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European Factors to Watch-Stocks set for subdued start, fretting over earnings
January 24, 2014 / 6:26 AM / 4 years ago

European Factors to Watch-Stocks set for subdued start, fretting over earnings

LONDON, Jan 24 (Reuters) - European stocks were set for a subdued opening on Friday, tracking overnight losses in Asia and the United States, and heading for their first significant weekly loss since mid-December on concerns about weak company earnings.

Weaker-than-expected sales from Starbucks and an earnings miss from McDonald’s overnight underscored the still fragile health of the global economy and consumers.

In Europe, Friday’s results diary includes Dutch cable group Ziggo and Britain’s Royal Mail, before the reporting season really heats up to full speed next week.

STOXX Europe 600 companies are on average seen missing consensus quarterly earnings forecasts by 2.4 percent according to Thomson Reuters StarMine SmartEstimates, which focus on the up-to-date predictions of the historically most accurate analysts.

That is bad news for investors, given the broadly-held view that European equity valuations are unlikely to rise much further and earning must thus grow if stock prices are to continue to grind higher.

Technical analysts say the major indexes - now in overbought territory and facing tough resistance levels - could be ripe for a correction of as much as 10 percent in coming weeks. That in turn would leave the market in a much healthier shape to resume the long-term up trend, they say.

Financial spreadbetters expected Britain’s FTSE 100 to open between 6 points higher and 3 points lower, Germany’s DAX was seen up 2 points to down 5 points, and France’s CAC 40 down 3 to 5 points.

That should lead to a subdued showing on the broad FTSEurofirst 300, which is already down 0.9 percent since the start of this week - putting it on track for its biggest weekly loss since mid-December. ------------------------------------------------------------------------------ > GLOBAL MARKETS-Asian shares sag on Chinese growth anxiety > US STOCKS-Wall St falls as China data trigger selloff in risky assets > Nikkei drops to 1-month low as China PMI impact drags > TREASURIES-U.S. bonds rally on weak stocks, Chinese data > FOREX-Yen, Swiss franc and euro sought in risk-asset rout, EM savaged > PRECIOUS-Gold extends winning streak to 5th week on softer equities > METALS-Copper eyes biggest weekly loss in more than two months > Brent holds above $107, set for biggest gain in five weeks

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