimulus, growth worries weigh                  
  > Brent slips towards $107, off 3-month top as supply worries ease       
    
    COMPANY NEWS
    LVMH 
    The luxury group said it acquired 80 percent of Italian luxury cashmere
clothing brand Loro Piana for 2 billion euros, boosting its presence in high-end
handcrafted products popular with Asian buyers. 
    
    MARKS & SPENCER 
    British retailer Marks & Spencer on Tuesday posted an eighth consecutive
quarterly fall in underlying sales of general merchandise, though the outcome
did represent a slowing in the rate of decline. 
    
    PSA PEUGEOT CITROEN 
    The carmaker said its global vehicle sales fell 9.8 percent in the first
half as it lost ground in a shrinking European market, partly offset by gains in
China and Latin America. 
    
    DEUTSCHE ANNINGTON 
    Germany's largest residential real estate company, revived plans for an
initial public offering (IPO). In an accelerated bookbuilding on
Tuesday/Wednesday, Deutsche Annington is offering 34.8 million shares in a price
range of 16.50 euros to 17 euros.
    Related news 
    
    MUNICH RE 
    The floods that engulfed Germany last month may have been the country's
costliest natural disaster on record, an executive of Munich Re told
Sueddeutsche Zeitung.
    Related news 
    
    SGL CARBON 
    Credit rating agency Standard & Poor's cut its rating on SGL to BB- from BB,
following an earlier announcement of a downgrade by Moody's. S&P cited a muted
outlook for the steel sector and overcapacity in the graphite electrodes market.
 
    Related news 
    
    ROYAL BANK OF SCOTLAND 
    The British government has ruled out a broad investigation into whether
Royal Bank of Scotland should be broken up and sold off in smaller component
parts to foster more competition in the banking sector, The Guardian reported on
Tuesday. 
    
    BP 
    The oil major drew tough questions on Monday from U.S. appeals court judges
hearing a complaint by the oil company objecting to the payment of certain
claims for damages related to the Gulf of Mexico spill, casting doubt on BP's
effort to curb the payouts. 
    
    VEOLIA ENVIRONNEMENT 
    The company unveiled a reorganisation creating country-based directors for
its water and waste management activities, as well as new innovation and
markets, and technical and performance departments. 
    
    EDF 
    The French government said it planned to propose an average rise in
electricity tariffs for households of 5 percent from Aug. 1, followed by a
similar rise the following year.
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