European Factors to Watch-Shares seen edging up ahead of Yellen

LONDON Tue Feb 11, 2014 1:24am EST

LONDON Feb 11 (Reuters) - European stocks were seen edging slightly higher on Tuesday, set to continue a week-long rebound from six-week lows as investors looked to the new U.S. Federal Reserve chair to reassure markets over policy.

Financial spreadbetters expected Britain's FTSE 100 to open 21 to 23 points higher, or up as much as 0.3 percent, Germany's DAX to open 21 to 25 points higher, or up as much as 0.3 percent, and France's CAC 40 to open 5 to 8 points higher, or up 0.2 percent.

The pan-European FTSEurofirst 300 and the euro zone blue chip EuroSTOXX 50 are both up 3 percent since hitting their lowest levels since mid December last Tuesday.

Janet Yellen will face U.S. lawmakers on Tuesday in her first test as chair of the Federal Reserve, where some stern Fed critics will want to know how committed she is to winding down the Fed's monetary stimulus.

While she is not expected to signal any deviation from the "tapering" of equity-friendly asset purchases, she may indicate that the Fed's forward guidance of low rates needs tweaking, given that the unemployment rate is near the central bank's target well before the Fed is inclined to raise rates again.

"Although she is known for her staunch dovish support for ultra easy monetary policy, there doesn't appear to be any possibility that she will scale back on the Fed's tapering program as some are speculating," Jonathan Sudaria, trader at London Capital Group, said in a note.

"The rapid decline in the unemployment rate now sees it hovering just above the Fed's target level... However, the main reason for this has been people dropping out of the labour force, so bulls may be looking for some sort of 're-phrasing' or even lowering of the threshold to bring it more into line with the real economy."

Europe bourses in 2014:

Asset performance in 2014:------------------------------------------------------------------------------ > Asia shares, gold get leg-up in pre-Fed jockeying > Wall St closes slightly up; investors look to Yellen > Nikkei rises to one-week high on soft yen; volume low > Treasury prices flat as investors await supply, Yellen > Dollar pulls back before Yellen; Aussie sets 1-mth high > Gold extends gains to near 3-month high ahead of Yellen > Shanghai copper sinks to two-month low on slow Chinese demand > Brent edges toward $109 on optimism Yellen to assure markets

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