European Factors to Watch - Shares seen edging higher at the open

Fri Nov 22, 2013 2:26am EST

By Francesco Canepa

LONDON Nov 22 (Reuters) - European stocks were seen following U.S. and Japanese shares higher on Friday, with investors looking to the German Ifo business sentiment index for reassurance about the strength of the euro zone economic recovery.

At 0714 GMT, futures for the Euro STOXX 50 and France's CAC were up 0.4 percent while contracts on Britain's FTSE 100 and Germany's DAX rose 0.2 percent.

The U.S. Dow Jones index closed above the psychologically key 16,000 points level for the first time on Thursday and Japanese stocks scaled six-month peaks after U.S. economic data pointed to a slowly improving labour market and subdued inflation.

Adding to the positive market sentiment, James Bullard, president of the Federal Reserve Bank of St. Louis and a voting member of the FOMC, said late on Thursday that the inflation data gives the central bank some leeway to keep the accommodative policy, which has helped European equities rise nearly 20 percent since September 2012.

After a strong rally since the start of the summer, the euro zone Euro STOXX 50 has been stuck in a 3.7 percent range in the past two weeks as traders weighed better U.S. data against the prospect of a reduction to the Fed's stimulus programme and fretted about signs of economic slowdown in the euro zone.

Yet some chartists remained bullish on European equities in the medium term as momentum indicators such as the 50-day moving average pointed to further upside on the euro zone blue-chip index, which closed at 3,044.34 on Thursday.

"The recent step back fits well into the process of higher tops and bottoms which originated in June 2013," Philippe Delabarre, an analyst at Paris-based Trading Central said.

"A break above 3,106, the index's most recent top, would call for a further rise towards the next resistance area around 3,275 (a five-year high). Only a break below 2,850 (a resistance broken in the summer) would dampen the bullish sentiment."

With no major European or U.S. companies due to report on Friday, investors were likely to focus on Germany's Ifo business morale index, due to be published at 0900 GMT and expected to rise to 107.7 points after a fall in the previous month.

"Looking ahead, market tone will likely remain positive with a light calendar providing little direction or distraction, though the chance of some consolidation and profit taking is not insignificant," Credit Agricole said in a note. > Nikkei nears 2013 peak as dollar breaks 100 yen barrier > U.S. Dow Jones ends above 16,000 for first time, boosted by data > Japan's Nikkei races to 6-month peak, SoftBank stars > U.S.TREASURIES-Prices edge up as economic data mixed > FOREX-Yen hits 4-month low vs dollar; Aussie under pressure > Gold set for biggest weekly loss in 2 mths on stimulus fears > Copper on track for first weekly gain in three > -Brent slips below $110, but on track for second weekly gain

COMPANY NEWS

CONTINENTAL

The German auto parts supplier now expects to reach 1 billion euros in sales of driver assistance systems in 2016 instead of 2020 as previously forecasted, management board member Frank Jourdan told German financial daily Handelsblatt.

SPANISH BANKS

Spanish banks could get a bigger than expected capital boost from the state from changes to tax assets, online newspaper El Confidencial reported, citing unnamed sources.

It said the government was considering converting 42 billion euros ($57 billion) - rather than the expected 28 billion euros - of their deferred tax assets into tax credits that would still count towards capital under Basel III rules.

BANKS

Several big banks including Barclays, Citigroup and Royal Bank of Scotland have banned traders from some online chat rooms in response to investigations into alleged collusion between dealers over key financial market benchmark rates, the Financial Times reports. Such a move had been expected.

ASSICURAZIONI GENERALI

The insurer is interested in acquiring control of Sace, the group that insures businesses abroad currently owned by state lender CDP, Il Sole 24 Ore said. Contacts were made some time ago but things speeded up on Thursday when the government announced Sace as one of the assets it aims to sell.

FIAT

Banks have slapped a valuation on Chrysler of 9-16 billion euros ahead of the IPO, newspapers said.

Chairman John Elkann and Tata Trust Chairman Ratan Tata speak at a conference at Milan's Bocconi University.

TELECOM ITALIA, TELEFONICA

Telefonica's chief financial officer said on Thursday the Spanish telecoms group supports Telecom Italia chief executive Marco Patuano, and is open to mergers, acquisitions and deals to share networks in Mexico.

Angel Vila said Telefonica had been impressed by Marco Patuano's work since he took the helm of Telecom Italia six weeks ago. He added that Telefonica had no plan to take its indirect stake in Telecom Italia beyond 14 percent.

Telco, the holding company controlling Telecom Italia, is expected to hold a board meeting on Friday.

REPSOL

Rising tensions between Spanish oil company Repsol and shareholder Pemex , the Mexican state-run oil firm, could scupper an alliance between the two groups, El Pais reported, without citing sources. That could force Pemex to remove its representative on Repsol's board, the newspaper said.

ENI

Eni will have to buy about 10 percent of its stock in a buyback programme if the government is to sell a 3 percent stake and keep control of the oil and gas group, sources said on Thursday.

NOVARTIS

The Swiss drugmaker offered a sweetener to investors on Friday by starting a $5 billion share buyback programme, but shied away from announcing any radical surgery to its structure.

RHOEN-KLINIKUM FRESENIUS SE

Rhoen-Klinikum, the hospitals chain, said late on Thursday that shareholder B. Braun Melsungen AG has filed a lawsuit to contest the sale of hospitals, which account for about two-thirds of Rhoen's revenues, to Fresenius SE.

TUI TUI TRAVEL

Norwegian shipping magnate John Fredriksen is increasing his shareholding in Europe's largest tour operator TUI to more than 20 percent and simultaneously selling his entire stake in its TUI Travel subsidiary.

RESOLUTION

The British life group has entered talks to sell its Luxembourg-based Lombard division, which sells tax-efficient insurance products to ultra-rich clients.

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