European Factors to Watch - Italian uncertainty to cap stocks

Wed Oct 2, 2013 2:34am EDT

LONDON, Oct 2 (Reuters) - European stocks are seen edging lower on Wednesday
after their biggest jump in three weeks in the previous session, with traders
awaiting news on the fate of Italy's government as well as U.S. economic data
before pouring fresh money into shares.
    At 0628 GMT, futures for the Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were between 0.1 percent
and 0.3 percent lower.
    Most global stock indexes kicked off a new month and a new quarter with
gains on Tuesday as investors, for now, appeared confident that a U.S.
government's shutdown, which threw hundreds of thousands of federal employees
out of work, would be short-lived. 
    With Friday's critical non-farm payrolls report set to be delayed unless
U.S. government operations resume, investors were increasing their focus on the
ADP employment report for September at 1215 GMT, expected to show an
acceleration in the number of jobs added by private employers.
    The euro zone's Euro STOXX 50 index rose 1.4 percent, the most
since Sept. 10, to 2,933.02 points on Tuesday, boosted by positive euro zone
data and hopes that a government crisis in Italy would be allayed.
    The index broke out of a consolidation channel that had trapped it for the
past 10 days and its Relative Strength Index, a momentum indicator, bounced off
a former declining trend line, pointing to further upside in the coming days,
said Philippe Delabarre, an analyst at Trading Central in Paris.
    "Therefore, the measured move up... should lead the prices towards 3,030
points in the next few days," Delabarre said "Our stop-loss is set at 2,878
points (the index's low onSept 30).
    Italy's Prime Minister Enrico Letta had not yet decided whether to call a
formal vote of confidence in parliament after a scheduled speech on Wednesday as
he sought to win over rebels from Silvio Berlusconi's centre-right party.
    "Even if the government survives, which looks more likely following
yesterday's news and rumours, political uncertainty would remain, but the market
reaction would be initially positive," Credit Agricole said in a note.
    "Sentiment going forward will be supported by a solid ADP employment
report...though the ongoing US fiscal battle and lingering uncertainties on
Italy will limit the upside."
    Against the backdrop of political turmoil in Italy and volatile market
interest rates swayed by U.S. policy uncertainty, the European Central Bank was
expected to hold off policy action on Wednesday but keep open the options of an
interest rate cut or a bumper cash injectio. 
 
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  MARKET SNAPSHOT AT 0628 GMT: 
    
                                             LAST   PCT CHG   NET CHG
 S&P 500                                 1,695.00     0.8 %     13.45
 NIKKEI                                 14,170.49   -2.17 %   -314.23
 MSCI ASIA EX-JP                           539.05     0.5 %      2.69
 EUR/USD                                   1.3516   -0.06 %   -0.0008
 USD/JPY                                    97.66   -0.32 %   -0.3100
 10-YR US TSY YLD                           2.637        --     -0.01
 10-YR BUND YLD                             1.802        --      0.00
 SPOT GOLD                              $1,289.80     0.3 %     $3.81
 US CRUDE                                 $101.47   -0.56 %     -0.57
 

  
  > Asian shares up cautiously on hopes for short shutdown         
  > Wall St rebounds as gov't shutdown seen short-lived            
  > Nikkei falls to 2-week low, Abe stimulus fails to inspire      
  > U.S. Treasuries slip on gain in manufacturing                  
  > Dollar off 8-mth low after manufacturing boost                 
  > Gold near 2-month low as U.S. gov't shutdown sparks selloff    
  > Copper near 1-week lows, U.S. shutdown dims outlook            
  > Brent drops further on worries U.S. shutdown will dent demand  
    
    COMPANY NEWS
    
    K+S 
    Three miners were killed on Tuesday after breathing leaked carbon dioxide
following a controlled explosion at a potash mine operated by K+S in the German
state of Thueringia. 
    
    TESCO 
    Britain's biggest grocer said that is 1-/2 years into a recovery plan and
posted flat quarterly sales in its home market, close to the upper end of
analysts' forecasts. 
    
    J SAINSBURY 
    Britain's third-biggest grocer met forecasts with a pick-up in quarterly
sales driven by growth at local convenience stores and online, outperforming
rivals including market leader Tesco. 
    
    
    BMW 
    The car maker said it sold 8.3 percent more vehicles in September than in
the same month last year. 
    Related news 
    
    DAIMLER 
    The car maker sold 6.7 percent more Mercedes-Benz cars in the USA in
september. 
    Related news 
        
    CONTINENTAL 
    Standard & Poor's has raised its long-term corporate credit rating on German
automotive supplier Continental AG to 'BB+' from 'BB'. The outlook is stable.
    
    VOLVO 
    Moody's said it had lowered its outlook on the Swedish truck maker to
negative from stable, in a move reflecting that an anticipated recovery in
Volvo's financial peformance could take longer than expected given soft market
demand. 
    
    AIR FRANCE-KLM 
    The Franco-Dutch airline is open to helping loss-making Italian carrier
Alitalia if the right conditions are met, Air France-KLM's chief executive told
French daily Les Echos. 
    
    VINCI 
    French construction group Vinci said it had been awarded a
contract for underground works on the Rennes metro system worth around 320
million euros ($433 million). 
    
    ALLIANZ 
    The German insurer's Pimco Total Return Fund, the world's largest mutual
fund, rose 1.8 percent in September after the U.S. Federal Reserve kept its
bond-buying program unchanged, according to preliminary data from investment
research firm Morningstar. This marked the best monthly performance for the bond
fund since January 2012. 
    
    SCOR 
    The French reinsurer has completed the acquisition of Assicurazioni
Generali's U.S. life reinsurance business for total gross proceeds
expected to be $900 million. 
    
    GDF SUEZ 
    The French utility said it had been awarded a 15-year contract to build and
operate Uruguay's first liquefied natural gas (LNG) terminal for the Gas Sayago
joint venture. 
    
    UPM-KYMMENE 
    Uruguay's president Jose Mujica is expected during Wednesday to announce his
decision regarding UPM's application for a modification to its environmental
permit to allow a higher annual production level at its Fray Bentos pulp mill.
    The plant is located on the Uruguay River that borders Argentina, and UPM's
application has sparked new friction between the countries, following a long
dispute around the mill by the time it was built.
    
    BANG & OLUFSEN 
    The Danish luxury stereo and television maker posted a fall in sales and a
marginally deeper pretax loss in its fiscal first quarter compared to the
corresponding period of last year but stuck to its full-year forecast for a
moderate rise in revenues.