(Updates prices, adds fresh analyst comments, details)
* European shares rise after encouraging earnings reports
* Asia hit by unexpected weakness in China services PMI
* Euro falls after subdued services activity data
* Wall Street expected to fall at open
By Emelia Sithole-Matarise
LONDON, Aug 5 European shares eked out gains on
Tuesday after a number of blue-chip companies reported upbeat
earnings. The euro fell after a disappointing set of reports on
The three main futures indices on Wall Street
pointed to a softer open on Wall Street before a survey
of the U.S. non-manufacturing sector that could help show how
fast the world's biggest economy is expanding.
European PMI figures showed the continent's economy was
growing, as expected. But a dip in the Italian index's reading
indicated the recovery remained fragile, keeping alive
expectations the European Central Bank will ease monetary policy
further. That put pressure on the euro.
Investors in Europe were cheered by forecast-beating results
from German luxury carmaker BMW and France's third-biggest
listed bank, Credit Agricole, among others.
The pan-European FTSEurofirst 300 index of leading
shares was up 0.6 percent at 1,337.70, a small recovery from its
near 4 percent fall over the past two weeks.
The index has been pummelled by concerns about tighter U.S.
monetary policy, financial trouble at BES, Portugal's largest
bank, and conflict in Ukraine and Gaza. Those concerns are still
weighing on the market, and analysts said the downtrend may
"This is mostly a technical bounce after such a slide, but
the background remains the same: the Ukrainian crisis still
poses a serious risk to Europe, and I don't think it's priced in
already, especially by retail investors," said Riccardo
Designori, market analyst at Brown Editore in Milan.
"Countries like Germany and Italy depend on Russia for oil
and gas. The crisis can seriously escalate when the winter kicks
in. Just think about all the German companies with exposure to
Russia, or Italian names ... This crisis is far from over."
The picture was glum in Asian equities after China's
HSBC/Markit services PMI fell to 50.0 in July from a 15-month
high of 53.1 in June. It was the lowest reading since November
2005, when the data collection began, indicating a recovery in
the broader economy is still tentative and may need further
The euro fell to a day's low of $1.3382 after the
euro zone's services PMIs, with initial declines sparked by
Italy's Markit/ADACI business activity index. The index slipped
to 52.8 in July from 53.9 in June. Economists in a Reuters poll
had expected 54.0. The broad euro zone PMI figure came in at
54.2, slightly below expectations.
"It (the euro) certainly has reacted negatively to the
Italian numbers," said Neil Mellor, a currency strategist with
Bank of New York Mellon in London.
"On the main numbers, even 54 is not exactly a figure that
sets the world alight. It returns us to what we've been seeing
for a few weeks now - that the momentum in Europe is faltering."
The corresponding U.S. survey is due later in the day and
expected to show a robust reading.
The dollar held below a 10 1/2-month peak against a basket
of currencies. It was held back by a fall in Treasury
yields overnight, after weaker-than-expected U.S. non-farm
payrolls data on Friday knocked it off the 103 threshold.
U.S. 10-year yields held steady in European
trading at 2.49 percent as the bond market retained its bullish
tone after rallying Friday on the jobs report.
In commodities, Brent crude held above $105 a barrel despite
ample supplies, underpinned by political tension in the Middle
East and North Africa and expectations that data will show a
further draw on U.S. crude inventories last week.
Brent rose for the second straight session, climbing
20 cents to $105.61 after gaining 57 cents on Monday.
(Additional reporting by Blaise Robinson and Patrick Graham,
editing by Larry King)