European Factors to Watch-Signs of progress in U.S. standoff to help shares

Thu Oct 10, 2013 2:49am EDT

LONDON, Oct 10 (Reuters) - European shares were set to snap a three-day
losing streak and rebound from one-month lows on Thursday, with signs of some
progress to end the U.S. fiscal stalemate and avert a possible debt default
improving investors' appetite for equities.
    U.S. Republicans were considering a short-term hike in the government's
borrowing authority to buy time for talks on broader policy issues, a Republican
leadership aide said on Wednesday. 
    "Further to last night's communication between the Republicans and Obama,
markets are set to rise today as their communication gives some level of
confidence in the short term. In the event of a deal being reached, shares may
rally," Tom Robertson, senior trader at Accendo Markets, said.
    U.S. President Barack Obama has said he would accept a short-term ceiling
increase as long as no strings were attached. House Republican leaders will
visit the White House on Thursday as the search intensifies for a way to break
the impasse.
    Some analysts, however, remained cautious.
    "This meeting already looks like a non starter. Although a positive (share
market) start is expected today, traders should be wary about the meeting
resembling a boxing match weigh-in and knocking any optimism about the political
stalemate out for the count," Capital Spreads wrote in a note.
    European stock futures rose in early trading, mirroring gains on Wall Street
and in Japan. At 0647 GMT, futures for the Euro STOXX 50, Britain's
FTSE 100, Germany's DAX and France's CAC were 0.6 to 0.7
percent.
    Mining stocks could gather strength also from a rise in metals prices.
    Japan's Nikkei average was up 1.1 percent on Thursday, while U.S.
shares   rose 0.1 to 0.5 percent on Wednesday. The
pan-European FTSEurofirst 300 index ended 0.5 percent lower on
Wednesday after hitting a one-month low, but the index is still up 8 percent
this year.
    A Reuters poll showed on Wednesday European shares were poised to add 4
percent to this year's strong rally, with Germany's top index on course for
another record high as the economic outlook improves. 
    In Britain, investors will keep an eye on the meeting of the Bank of
England, although the central bank is expected to leave monetary policy
unchanged despite more signs of economic strength as it sticks to its commitment
to keep interest rates on hold while joblessness stays above target.
 
    On the data front, French and Italian industrial output numbers are due at
0645 GMT and 0800 GMT respectively. 
    In the United States, investors will scrutinise first-time claims data for
jobless benefits for the week ended Oct. 4, due at 1230 GMT, for hints about the
timing of the Federal Reserve's likely to move to trim stimulus measures.
Economists forecast a 310,000 new filings, up from 308,000 in the previous week.
    The minutes of the Fed's Sept. 17-18 meeting, released late on Wednesday,
showed the central bank's shock decision last month not to reduce its support
for the U.S. economy was a "relatively close call" for policymakers.
 
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     MARKET SNAPSHOT AT 0648 GMT                                   
                                                  LAST    PCT CHG   NET CHG
     S&P 500                                  1,656.40     0.06 %      0.95
     NIKKEI                                  14,194.71     1.12 %    156.87
     MSCI ASIA EX-JP                            544.37    -0.18 %     -0.98
     EUR/USD                                    1.3499    -0.18 %   -0.0024
     USD/JPY                                     97.73     0.41 %    0.4000
     10-YR US TSY YLD                            2.692         --      0.03
     10-YR BUND YLD                              1.846         --      0.04
     SPOT GOLD                               $1,305.31     -0.1 %    -$1.28
     US CRUDE                                  $102.16     0.54 %      0.55
  > Japan shares, dollar rise on hopes of US fiscal breakthrough     
  > Dow, S&P 500 end modestly higher on hopeful signs in fiscal impasse     
  > Nikkei hits 1-week high on hopes for progress in U.S. standoff          
  > TREASURIES-Prices dip as focus remains on Washington                  
  > Dollar bounces back on signs Washington is moving                     
  > Gold drops close to $1,300 on stronger dollar, stimulus worries       
  > London copper edges off three-week low as deadlock fears ease        
  > Brent steadies above $109 after steep overnight losses                 
    
    COMPANY NEWS 
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    MELROSE 
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    Alitalia, in which the Franco-Dutch airline holds a 25 percent stake, needs
a 300-million-euro ($405.5 million) capital increase and a 200-million-euro
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    TOTAL 
    Uganda said the French oil major and Tullow Oil could be awarded
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