European Factors to Watch-Shares to edge higher, focus on BHP, ZEW

Tue Feb 18, 2014 2:40am EST

LONDON Feb 18 (Reuters) - European shares were expected to extend gains on Tuesday, with investors betting that German economic sentiment data will be encouraging and strong results from BHP Billiton will support basic resources stocks.

The Mannheim-based ZEW economic think tank's poll of German economic sentiment for February, due at 1000 GMT, is expected to have steadied at 61.7, while the forecast for current conditions is seen rising to 44 from 41.2 in the previous month.

"Any further improvement (in German ZEW) would back the idea that the current recovery has legs, with business confidence returning to all euro zone member states and not only to Germany," Credit Agricole said in a note.

Investors will also scrutinise UK inflation numbers, to be released at 0930 GMT. Inflation, based on the consumer price index, is forecast to show a fall in January from a month earlier. For the year, inflation is likely to show a reading of 2 percent, in line with the Bank of England' target.

Analysts said a soft reading of inflation numbers would mean that the central bank will keep rates lower for a longer time.

The market's spotlight will also be on company earnings, with French retailer Casino posting an 18.1 percent rise in 2013 operating profit and expecting its sales and profits to grow this year.

Basic resources stocks could get some support after global miner BHP Billiton topped forecasts with a 31 percent rise in first-half profit and hinted it may launch a share buyback in August, despite a cautious outlook on Chinese growth.

European shares have been helped by relatively good corporate results in the current earnings season, with 58 percent of companies reporting in-line or better-than-expected profits, according to Thomson Reuters Starmine data.

At 0734 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were 0.2 to 0.4 percent higher.

Tuesday's gains will be on the top of a 0.4 percent rise to a three-week high recorded by pan-European FTSEurofirst 300 index on Monday, when volumes were lower than average due to a holiday in the United States.

Italian shares are expected to gain further on improvements on the political front. The country's centre-left leader Matteo Renzi received a mandate on Monday to form a new government, promising rapid tax, labour and institutional reforms to revive a deeply troubled economy.

Europe bourses in 2014:

Asset performance in 2014:------------------------------------------------------------------------------ > Dollar near 6-week lows, Asian shares mostly softer > Nikkei rises more than 3 pct after BOJ decision, banks soar > Yen slumps as BOJ stands pat, extends loan scheme > Gold snaps rally on profit-taking; hovers near 3-1/2 month high > London copper steady, underpinned by China post-holiday buying > Brent stays above $109 on US winter demand, weak dollar

COMPANY NEWS

BHP BILLITON

Global miner BHP Billiton topped market forecasts with a 31 percent rise in first-half profit on Tuesday and hinted it may launch a share buyback in August, despite a cautious outlook on Chinese growth.

BANKS

In a crackdown on currencies traders, financial institutions including Royal Bank of Scotland, Deutsche Bank and UBS are reviewing the rules governing how traders make bets with their own money, the Financial Times reported on Monday.

CASINO

French retailer Casino said on Tuesday it was confident it would grow sales and profits this year after it posted an 18.1 percent rise in 2013 operating profit as robust growth in Brazil offset a weak home market.

VODAFONE

Vodafone has lodged a complaint against Spanish rival Telefonica, alleging it is abusing its position in Spain to reduce competition for telecoms, Internet and television services.

NOBEL BIOCARE

Swiss dental implant maker Nobel Biocare expects higher market share and sales in 2014 as it notched up its first annual revenue growth in six years. For more, click on:

AIR LIQUIDE

The French industrial gases group said it was confident it would achieve further earnings growth this year as it posted a 3.1 percent rise in 2013 net profit.

INTERCONTINENTAL HOTELS

The hotels group posted higher annual profits.

SANOFI

The drugmaker's Merial animal health division won European Commission approval for its NexGard oral treatment for flea and tick infestations in dogs.

JOHN WOOD GROUP

British energy services company Wood Group reported on Tuesday an increase in full year profit of 14 percent, in line with the company's expectations, as strong performance in services and engineering offset weakness in its gas turbine division.

PEUGEOT

The car maker's founding family gave the go-ahead on Monday for a 3 billion euro tie-up with China's Dongfeng that would draw a line under one of France's oldest industrial dynasties, sources said.

Dongfeng and Peugeot will sign a memorandum of understanding on a capital tie-up on Tuesday, a Dongfeng source said.