European Factors to Watch-Shares seen lower on China credit worries

Wed Mar 12, 2014 3:41am EDT

LONDON, March 12 (Reuters) - European shares headed for a weaker open on Wednesday, tracking losses on Wall Street and in Asia, with poor earnings outlook from some companies and worries about the Chinese credit market hurting sentiment.

Enel, Italy's biggest utility, said its core earnings this year would be lower than last year, while Germany's No. 1 utility E.ON cut its dividend and said it expected core profit to decline in 2014 for the third year in a row.

Investors' focus will also be on mining stocks after Shanghai copper fell by its five percent daily limit and London copper hit a 44-month low on growing concerns that credit-linked defaults in China, the world's top user of the metal, could unlock copper from financing deals and unleash more selling.

Chinese firm Baoding Tianwei Baobian Electric announced a second straight year of net losses on Tuesday, leading to a suspension of its stock and bonds on the Shanghai Stock Exchange and stoking fears that it too may default on bond payments after Chaori Solar last week. Much of copper imports are used in China as collateral to raise funds.

"Outlook today is not a positive one," Credit Agricole said in a note. "Copper prices continue to be hit by China growth worries ... Ukraine tensions have intensified, with diplomatic efforts yielding no success and Russia stating that it would recognise the results of the referendum in Crimea."

Investors were also nervous due to tensions between Ukraine and Russia, which remained tense. Ukraine's government appealed for Western help on Tuesday to stop Moscow annexing Crimea but the Black Sea peninsula.

However, investors could get some comfort from a Reuters report that China's central bank is prepared to loosen monetary policy if economic growth slows further by cutting the amount of cash that banks must keep as reserves.

At 0726 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were 0.5 percent to 0.7 percent lower.

Japan's Nikkei fell 2.6 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.2 percent on Wednesday, a day after U.S. shares fell 0.4 to 0.6 percent.

Europe bourses in 2014:

Asset performance in 2014:------------------------------------------------------------------------------ > Asian stocks slip, commodities feel China chill > Profit-taking drags Wall Street lower > Nikkei slides 2 pct on firmer yen, profit-taking on recent rally > Bonds edge higher on Ukraine, China concerns > Yen takes lead as investors dodge risk; Aussie under pressure > Gold extends gains to 4-1/2 mth high on safe-haven demand > Shanghai copper falls by 5 pct limit on credit fears > Brent slips towards $108 as demand worries offset Ukraine tensions

COMPANY NEWS

E.ON

Germany's No.1 utility slashed its dividend and said it expected core profit to decline in 2014 for the third year in a row, adding it saw no end to a sector crisis that has eroded profits at its gas and coal plants.

MAN SE

The German truckmaker may post a "distinctly higher" operating profit this year than in 2013 when earnings plunged by half on costs of a failed power-plant project.

ENEL

Italy's biggest utility said its core earnings this year would be lower than last year as power demand in its main markets continues to suffer.

REPSOL, GAS NATURAL

Repsol has decided to put off a sale of its stake in Gas Natural, El Economista reported without citing sources.

LLOYDS

Lloyds Banking Group said on Tuesday it would cap the pensions of around 35,000 employees in a move that will boost income by 1 billion pounds ($1.66 billion) but risks a backlash from disgruntled employees.

ADECCO

The world's No.1 staffing agency grew revenue

NUMERICABLE

Patrick Drahi, the controlling shareholder of French cable group Numericable, said he would not raise his bid for Vivendi's SFR, a day ahead of the seller's deadline for final offers, according to an interview in Les Echos.

ALLIANZ

The Pimco Total Return Fund, the world's largest bond fund, slashed its holdings of mortgages in February to the lowest level since at least late 2011 on bets that the Federal Reserve will conclude bond purchases this year, data from the firm's website showed on Tuesday.

BAYER

German drugmaker Bayer said on Wednesday it aims to increase its pharmaceuticals sales by 8 percent annually on average until 2016, adjusted for currency and portfolio effects, on the back of newly launched drugs.

DEUTSCHE POST

Deutsche Post reported a 7 percent rise in operating profit in the fourth quarter, beating estimates, partly boosted by its parcel business and strong growth in its international courier Express division.

SIEMENS

The technology group has hired a bank to seek potential buyers for its microbiology business, which could fetch $300- $600 million, Bloomberg reported citing sources.

Related news

VOLKSWAGEN

Anti-union Volkswagen workers will get a chance to defend the results of a mid-February union election that the United Auto Workers lost at a Chattanooga, Tennessee VW plant, the U.S. National Labor Relations Board has decided.

FERREXPO

Ukraine-focused iron ore miner Ferrexpo Plc said it was on track to complete its expansion programme as it posted an increase in annual earnings, helped by higher iron ore output offsetting weaker prices for the steelmaking ingredient.

VALEO

The French government is to reduce its stake in car parts maker Valeo, reversing a move it made five years ago as part of attempts to shore up the crisis-hit car industry.

ALSTOM

Alstom Transport its preparing its initial public offering, has appointed banks to advise it and is working on the reference document, Les Echos reported. [ALSO.PA