European Factors to Watch-Shares seen hitting 2-wk high on likely U.S. deal

Tue Oct 15, 2013 2:36am EDT

LONDON, Oct 15 (Reuters) - European shares were expected to hit a two-week
high on Tuesday, mirroring gains on Wall Street and in Asia, on rising optimism
that U.S. lawmakers would soon agree on a deal to re-open their government and
avoid a possible debt default.
    U.S. Senate Majority Leader Harry Reid, a Democrat, and his Republican
counterpart, Mitch McConnell, ended a day of talks on Monday, with Reid saying
they had made "tremendous progress". 
    "Optimism that a deal will soon be agreed continues to prevail. Relief that
politicians have taken the U.S. to the edge and back again is clear," said Keith
Bowman, equity analyst at Hargreaves Lansdown.
    "The move allows investors to again concentrate on fundamentals, including
the now unfolding third quarter results season." 
    The plan under discussion would end a partial government shutdown and raise
the debt ceiling by enough to cover the nation's borrowing needs at least
through mid-February 2014, according to a source familiar with the negotiations.
    "This is the first clear sign we've had that a deal may be close," Craig
Erlam, analyst at Alpari, wrote in a note.
    "That said, based on the size of the gains seen in the stock market, what
we're actually seeing is a case of cautious optimism. Investors are clearly
still concerned that negotiations can collapse which would be disastrous, so
close to the deadline." 
    At 0626 GMT, futures for the Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were 0.4 to 0.7 percent
higher.
    The FTSEurofirst 300 index of top European shares ended 0.1 percent
higher in the previous session and a further rise on Tuesday would push the
index to its highest level since early October. The index is up more than 10
percent this year.
    U.S. stocks   closed 0.4 to 0.6 percent higher on
Monday, while MSCI's broadest index of Asia-Pacific shares outside Japan
 rose 0.8 percent on Tuesday.
    Investors will keep a close eye on the third-quarter earnings season for
hints about the stock market's near term direction. Several major U.S. companies
including Citigroup, Intel, Johnson & Johnson and Yahoo
 are scheduled to announce results. European earnings season will gather
momentum in the last week of the month.
    On the macroeconomic front, focus will be on German ZEW economic sentiment
indicator, seen at 49.6, at 0900 GMT, while ICSC/Goldman Sachs' U.S. chain store
sales numbers for the week ended Oct. 12 are due at 1145 GMT. 
   
--------------------------------------------------------------------------------
     MARKET SNAPSHOT AT 0634 GMT                                
                                               LAST    PCT CHG   NET CHG
     S&P 500                               1,710.14     0.41 %      6.94
     NIKKEI                               14,441.54     0.26 %      36.8
     MSCI ASIA EX-JP                         554.62     0.68 %      3.76
     EUR/USD                                 1.3564     0.02 %    0.0003
     USD/JPY                                  98.42    -0.14 %   -0.1400
     10-YR US TSY YLD                         2.715         --      0.03
     10-YR BUND YLD                           1.902         --      0.04
     SPOT GOLD                            $1,270.66    -0.17 %    -$2.13
     US CRUDE                               $102.19    -0.21 %     -0.22
 
  > Asian shares head to 5-mth highs on U.S. deal hopes             
  > Wall St rises on hopes for a budget deal                               
  > Nikkei extends rise into 5th day on U.S. deal optimism                 
  > Dollar firm on hopes U.S. debt deal may be around corner             
  > Gold in tight range amid U.S. budget talks, fund outflows            
  > London copper slips; traders wait for U.S. fiscal deal news         
  > Brent edges below $111 on hopes of US debt deal, ahead of Iran talks  
    
    COMPANY NEWS 
    RIO TINTO 
    Global miner Rio Tinto boosted its forecast copper output for 2013 after a
better-than-expected recovery from the U.S. Kennecott mine following a
landslide, and posted record iron ore and coal output in the third quarter.
 
    
    TELEFONICA 
    Spanish telecoms group Telefonica has started preparing the sale of its $3.6
billion stake in its listed Czech unit, three sector bankers closely following
the process but not directly involved said on Monday. 
    
    HENNES & MAURITZ 
    Swedish budget fashion retailer Hennes & Mauritz said sales in its stores
open at least a year fell 2 percent in September, in line with expectations.
 
    
    CASINO 
    The company said sales growth accelerated in the third quarter thanks to
robust demand in Brazil and an improvement at its Geant hypermarkets in France,
where the retailer started to benefit from price cuts introduced at the end of
last year. 
    
    BURBERRY GROUP 
    The company said its chief creative officer Christopher Bailey would become
chief executive, following the departure of long-standing boss Angela Ahrendts
to Apple.
    It said its retail revenue rose 17 percent to 694 million pounds ($1.11
billion) in the six months to Sept. 30 - bang in line with analysts' forecasts.
 
    
    MARINE HARVEST 
    Norwegian fish farmer Marine Harvest's operating income surged to about 790
million Norwegian crowns ($132.23 million) in the third quarter of 2013 from 73
million in the year-ago quarter, lifted by strong salmon prices, the firm's
preliminary accounts showed. 
      
    ROYAL DUTCH SHELL 
    Royal Dutch Shell CEO Peter Voser said it will take a longer time than
expected for the company to reap benefits from its shale gas projects due to
poor short-term results. 
    
    DANONE 
    French food maker Danone said it will appoint new management at its Dumex
infant milk powder operation in China and has suspended a nutrition programme
for mothers in the wake of a bribery scandal at Chinese hospitals.
 
    
    SCHINDLER 
    The company said net profit fell to 368 million Swiss francs during the
first nine months of the year due to an extraordinary impairment of 155 million
francs and revised downwards its net profit expectations for the full year.
 
    
    KUEHNE + NAGEL 
    The company's net profit rose to 442 million Swiss francs during the first
nine months of the year.
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