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European Factors to Watch - Rally to pause before inflation data
November 29, 2013 / 6:40 AM / 4 years ago

European Factors to Watch - Rally to pause before inflation data

LONDON, Nov 29 (Reuters) - European stocks were expected to open flat to lower on Friday as weak German retail sales dented sentiment and investors waited for confirmation that euro zone inflation is holding up before committing more money to a three-month rally in local indexes.

Retail sales in Germany unexpectedly fell in October, cooling investor enthusiasm over the region’s largest economy after a higher-than-expected inflation reading on Thursday and sending a cautious signal ahead of the Christmas sales season.

“German retail sales make me a little bit worried that Christmas sales in Germany may not turn out as good,” Markus Huber, senior sales trader at Peregrine & Black, said.

“It’s the last day of the month so I would expect range trading and a bit of profit taking.”

At 0719 GMT, futures for the Euro STOXX 50, Britain’s FTSE 100 , Germany’s DAX and France’s CAC were between flat a 0.1 percent lower.

After higher-than-expected German consumer prices data on Thursday, investors were speculating euro zone flash inflation estimates for November, due out at 1000 GMT, would beat economists’ expectations for a paltry 0.8 percent rise.

A higher reading would paint a healthier picture of the region’s economy and reduce pressure on the European Central Bank to cut interest rates or take other action to ease monetary policy.

“With these preliminary figures, Eurozone flash (estimates) will likely print a higher than expected level in November,” Credit Agricole wrote in a note, adding it expects a 0.9 percent inflation rate.

The DAX index reached an all-time high on Thursday and the euro zone’s blue-chip Euro STOXX 50 rose 0.3 percent to 3,092.42 points, a closing high not seen for five years. It was now a whisker away from an intra day of 3,106 hit on Nov 7.

With one day to go, the Euro STOXX 50 is up 0.7 percent so far in November, in what would be its third consecutive monthly gain.

Stan Shamu, a market strategist at IG, said further evidence of reduced deflation risk for the euro zone could push the Dax higher.

Trading was expected to be light as the U.S. stock market was due to close early at 1800 GMT. Volume on the pan-European FTSEurofirst 300 so far this week has been the lowest since the first week of January, when the index only traded for four days.

> GLOBAL MARKETS-Nikkei pauses, yen hits 5-yr low vs euro > Nikkei near flat after 6-year closing high; exporters sag > FOREX-Yen under pressure from carry trades > Gold set for biggest loss in 5 months on U.S. stimulus concerns > Copper up, but on track for 3 pct monthly drop > Brent holds near $111, Libya worries support



A preliminary commitment by banks to underwrite Monte dei Paschi’s 3-billion-euro ($4 billion) capital increase expires at the end of January, the Italian bank said in a document showing why it needs to press on with the cash call.


The oil and gas group Eni said it may demand as much as $10 billion from Norway’s Statoil in arbitration in one of the biggest cases ever over expensive long-term gas contracts.


Lufthansa will not name its new chief executive next week as it scans the market for possible external candidates, the German airline’s chairman told employees on Thursday.

Separately Britain, France and Germany want to curtail further a European Union plan to regulate CO2 emissions from flights, setting up a clash with Brussels keen to maintain the bloc’s climate policy which has sparked threats of a global trade war.


Low cost airline Ryanair has applied for slots in the airport of Copenhagen, travel and airline newsletter Check-In said. The airline has applied for permission to fly to 16 destinations from the Danish capital, Check-In said.


The utility is scrapping wage increases for managers as the company cuts costs and jobs as it grapples with weak earnings, German paper Westdeutsche Allgemeine Zeitung reported.


The insurer has ruled out the idea of an IPO or a merger for its BSI unit and is looking at a sale. The group is seeking to find an agreement on price with Portugal’s Banco Espirito Santo, it said.


The bank’s new shareholder pact will be ready in the summer but the guidelines have already been outlined, Il Sole 24 Ore said. The pact will represent 30.05 percent of capital and will last 2 years, it said.


Credit rating agency Moody’s said late on Thursday it cut its outlook on Suedzucker’s Baa1 rating to “stable” from “positive”.


Renault-Nissan will build a second engine with Russian partner AvtoVAZ and aims to overcome a decline in Lada sales in a market set to overtake Germany within two years, Renault’s regional boss said.


Alcatel-Lucent could rejoin France’s blue-chip CAC 40 index next month as the telecom gear maker’s turnaround gains traction and its stock hits two-year highs, analysts and fund managers said.

It is expected to replace chipmaker STMicroelectronics, whose shares have lost 24 percent over the past six months as the company grapples with weakening demand from Asian smartphone and electronics makers.

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