September 30, 2013 / 5:30 AM / in 4 years

European Factors to Watch-Shares set to drop on Italian, U.S. politics

PARIS, Sept 30 (Reuters) - European stocks are set to drop on Monday, losing
ground for the fifth time in seven sessions, as a fresh political crisis in
Italy and the prospect of a shutdown of the U.S. government spook investors.
    A downward revision to activity in China's factory sector was also dampening
the mood. While the final HSBC Purchasing Managers' Index (PMI) did edge up to
50.2 in September, it was well down on the preliminary reading of 51.2,
suggesting that a firm rebound in Chinese growth still remains elusive.
    At 0618 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were down 0.9-1.1
percent, while financial spreadbetters expected Italy's FTSE MIB to
open down 1.7 percent. Italian government bond yields jumped while the euro
 lost ground.
    Italy's latest crisis was set off on Saturday when the five Cabinet
ministers who are from former Prime Minister Berlusconi's party suddenly stepped
down, threatening to bring down the government and force new elections seven
months after the last vote. 
    In Washington, chances that Republicans and Democrats could reach a deal on
funding the government before the fiscal year ends at midnight on Monday seemed
increasingly thin. On Sunday, the Republican-controlled House of Representatives
passed a measure that ties government funding to a one-year delay of President
Barack Obama's landmark healthcare restructuring law, while Senate Democrats
have vowed to reject it. 
    U.S. stock index futures   were down 0.6-0.8 percent.
    Despite the negative sentiment on Monday, Capital Spreads trader Jonathan
Sudaria said the expected drop could bring interesting entry levels for
    "We've been in this knife edge situation multiple times since 2011 and
although the herd is expected to head for the exit on the open of the European
bourses, will Tesco sell less bread, BMW less cars and LVMH less handbags? No,
and the more eagle-eyed traders may take this as an opportunity to snap up some
bargains," he wrote in a note.
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,691.75  -0.41 %    -6.92
 NIKKEI                             14,455.80  -2.06 %  -304.27
 MSCI ASIA EX-JP                       535.06  -1.21 %    -6.55
 EUR/USD                               1.3491  -0.22 %  -0.0030
 USD/JPY                                97.86  -0.39 %  -0.3800
 10-YR US TSY YLD                       2.603       --    -0.03
 10-YR BUND YLD                         1.758       --    -0.02
 SPOT GOLD                          $1,338.60   0.22 %    $2.89
 US CRUDE                             $101.55  -1.28 %    -1.32
  > GLOBAL MARKETS-Shares jolted by U.S., Italian politics 
  > US STOCKS SNAPSHOT-Futures fall as government shutdown seems likely 
  > Nikkei tumbles on global political concerns, exporters suffer 
  > FOREX-Euro, dollar hit by political drama; yen, franc benefits 
  > Gold gains as U.S. shutdown looms, headed for best qtr in a year 
  > Copper eyes best quarter since March 2012 as global economy steadies 
  > Brent falls below $108 on U.S. jitters, Iran 
    Europe's biggest engineering firm is to shed 15,000 jobs over the next year,
a third of them in Germany, as part of a 6 billion euro ($8.1 billion) cost
cutting programme, a spokesman said on Sunday. 
    Italy's largest retail bank Intesa Sanpaolo ousted CEO Enrico Cucchiani on
Sunday, after he clashed with the powerful chairman of the lender's supervisory
board and several influential shareholders. 
    Telecom Italia Chairman Franco Bernabe is considering resigning at a board
meeting scheduled for Thursday, a source close to the situation said, as his
plans to relaunch the indebted company may not get enough backing. 
    The world's largest steelmaker said it will sell a majority stake in its
Algerian operations to the Algerian state as part of a $763 million investment
    Banco Santander Brasil, seeking to jumpstart its flagging return on equity,
will modify its capital structure by paying shareholders a one-off dividend of 6
billion reais and issuing foreign currency-denominated debt. 
    The insurer is set to confirm the closing of its previously announced
private-equity spinoff early this week, the head of AXA Private Equity said in
an interview with the Financial Times. 
    Exclusive talks for Etisalat to buy Vivendi's 53 percent stake in Maroc
Telecom have been extended to Oct. 31, the United Arab Emirates' former telecom
monopoly said on Sunday. 
    Mexican phone company America Movil, embroiled in an increasingly complex
bid for Dutch telecom KPN, said on Friday that it might go ahead with its formal
offer next month. 
    New data showed that the company's cancer drug Erbitux was more effective at
prolonging the lives of bowel cancer patients than Roche's Avastin,
Merck KGaA said. 
    An experimental Roche drug that seems to work particularly well against lung
cancer in smokers may be a "game changer" for these normally difficult-to-treat
patients, researchers said on Sunday. 
    The European Union's markets watchdog wants to charge foreign clearing
houses seeking to cash in on new derivatives rules being introduced across the
28-country bloc, an EU document showed. 
    An extraordinary general meeting of Deutsche Wohnen shareholders is due, at
which they are to vote on the issue of new shares to fund the planned takeover
of GSW Immobilien. 
    France will finance a promised shift towards greener energy with cash freed
up by an accounting change at EDF's nuclear plants that will boost the
state-owned utility's profit and dividends, sources close to the matter said.

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