European Factors to Watch-Shares set to continue bounce on U.S. optimism

LONDON, March 26 Wed Mar 26, 2014 3:29am EDT

LONDON, March 26 (Reuters) - European stocks were seen rising at the open on Wednesday, buoyed by increasing signs of life in the U.S. economy, with a key index set to continue a rally off a one-week closing low back towards multi-year highs.

At 0720 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were 0.3-0.5 percent higher.

Stock markets in Europe were broadly expected to track gains made in Asian and U.S. trade, where buoyant U.S. consumer confidence and house prices helped to fuel gains.

The two reports were the latest in a series of positive data releases from the United States, supporting the view that bad weather rather than inherent economic weakness affected weaker reports earlier this year.

"Concerns around the three C's (cold, Crimea, China) are dropping off as the effect of the US winter subsides, the Crimean conflict is no longer affecting markets and China has seen stimulation bets ramping up," Evan Lucas, market strategist at IG, said in a note.

"This will mean markets will continue to push higher in the short term, with the US and China currently driving most market reactions; and signs of stability or growth will be equity and commodity supportive."

Growing bets that China will act to stimulate its economy and an increased resilience to uncertainty over relations between Russia and the West over Crimea helped to support European equity markets on Tuesday.

The pan-European FTSEurofirst 300 rose 1.3 percent in the previous session, bouncing off a one-week closing low set at the start of the week.

The index remains 3 percent off its closing high in February, however, which was its highest close since May 2008.

Economic confidence in Europe also held up despite ongoing concerns about Russian intervention in Ukraine, with market research group GfK finding that German consumer morale held steady at its highest reading since January 2007.

The reading comes on the back of comments from European Central Bank President Mario Draghi and Bundesbank President Jens Weidmann that stimulus from the euro zone's central bank was not out of the question as the euro zone still battles with deflationary pressures.

The unexpected intervention from Weidmann, whose Bundesbank had previously expressed scepticism about such measures, also helped to boost European shares on Tuesday.

"While talk is cheap, the ECB will ultimately need to back its words with credible measures, with the standard toolbox running on empty," Anatoli Annenkov, senior European economist at Societe Generale, said in a note.

Europe bourses in 2014: link.reuters.com/pad95v

Asset performance in 2014: link.reuters.com/rav46v ------------------------------------------------------------------------------ > GLOBAL MARKETS-Asia shares hit 2-wk highs on upbeat U.S. data > US STOCKS-Wall St rebounds; biotech shares snap losing streak > Nikkei up slightly in choppy trade, Kirin Holdings soars > TREASURIES-Solid demand, but light dealer purchases > FOREX-Euro steadies after ECB clarifies monetary policy stance > PRECIOUS-Gold rebounds from near 6-week low > METALS-Copper slips after sharp rise on China stimulus hopes > Brent rises above $107 on supply concerns, strong US data

COMPANY NEWS

LLOYDS BANKING GROUP

Britain sold 4.2 billion pounds ($6.9 billion) of shares in Lloyds Banking Group to cut its stake in the country's largest retail bank to 25 percent and put it on course for a complete exit in the next year at a profit.

DEUTSCHE BANK

German prosecutors widened an investigation to include a second Deutsche Bank board member in another twist to the lender's legal battle with heirs of late media mogul Leo Kirch that included a search of the bank's headquarters on Tuesday.

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LUFTHANSA

The U.S. Federal Aviation Administration on Tuesday ordered an immediate fix to the latest version of Boeing Co's BA.N 747-8 plane, saying a software glitch could cause it to lose thrust when close to landing and fly into the ground. Lufthansa said it was checking to what extent its fleet of 11 747-8s was affected.

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GENERALI

Standard & Poor's has removed Generali from its Credit Watch list after ascertaining that Italy's biggest insurer would not exhaust its regulatory capital even if its home country were to default on its debt.

MEDIASET

Italy's biggest TV broadcaster Mediaset said on Tuesday advertising trends for this year were difficult to predict after beating 2013 profit expectations thanks to higher-than-expected cost cuts.

ORPEA

The retirement homes group said full-year 2013 revenues rose by 12.5 percent to 1.608 billion euros ($2.22 billion) on the back of brisk organic growth of 7.1 pct and the contribution made by acquisitions, especially in international markets.

EBITDA earnings before rents (EBITDAR) advanced by 17.1 percent to 433.2 million euros.

With a growth pipeline of 8,339 beds under development and a proven ability to generate new projects, the company said it "boasts impressive growth potential"

EDF, VEOLIA

The French utility and the water-and-waste-management company said they had agreed how to split up their Dalkia energy-services joint venture after months of talks.

SYNGENTA

Syngenta AG said that grain prices have played a role in China's rejection of U.S. corn shipments containing an unauthorized, genetically modified trait developed by the company.

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UBS

The broker tug-of-war between Morgan Stanley and UBS Wealth Americas in Florida continued this month as veteran adviser David Behar jumped to Morgan Stanley after nine years with UBS.

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HANDELSBANKEN

The Swedish banking group said late on Tuesday it and Handelsbanken Pension Foundation and Handelsbanken Pension Fund had reorganized their holdings in investment group Industrivarden and hygiene group SCA.

Handelsbanken said as a result of the transactions it controls 10.46 percent of votes in Industrivarden and 10.15 percent of votes in SCA. The two companies have long had close connections with Handelsbanken and share several board members.

Business daily Dagens Industri said the move was to enable Handelsbanken to get round new EU rules on how many board positions bank board members are allowed to have.

Dagens Industri wrote that Handelsbanken's increased stake in the two companies could lead investors to see it as an investment firm rather than a bank. Investment firms often trade at a discount to the value of their holdings and the paper reckoned Handelsbanken shares could fall 3-4 percent on opening.

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A.P. MOLLER-MAERSK

The Danish shipping and oil group is preparing a divestment of offshore service company Esvagt of which it controls 75 percent, daily Borsen wrote, based on a source who has knowledge of the matter.

Esvagt operates a fleet of 37 units ranging from anchor handling, tug, supply, tanker assist vessels - to oil recovery-, survey- and rescue vessels. Sources told the newspaper valuation of Esvagt could be between 2 and 3 billion Danish crowns ($369 -$554 million).

A spokeswoman from A.P. Moller-Maersk declined to comment in a mail to Reuters.

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(Reporting by Alistair Smout; Editing by Atul Prakash)

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