European Factors to Watch-Shares set to recover poise after Portugal rout

Fri Jul 11, 2014 2:29am EDT

(Adds detail, futures, company news)
    EDINBURGH, July 11 (Reuters) - European stocks were seen edging higher on
Friday, consolidating after steep falls in the previous session but still set
for a sharp weekly loss, as Portugal's biggest bank attempted to reassure
investors after trading in its shares was suspended.
    Portugal's PSI share index was expected to open 0.3 percent higher
by financial spreadbetter IG, after falling 4.2 percent to a nine-month low on
Thursday, lagging all other European benchmarks. 
    The drop came after shares and bonds of Espirito Santo Financial Group
, the chief shareholder in Banco Espirito Santo, were suspended
over "material difficulties" at parent firm ESI. 
    Portugal's stock market regulator halted trading in the bank after the
shares fell 19 percent. Ahead of the resumption of trade on Friday, Banco
Espirito Santo said that losses on loans to the troubled business empire of its
founding family will not put the bank at risk of running short of capital.
 
    Concerns over the financial sector hit shares as far away as the United
States and Japan, and events in Portugal made investors nervous across Europe. 
    The FTSEurofirst 300 index of top European shares closed 1 percent
lower at 1,349.89 on Thursday, down 3.2 percent for the week.
    Shares were set to rebound slightly on Friday. At 0611 GMT, futures for the
Euro STOXX 50, Britain's FTSE 100, Germany's DAX and
France's CAC were 0.2-0.4 percent higher.
    "The question on investors' minds is whether this latest Portugal banking
crisis will lead to contagion in the region," Stan Shamu, market strategist at
IG, said. "The market doesn't quite feel this is the case."
    Some expected the gains to be shortlived, taking the FTSEurofirst 300's
failure to push on beyond 6-1/2 year highs touched last week, instead hitting
two-month lows, as indicators that there could be further falls ahead.
    "European equities are set to limp higher on the open but sentiment still
remains weak," Jonathan Sudaria, a trader at Capital Spreads, said in a note. 
    "It's been a bad week for the bulls already but with the euro zone crisis
making an unwelcome comeback yesterday, traders are getting concerned that the
bearish flood gates are starting to creak."
    
    
    Europe bourses in 2014: (link.reuters.com/pad95v)
    Asset performance in 2014: (link.reuters.com/rav46v)
------------------------------------------------------------------------------
  MARKET SNAPSHOT AT 0621 GMT: 
  
                                           LAST   PCT CHG  NET CHG
 S&P 500                               1,964.68   -0.41 %    -8.15
 NIKKEI                                15164.04   -0.34 %   -52.43
 MSCI ASIA EX-JP                         496.95   -0.38 %    -1.89
 EUR/USD                                 1.3603   -0.04 %  -0.0006
 USD/JPY                                 101.27   -0.04 %  -0.0400
 10-YR US TSY YLD                         2.529        --    -0.01
 10-YR BUND YLD                           1.205        --     0.01
 SPOT GOLD                            $1,336.70    0.13 %    $1.80
 US CRUDE                               $102.74   -0.18 %    -0.19
 
  
  > GLOBAL MARKETS-Asian shares prove resilient to euro jitters    
  > US STOCKS-Wall St ends lower on angst over Portugal's bank woes    
  > Nikkei falls for 5th day, hit by Portugal bank fallout        
  > TREASURIES-U.S. bond prices firm on Portuguese bank jitters    
  > FOREX-Yen gains after Portuguese bank woes unsettle stocks    
  > PRECIOUS-Gold gains, Portugal bank woes bring safe-haven bids    
  > METALS-Copper eyes 4th week of gains on tighter supply        
  > Oil price heads for 3rd weekly loss, Brent stays above $108    
    
    COMPANY NEWS
    
    BANCO ESPIRITO SANTO    
    Losses on loans to the troubled business empire of its founding family will
not put Banco Espirito Santo at risk of running short of capital, the bank said
on Thursday night. 
    Shares in Portugal's largest listed bank were suspended on Thursday after
plunging as much as 19 percent in morning trading amid fears about its exposure
to companies in the wider group controlled by the powerful Espirito Santo clan.
    
    COMMERZBANK 
    The German bank dismissed employees in Hamburg "some time ago" for having
concealed dealings with customers in countries such as Iran and Sudan,
Frankfurter Allgemeine Zeitung reported.
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    VOLKSWAGEN 
    The United Auto Workers will form a local union in Tennessee to represent
workers at a Chattanooga Volkswagen AG plant, a The Tennessean newspaper
reported on Thursday. 
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    AIRBUS  
    Irish leasing company SMBC Aviation Capital is in advanced talks to buy
around 100 Airbus aircraft, setting the stage for what could be one of the
largest order announcements at next week's Farnborough Airshow, two people
familiar with the matter said. 
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    PERNOD RICARD 
    Pernod Ricard said it had completed the acquisition of a significant
majority stake in Avión Spirits LLC, owner of the ultra-premium tequila brand
Avión, from its joint-venture partner Tequila Avión. 
    
    SANOFI 
    The first vaccine against dengue fever, from France's Sanofi  provided
moderate protection in a large clinical study, but questions remain as to how
well it can help fight the world's fastest-growing tropical disease.
 
       
    ENI 
    Utility EnBW has agreed to buy out Eni's 50 percent stake in a
German gas grid joint venture to take full ownership, two sources familiar with
the matter said, to take advantage of the stable income from regulated assets.
 
    
    ENEL 
    Italian energy group Enel said on Thursday its board agreed on a plan to
sell its power generation assets in Slovakia and its distribution and sales
assets in Romania. 
    
    TELECOM ITALIA 
    The company's Chairman, Giuseppe Recchi, said on Thursday that the sale of
Telecom Argentina is proceeding as planned and does not have to be
pushed back, and that its Tim Brasil holding is "strategic".
 
    
    FIAT 
    The Italian carmaker said on Thursday it set a 4.75 percent coupon and an
issue price at par on its bond due July 2022. 
    
    

 (Reporting by Alistair Smout; Editing by Tricia Wright)
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