European Factors to Watch-Shares seen lower, focus on Deutsche Bank

Mon Jan 20, 2014 2:39am EST

LONDON Jan 20 (Reuters) - European shares were expected to open lower on Monday, tracking losses on Wall Street and in Asia, with banking shares coming under scrutiny after Deutsche Bank posted a surprise pre-tax loss of 1.15 billion euros.

The bank's losses for the fourth quarter were due to heavy costs for litigation and restructuring and it warned that 2014 would be another year of further challenges and reform.

Investors were also likely to trade cautiously after Chinese growth eased to 7.7 percent in the last quarter of 2013 from 7.8 percent the previous quarter, and some analysts predict the world's second-largest economy will keep losing momentum this year, all of which may keep investors cautious on a thin trading day due to a U.S. holiday.

Markets in the United States are closed on Monday for the Martin Luther King Day holiday after U.S. shares ended 0.3 to 0.5 percent lower in the previous session.

The negative sentiment following disappointing results from U.S. conglomerate General Electric continued in Asia on Monday, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.4 percent and Japan's Nikkei dropping 0.6 percent.

At 0724 GMT, futures for the Euro STOXX 50, Germany's DAX and France's CAC were 0.1 to 0.3 percent lower.

The FTSEurofirst 300 index managed to gain 0.5 percent to close at 1,345.02 points on Friday, a level not seen in 5-1/2 years. Germany's DAX index set a new record high and the STOXX Europe 600 index climbed to a six-year high following a rally in mining stocks.

The euro zone's blue-chip Euro STOXX 50 index finished 0.1 percent higher at 3,154.10 points, with charts suggesting that the index concluded a consolidation below 3,130 points and triggered a new buy signal last week.

"As a consequence the index is working on establishing a new medium-term uptrend. The next support area is see at 3,130," Sophia Wurm, technical analyst at Commerzbank, said.

Investors will focus on the earnings season this week when major European and U.S. companies such as Unilever, Nokia, Johnson & Johnson, Microsoft and Xerox are scheduled to announce results.

According to StarMine SmartEstimates, which focus on predictions by the historically most accurate analysts, the STOXX Europe 600 companies are seen missing fourth quarter consensus by 0.4 percent on revenues and by 1.5 percent on earnings.

------------------------------------------------------------------------------ > Asia manages muted cheer for China growth > S&P, Nasdaq end down with Intel, GE; Dow gains > Nikkei sags to 1-week low, Nintendo dives on loss forecast > Prices rise, Fed meeting this month in focus > Dollar holds firm vs euro; Aussie off lows after China GDP > Gold hits 6-week high; platinum up on S. African strikes > London copper steady; China GDP shows cooling growth > Brent falls towards $106 on strong dollar; China data may support

COMPANY NEWS

DEUTSCHE BANK

Deutsche Bank posted a surprise pre-tax loss of 1.15 billion euros ($1.56 billion) for the fourth quarter due to heavy costs for litigation and restructuring, and warned that 2014 would be another year of further challenges and reform.

Separately, Germany's top banking watchdog plans to intensify its probe into possible manipulation of benchmark foreign exchange rates at Deutsche Bank by launching a so-called special investigation, magazine Der Spiegel reported on Sunday.

AB INBEV

The world's largest brewer has agreed to buy South Korea's Oriental Brewery Co Ltd from KKR & Co and Affinity Equity Partners for $5.8 billion including debt, regaining ownership of a key Asian asset at a time of strong growth in the industry across the region.

COMMERZBANK

German banks are more likely to restructure than turn to the capital markets for more cash ahead of upcoming stress tests, bankers and analysts said on Friday, a day after the country's top regulator Bafin said some banks may face a shortfall.

Separately, the European Central Bank has given selected euro zone banks three weeks to submit extensive details of their trading books and risk models as part of a review of the currency bloc's largest banks.

VODAFONE, BSKYB

Telecom company Vodafone and broadcaster BSkyB have held high-level discussions on how to curb BT's BT.L growing reach over the broadband market, the Sunday Times reported, citing senior sources.

DEUTSCHE LUFTHANSA

Germany's air traffic controllers are planning to strike for one hour on Jan. 29, in a show of support for an expected Europe-wide strike that could lead to considerable flight disruption, their union boss said on Saturday.

DEUTSCHE TELEKOM

Softbank Corp has entered direct talks with Deutsche Telekom as it seeks to combine its Sprint Corp unit with the German company's T-Mobile US, Bloomberg reported on Sunday, citing people familiar with the matter.

E.ON, RWE

Germany's economy minister wants to cut promptly the support price paid for electricity from solar and wind power generators by about a third by 2015, according to a draft proposal for one of the most challenging economic reforms facing Chancellor Angela Merkel's new government.

PSA PEUGEOT CITROEN

PSA Peugeot Citroen, the troubled French automaker negotiating a tie-up with China's Dongfeng, said on Monday its global car sales fell 4.9 percent as European demand hit a twenty-year low in 2013.

AREVA

The French state-controlled nuclear group and Spanish wind turbine maker Gamesa are in advanced talks over a joint venture in offshore wind turbines, two sources with direct knowledge of the matter said.

TOTAL

Abu Dhabi's state-owned carrier Etihad Airways is joining with the French energy firm and U.S. aircraft maker Boeing to develop biofuels in the emirate, company officials announced on Sunday.

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