European Factors to Watch-Shares to slip further on U.S. budget impasse
LONDON, Oct 9 (Reuters) - European shares were expected to extend losses on Wednesday on a lack of progress to resolve a U.S. budget impasse, although the nomination of dovish Federal Reserve Vice Chair Janet Yellen to head the central bank could limit losses. U.S. President Barack Obama will announce her nomination later in the day. If confirmed by the Senate, Yellen will replace Ben Bernanke whose second term ends in January. She has been a forceful advocate for aggressive action to stimulate the economy through low rates and bond purchases. "Yellen's nomination is certainly a good thing for the markets. She is one of the main supporters of a loose monetary policy and the markets will be assured that changes in the policy will be minimal, as long as underemployment persists," Koen De Leus, senior economist at KBC, in Brussels, said. "However, markets are getting more nervous day by day. The longer the uncertainty of the debt ceiling and the government shutdown lasts, the more damage is inflicted to the economy." Investors' focus remained on the U.S. budget talks that dragged on for a second week. Obama said on Tuesday he would be willing to negotiate budget issues with Republicans only if they agree to reopen the government and raise the debt limit. Expectations are fading for a resolution to be reached before the mid-October deadline when Congress must decide whether to raise the borrowing limit or face the risk of an historic debt default. While there is no panic in the market yet, the uncertainty prompts investors to avoid taking big positions. At 0634 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were flat to 0.3 percent lower. The pan-European FTSEurofirst 300 index, which fell for a second straight day in the previous session to close 0.8 percent lower, could set a one-month low on Wednesday. However, the index is still up 8.6 percent so far this year. On the macroeconomic front, focus will be on German industrial output figures at 1000 GMT, U.S. weekly mortgage market index at 1100 GMT and the minutes from the Federal Open Market Committee's Sept. 17-18 meeting at 1800 GMT. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 633 GMT LAST PCT CHG NET CHG S&P 500 1,655.45 -1.23 % -20.67 NIKKEI 14,037.84 1.03 % 143.23 MSCI ASIA EX-JP 544.84 -0.26 % -1.43 EUR/USD 1.3551 -0.15 % -0.0020 USD/JPY 97.43 0.59 % 0.5700 10-YR US TSY YLD 2.645 -- 0.01 10-YR BUND YLD 1.815 -- 0.00 SPOT GOLD $1,318.14 -0.01 % -$0.16 US CRUDE $103.67 0.17 % 0.18 > Shares under pressure as U.S. debt worries grow > Year's winners lead Wall St lower as default angst rises > Nikkei turns higher but mood still cautious on U.S. deadlock > Prices slip but uncertainty limits downside > Dollar gets relief vs yen as Yellen tapped to lead Fed > Gold steady on U.S. budget gridlock, debt ceiling fears > London copper drifts as U.S. impasse drains risk appetite > Brent slips below $110 as US budget crisis drags on COMPANY NEWS ALCATEL-LUCENT French president Francois Hollande called on the telecoms equipment maker to save as many jobs as possible in France after it said it plans to cut 10,000 posts worldwide. BAYER The U.S. Food and Drug Administration said on Tuesday it has approved Bayer AG's drug to treat two types of pulmonary hypertension. LLOYDS Westpac Banking Corp., Australia's second-biggest lender by market value, bid about A$2.1 billion ($2 billion) for Lloyds Banking Group Plc's assets in the country, Bloomberg reported, quoting a person with knowledge of the matter. STORA ENSO Finnish pulp and paper company Stora Enso warned of lower profits in the fourth quarter versus a year earlier, blaming weak demand and prices for paper in Europe. BANKIA, FCC, REALIA Spanish lender Bankia and construction company FCC are working together to sell their individual stakes in property firm Realia to a sole investor, Expansion reports on Wednesday, citing financial sources. SANTANDER The Spanish bank's British arm is resisting joining the government's mortgage guarantee scheme "Help to Buy", according to Expansion, because of fears of a housing bubble in Britain. However, the bank may still join the programme despite its doubts, the newspaper says. DEUTSCHE TELEKOM Deutsche Telekom unit T-Mobile US is set to print the second-largest high-yield bond deal of the year on Tuesday, after strong demand enabled it to almost double the size of the issue to USD5.6bn. NESTLE Nestle is looking to sell its Jenny Craig diet business and is speaking to a small group of potential buyers about the brand, according to three sources familiar with the matter. DASSAULT AVIATION French Defence Minister Jean-Yves Le Drian told Les Echos newspaper he was confident that India would sign a deal to buy Rafale fighter jets, built by Dassault Aviation, next year.
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