European Factors to Watch-Shares seen higher, focus on ECB

Mon Nov 4, 2013 2:38am EST

LONDON Nov 4 (Reuters) - European shares were expected to grind higher on Monday, with sentiment buoyed by increased hopes the European Central Bank will strike an equities-friendly dovish tone at its latest meeting this week.

That follows a surprise drop in euro zone inflation to 0.7 percent in the year to October, well below the ECB's target of just under 2 percent. Both UBS and RBS expect a rate cut at Thursday's meeting, although others think the central bank will hold fire for the time being.

"There will be plenty of attention on the ECB to see whether they open the door to further policy easing ahead of the next meeting in December in the wake of softer data," Credit Agricole said in a note.

"We do not expect a rate cut as soon as this week, but ... it cannot be ruled out completely as the ECB is coming under growing pressure to act."

At 0728 GMT, futures for the Euro STOXX 50, Britain's FTSE 100, Germany's DAX and France's CAC were 0.3 to 0.5 percent higher.

Investors will also keep a close eye on a raft of data later in the session for hints about the market's near-term direction. Focus will be on euro zone, German and French manufacturing PMI (purchasing managers' index) for October at 0858 GMT, 0853 GMT and 0848 GMT, respectively.

UK construction sector PMI for October is due at 0930 GMT, while in the United States, August and September factory orders will be released at 1500 GMT, while the Institute for Supply Management-New York will publish its October index of regional business activity at 1445 GMT.

The earnings season will continue to inject volatility in the market. Focus will be on HSBC, which is expected to report at 0815 GMT a 10 percent rise in quarterly profit as Europe's biggest bank benefits from cost cuts.

Europe's largest airline Ryanair said on Monday its annual profit is set to fall for the first time in five years as intense competition in Europe pushes average fares down by around 10 percent over the winter months.

The European earnings numbers have so far lagged recent quarters as well as the U.S. market. According to Thomson Reuters StarMine data, more than half of the STOXX Europe 600 companies have reported results so far, of which 47 percent have met or beaten expectations, against 58 percent in the full second quarter and 52 percent in the Jan.-March period.

In the United States, three-quarters of Standard & Poor's 500 firms have posted results, of which 73 percent have met or beaten and only 27 percent have missed profit forecasts.

---------------------------------------------------------------- ---------------- > Asian shares slip in lacklustre trade, dollar holds firm

> Wall St ends higher after factory data; Dow, S&P up for week

> U.S. bond prices sink on strong factory data

> Euro hits 6-week low; Aussie lifted by solid retail sales

> Gold edges lower for sixth session on Fed stimulus worries

> LME copper slips as uptick on global manufacturing data ebbs

> Brent climbs above $106 as steep slump prompts investors to buy

COMPANY NEWS

RYANAIR

Ryanair's annual profit is set to fall for the first time in five years as intense competition in Europe pushes average fares down by around 10 percent over the winter months, Europe's largest airline by passenger numbers said on Monday.

SIEMENS

The industrial giant may set a new operating profit margin target of 10 percent, Frankfurter Allgemeine Zeitung reported on Saturday, without citing the source of the information. Siemens declined to comment. Related news

BASF

The world's largest chemicals maker by sales would incur over 300 million euros ($404.6 million) in extra costs per year if the company was stripped off exemptions under Germany's renewable energy act (EEG), Wirtschaftswoche reported on Saturday, citing a spokesman.

AIR FRANCE-KLM <AIRF.PA >

Air France-KLM has set tough conditions, including 5,000 job cuts, for investing more money in loss-making Italian airline Alitalia, financial daily Il Sole 24 Ore reported on Sunday.

AUTOS

BMW's U.S. October sales rose 2.9 percent to 33,274 vehicles. Daimler's Mercedes-Benz reported U.S. October sales of 32,620 units, up 22.4 percent year-on-year.

THYSSENKRUPP

The industrial conglomerate denied a media report saying it is about to sign a $3.4 billion contract to sell submarines to Saudi Arabia.

NOVO NORDISK

Denmark's Novo Nordisk said late on Friday that the United States Food and Drug Administration (FDA) has approved two insulin pens with Novo's new dosing system.

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