Europe Factors to Watch-Shares set to halt sell-off; eyes on BES

Mon Aug 4, 2014 2:32am EDT

PARIS, Aug 4 (Reuters) - European stocks were set to rise on Monday, halting
last week's sell-off, although gains could be limited as trouble at Portugal's
Banco Espirito Santo rekindles worries over the health of the euro zone
banking sector.
    At 0620 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were up 0.4-0.7 percent.
    Following a frenzied weekend of discussions between Portuguese and European
Union officials, Portugal agreed to spend 4.9 billion euros ($6.58 billion) to
rescue Banco Espirito Santo, or BES, its largest listed bank, just months after
the country exited an international bailout. 
    Shares in Credit Agricole will be under pressure on Monday as the
French lender owns 14.6 percent of BES.
    Shares in BES were halted in late trade on Friday. The stock tumbled 73
percent during the week as the bank's 3.6 billion euro loss and
higher-than-expected provisions to cover its exposure to companies owned by its
founding Espirito Santo family spooked investors.
    The massive loss at the Portuguese lender has dragged Europe's banking
sector index down 3.4 percent last week, reviving concerns over the
sector, particularly in southern Europe, hit hard by the years-long sovereign
debt crisis.
    European stocks sank in huge volumes on Friday for the third straight
session, with the FTSEurofirst 300 index of top European shares hitting
a 3-1/2 month low, hurt by concerns over BES as well as tension between Russia
and the West. 
    The FTSEurofirst 300 has slipped 4.7 percent over the past month, while the
euro zone's blue-chip Euro STOXX 50 index has dropped 7.6 percent
since a mid-June peak, hurt in part by worries over sanctions against Russia.
    "We've already heard names like Adidas, Siemens and
Volkswagen speaking out about how their businesses are being
affected by tensions in Ukraine and Russia," IG chief market strategist Chris
Weston wrote in a note.
    "Reports that Russia is amassing troops on the Ukrainian border will not
appease falling sentiment towards the region."
    Russia is conducting new military exercises with more than 100 aircraft in
the country's central and western districts, an air force spokesman was quoted
as saying on Monday, a show of strength near the border with Ukraine.
 
        
    Europe bourses in 2014: (link.reuters.com/pad95v)
    Asset performance in 2014: (link.reuters.com/rav46v)
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  MARKET SNAPSHOT AT 0627 GMT: 
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,925.15  -0.29 %    -5.52
 NIKKEI                               15474.5  -0.31 %   -48.61
 MSCI ASIA EX-JP                       506.02   0.44 %     2.21
 EUR/USD                               1.3422  -0.05 %  -0.0007
 USD/JPY                               102.66   0.05 %   0.0500
 10-YR US TSY YLD                       2.507       --     0.00
 10-YR BUND YLD                         1.143       --     0.00
 SPOT GOLD                          $1,294.05   0.03 %    $0.45
 US CRUDE                              $98.20   0.33 %     0.32
  > GLOBAL MARKETS-SHARES PRESSURED BY WALL ST,GEOPOLITICAL TENSIONS 
  > US STOCKS-S&P 500 POSTS BIGGEST WEEKLY DECLINE SINCE 2012 
  > NIKKEI HITS 1-WEEK LOW ON WALL ST GLOOM; FINANCIALS, SOFTBANK WEIGH 
  > FOREX-DOLLAR OFF TO PEDESTRIAN START IN AUGUST AFTER STELLAR JULY 
  > GOLD HOLDS ABOVE $1,290 ON WANING RATE HIKE FEARS, WEAK EQUITIES 
  > METALS-COPPER EDGES UP, WEAK US JOB DATA CALMS WORRIES ABOUT FED 
  > BRENT EDGES UP TO $105 BUT SURPLUS OIL STILL WEIGHS ON PRICES 
    
    COMPANY NEWS:
        
    BANCO ESPIRITO SANTO, CREDIT AGRICOLE 
    Portugal will spend 4.9 billion euros ($6.58 billion) to rescue its largest
listed bank, testing the euro zone's resilience to another banking crisis just
months after Lisbon exited an international bailout. Credit Agricole 
owns 14.6 percent of BES. 
    
    EUROPEAN BANKS
    France has gathered support to challenge recent heavy U.S. penalties on
foreign banks at a G20 meeting of world leaders later this year after the record
$8.9 billion fine levied on BNP Paribas BNPP.PA last month, the Financial Times
reported on Monday. 
        
    BANCA CARIGE 
    The bank posted a first-half net loss of 45.5 million euros on Friday due to
writedowns on its insurance units, higher taxes and costs to close down branches
as part of its restructuring plan. 
    
    GERMAN AUTOS   
    Carmakers reported July sales in the United States, with deliveries by BMW
up 7.4 percent and Mercedes-Benz up 15 percent. Volkswagen was down 14.6
percent, while Audi gained 11.9 percent and Porsche sales rose 12.6
percent. 
    Separately, Daimler Chief Executive Dieter Zetsche told Germany's Bild am
Sonntag the automaker had seen booming growth in the Russian auto market weaken
due to the Ukraine crisis. 
    
    DEUTSCHE BANK 
    German regulators have intensified investigations into Deutsche Bank in an
effort to resolve a long-running, industry-wide investigation into possible
efforts to manipulate benchmark interest rates, magazine Der Spiegel said on
Sunday. 
    
    FRESENIUS 
    A three-for-one stock split is due to become effective. The company aims to
promote trading activity and increase the stock's attractiveness for a broader
group of investors. 
    
    BUZZI UNICEM 
    Italian cement maker Buzzi UniCem expects an "improvement" in recurring
EBITDA this year to just above 400 million euros, it said on Friday, despite
sales being hit by the Ukrainian crisis. 
    
    TELEFONICA, TELECOM ITALIA 
    Spain's Telefonica, Telecom Italia's main shareholder, has contacted banks
to make an offer for Vivendi's fixed-line Brazilian unit GVT to ensure
it does not end up in the hands of the Italian telecoms incumbent, La Repubblica
said on Saturday. 

 (Reporting by Blaise Robinson; Editing by Francesco Canepa and Subhranshu Sahu)