European Factors to Watch-Shares to make positive start to Q2

LONDON, April 1 Tue Apr 1, 2014 2:36am EDT

LONDON, April 1 (Reuters) - European stocks were expected to make a positive start to the second quarter of the year on Tuesday as expectations of continued economic stimulus from U.S. and Chinese authorities helped key indexes recoup a late selloff on the previous day.

At 0631 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were up between 0.2 percent and 0.5 percent.

Persistent weakness in China's manufacturing sector was seen boosting the chances of increased government spending to spur growth. Investors were also reassured by dovish comments by U.S. Federal Reserve Chair Janet Yellen, who said an easy monetary policy would need to remain in place for some time.

European indexes were likely to trade in a narrow range ahead of the publication of manufacturing surveys for some key European countries and the euro zone, due out between 0745 GMT and 0830 GMT. U.S manufacturing data is due at 1400 GMT, with all important non-farm payrolls figures due on Friday.

"Despite signs suggesting that central banks are going to be firmly committed to easy monetary policy... traders are still likely to tread cautiously ahead of upcoming data releases," Jonathan Sudaria, a dealer at Capital Spreads, said in a trading note.

The euro zone Euro STOXX 50 index hit its highest level since 2008 at 3,185.68 points before succumbing to some quarter-end profit taking to end 0.3 percent lower at 3,161.60 points.

Nicolas Suiffet, a technical analyst at Trading Central, said the trend was still up for the index and momentum, as measured by the index's 14-day Relative Strength Index, remained strong.

"From a chartist point of view, the failure breakout top of the short term trading range at 3,177 yesterday calls for caution," Suiffet said. "However, prices are supported by an internal trend line drawn from August 2013 currently around 2,970.".

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

Asset performance in 2014: link.reuters.com/rav46v > Asian shares hit 4-month high on China data, Yellen > Wall St rises on Yellen's view; S&P scores modest Q1 gain > Nikkei choppy as tankan disappoints, utility shares drop > TREASURIES-Long-dated yields edge higher ahead of jobs data > FOREX-Dollar unsettled by dovish Yellen, yen still in doldrums > Gold languishes at 7-week low as fund outflows resume > Copper slips from 3-week peak on sluggish China signals > Brent holds steady below $108 after China data

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(Reporting By Francesco Canepa, Editing by Alistair Smout)

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