European Factors to Watch-Futures signal broadly lower open

Fri Jan 3, 2014 2:41am EST

LONDON Jan 3 (Reuters) - European shares were expected to open broadly lower on Friday, with investors taking some profits from a 5-1/2-year high and positioning ahead of a busier week that could determine the market's near-term trading direction.

Most traders return from holidays next week and the U.S. reporting season gets under way. Also due are a U.S. Senate vote on Janet Yellen's appointment as the Federal Reserve's next chair, the minutes from the Fed's last policy meeting and U.S. non-farm payrolls data.

At 0734 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 and Germany's DAX were 0.1 to 0.2 percent lower, while France's CAC futures were up 0.2 percent, a day after the market witnessed a broad sell-off.

The FTSEurofirst 300, which gained 16 percent in 2013, ended its first session of 2014 down 0.8 percent at 1,305.59 points after setting earlier on Thursday its highest since mid-2008. The drop was bigger in the euro zone, with the blue-chip Euro STOXX 50 losing 1.6 percent.

Losses in the first two trading days of the new year were broad-based, with MSCI's index of Asia-Pacific shares outside Japan shedding 1.2 percent on Friday, with markets from Shanghai to Sydney all in the red.

In the United States, major stock indexes fell 0.8 to 0.9 percent on Thursday on profit-taking.

"I don't think these losses are anything to be concerned about, despite it being the first time since 2008 that we've seen a negative first trading day of the year," Alpari analyst Craig Erlam said in a morning note.

"This just appears to be a little bit of profit taking after indices in the U.S. ended 2013 at record highs. I still believe January is going to be another good month for the markets, we've just had a bit of a rocky start."

The extent of losses surprised the market as traders and fund managers usually get fresh allocations at the start of the year, which help in pushing the market higher.

Analysts, however, said that the market's medium-term outlook remained positive due to improving economic conditions especially in Europe and the United States and forecast that equities will recover to set new highs in the coming weeks. ------------------------------------------------------------------------------ > Asia shares roiled by risk aversion; yen rallies > Wall St starts 2014 with drop as investors take profits > U.S. bond prices rise after bleak 2013 > Yen firms vs dollar and euro in short-covering rally > Gold extends gains, climbs to 2-week high as equities soften > LME copper eases from 7-month top, Shanghai falls 0.9 pct > Brent rises toward $108; Libya, US inventories in focus

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