European Factors to Watch-Shares to rally as Summers pulls out of Fed race
By Francesco Canepa
LONDON, Sept 16 (Reuters) - European stocks were set to rally on Monday on expectations the Federal Reserve would keep an easier monetary policy for longer after Lawrence Summers, widely regarded as the most hawkish candidate to head the central bank, withdrew from the race.
Demand for equities was also bolstered by an international deal to destroy Syria's chemical arsenal, which put off the threat of a U.S.-led attack against the country and allayed the spectre of a broader conflict in the oil-producing Middle East.
At 0626 GMT, futures for the Euro STOXX 50, for UK's FTSE 100, for Germany's DAX and for France's CAC were between 0.8 and 1.1 percent higher.
Investors wagered that the Fed would take a more gradual approach to tightening its policy after a surprise withdrawal by Summers, who had been perceived as less supportive of the bank's equity-friendly monetary stimulus programme than the other main candidate, Janet Yellen.
Summers' decision comes just before the central bank meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases, which have helped the Euro STOXX 50 index rise nearly 20 percent in the past year, from the current pace of $85 billion a month.
"Our basis hypothesis is that the central bank will remain behind (markets) and with Ms Yellen there is not doubt that it will be that way," said François Duhen, a strategist at CM-CIC Securities in Paris, adding that he was set to cut its forecasts for the dollar following Summer's announcement.
"For stock markets this is obviously favourable."
Energy stocks, however, may come under pressure on Monday as Brent oil futures fell by more than a dollar on easing worries about supply from the Middle East after the Syrian deal.
Expectations of a diplomatic solution to the Syrian crisis, which first emerged early last week, and generally positive global economic data helped the Euro STOXX 50 rise to two-year highs last week, while European equity funds posted their second biggest inflow year-to-date in the seven days to September 11, EPFR data showed.
> Stocks & bonds rally, dollar dips as Summers steps aside > US stock futures advance as Summers withdraws Fed candidacy > Nikkei posts 2nd straight weekly gain > TREASURIES-Prices gain after weak U.S. data, eyes on Fed > Dollar takes a beating as Summers withdraws from Fed race > Gold gains as dollar slips, stimulus outlook eyed > Copper climbs from 5-week low as Syria fears ease > Brent hits 3-week low after U.S.-Russia deal on Syria
Germany's banking regulator will examine a court decision that Deutsche Bank unfairly dismissed traders responsible for interbank rates, as the watchdog investigates if the bank played a role in a rate fixing scam, Der Spiegel reported on Sunday.
Christoph Franz, chief executive of Deutsche Lufthansa, is in pole position to take over as chairman of Swiss drugmaker Roche, the Swiss newspaper NZZ am Sonntag reported on Sunday, citing sources.
Lufthansa is close to placing an order, split between Airbus and Boeing, for dozens of long-haul jets, two people familiar with the matter said on Friday.
Lanxess, the world's largest maker of synthetic rubber for tyres, is looking at acquisitions to become less dependent on its synthetic rubber business, a German weekly said on Saturday, citing no sources.
German utility RWE Chief Executive Peter Terium wants to cut costs at its renewable energy unit Innogy, including selling special ships used to build offshore windparks, Der Spiegel magazine said on Sunday.
Volkswagen is considering increasing its stake in its car joint venture with China's state-owned FAW Group, VW Chief Executive Martin Winterkorn said in an interview with Frankfurter Allgemeine Sonntagszeitung on Sunday.
Technology consulting firm Atos said it would proceed with the early redemption of its convertible bonds issued in 2009 and authorise a share buyback worth 115 million euros.
The French government has selected Gemalto, a specialist in smart cards and security products, to provide software for the country's new electronic driving licence in a multi-year contract. No financial details were disclosed.
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