European Factors to Watch-Shares seen steady ahead of ECB

Thu Sep 4, 2014 2:25am EDT

PARIS, Sept 4 (Reuters) - European stocks were seen opening flat to slightly
lower on Thursday, taking a breather following the previous session's sharp
gains, as investors awaited to see whether the European Central Bank will unveil
further immediate stimulus steps to stave off deflation.
    At 0615 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were flat to down 0.1
percent.
    European shares strongly rallied on Wednesday, with the FTSEurofirst 300
 index of top European shares climbing to a two-month high, boosted in
part by speculation of a ceasefire in Ukraine.
    On Wednesday, Russian President Vladimir Putin outlined plans for a
ceasefire in eastern Ukraine but the Ukrainian prime minister dismissed the
proposal, while France expressed its disapproval of Moscow's support for
separatist forces by halting delivery of a warship. 
    The focus will be on the European Central Bank on Thursday. According to BNP
Paribas equity derivative strategists, investor sentiment towards euro zone
banks is quite bullish ahead of the ECB rate decision and press conference.
    "Open interests for call options on the STOXX 600 euro zone bank index
 have surged over the last week. 1.5 billion euros notional was traded
since the beginning of this week, compared to 500 million euros on puts," the
strategists wrote in a note.
    The ratio measuring the number of negative 'put' options versus bullish
'call' options on the euro zone's blue-chip Euro STOXX 50 index -
the most liquid European market for options traders - has dropped sharply in the
past three weeks, hitting 0.93 earlier this week, down from 2.45 in early
August. 
    Dovish comments by ECB President Mario Draghi in late August sparked market
bets that the central bank is preparing to pump more liquidity into the system,
possibly via purchases of government or corporate bonds, a measure known as
quantitative easing (QE).
    "Ever since Mario Draghi made his speech at Jackson Hole in August, markets
have been speculating that we could well see some extra measures unveiled today,
either in the form of further rate reductions or an announcement of further
easing measures in the form of asset purchases of some description," Michael
Hewson, chief market analyst at CMC Markets, wrote in a note.
    "But while we may see the ECB revise its inflation and growth forecasts we
still haven't seen the end product with respect to the measures that were
announced in June and the TLTROs. It would therefore be most odd, and out of
character to see the ECB take further steps before they have seen the results of
their previous measures."
    Sources from within the central bank told Reuters last week that new action
at its meeting this Thursday was unlikely but not impossible, and that the
barrier to QE was still "very high". 
    In a Reuters poll conducted last week, economists saw a 75 percent chance
that the ECB would buy asset-backed securities through a quantitative easing
(QE) programme. In the poll, 32 of 39 economists said the ECB would conduct QE
by March 2015. 
           
    Europe bourses in 2014: (link.reuters.com/pad95v)
    Asset performance in 2014: (link.reuters.com/rav46v)
------------------------------------------------------------------------------
  MARKET SNAPSHOT AT 0620 GMT: 
                                         LAST   PCT CHG  NET CHG
 S&P 500                             2,000.72   -0.08 %    -1.56
 NIKKEI                              15676.18   -0.33 %   -52.17
 MSCI ASIA EX-JP                       514.71   -0.14 %     -0.7
 EUR/USD                                1.315       0 %   0.0000
 USD/JPY                               104.83    0.04 %   0.0400
 10-YR US TSY YLD                       2.402        --    -0.01
 10-YR BUND YLD                         0.948        --    -0.01
 SPOT GOLD                          $1,270.89    0.18 %    $2.32
 US CRUDE                              $94.82   -0.75 %    -0.72
 
  > GLOBAL MARKETS-ASIAN SHARES FIRM NEAR 7-YEAR HIGH ON ECB HOPES 
  > US STOCKS-WALL STREET ENDS MIXED AS APPLE WEIGHS ON NASDAQ 
  > NIKKEI STEADY NEAR 7-MONTH HIGHS AS MARKET AWAITS BOJ OUTCOME 
  > FOREX-EURO HOLDS STEADY AS ECB POLICY DECISION LOOMS 
  > PRECIOUS-GOLD GAINS MODESTLY FROM 2-1/2 MONTH LOW ON PHYSICAL BUYING 
  > METALS-LONDON COPPER EDGES OFF 2-WK LOW AHEAD OF ECB MEETING 
  > BRENT SLIPS TOWARDS $102 ON U.S. FUEL STOCK-BUILD AFTER OVERNIGHT JUMP 
    
    COMPANY NEWS:
    
    COMMERZBANK 
    German lender Commerzbank AG is nearing agreement with U.S. authorities over
its dealings with Iran and other countries under U.S. sanctions, sources
familiar with the matter said. 
    
    ALLIANZ 
    Investors pulled cash from the Pimco Total Return Fund for a 16th straight
month in August despite some improvement in performance for the world's largest
bond fund. 
    
    STANDARD LIFE 
    Manulife Financial Corp said on Wednesday it has agreed to acquire
the Canadian operations of Standard Life for about C$4 billion ($3.7 billion) in
cash, in a deal that significantly expands the insurer's presence in Quebec.
 
    
    AUTOS    
    Carmakers reported U.S. sales figures for August. BMW's vehicles sales were
up 5.5 percent, Daimler's Mercedes-Benz 9.4 percent and Audi's 22.1 percent.
Volkswagen saw its deliveries decline by 12.8 percent. 
    
    VESTAS 
    Danish wind turbine maker Vestas confirms information in the market
regarding a 110 megawatt project in the U.S., the company said in an
announcement on Wednesday evening. 
    
    DANONE 
    U.S. drugmaker Hospira's talks to buy the medical nutrition unit of
Danone and use the deal to move its tax domicile abroad have stalled, according
to people familiar with the matter, as attempts by U.S. companies to relocate
abroad and cut their tax bills draw growing criticism back home. 
    
    AIR FRANCE-KLM 
    The carrier is expected to unveil a new strategy to combat low-cost airlines
following a board meeting later on Thursday, with plans for its Transavia unit
to open bases across Europe, Les Echos newspaper reported. 
    
    DEUTSCHE BANK 
    Billionaire investor William Ackman has tapped Deutsche Bank and UBS UBSN.VX
to handle the listing of one of his hedge fund portfolios in London later this
year, three sources familiar with the matter said on Wednesday. 
    
    BAYER 
    Bayer CropScience plans to invest close to $1 billion in the United States
between 2013 and 2016 to help it grow faster than the U.S. market, it said on
Wednesday. 
    
    AXA 
    French mutual health insurer Mutuelle Generale said it had entered exclusive
tie-up talks with bigger rival Malakoff Mederic to create the country's biggest
not-for-profit mutual insurer owned by policyholders. 
    
    TELEFONICA, TELECOM ITALIA 
    Brazil's antitrust watchdog Cade could analyze Telefonica plan to purchase
smaller rival GVT jointly with a proposal to exit Telecom Italia,
depending on how the deals are presented to regulators, the agency's president
said on Wednesday.    

 (Reporting by Blaise Robinson; Editing by Atul Prakash)
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