December 21, 2012 / 6:30 AM / 5 years ago

Europe Factors to Watch-Shares set to dip on U.S. budget impasse

PARIS, Dec 21 (Reuters) - European stocks are set to fall on Friday,
trimming recent lofty gains after a proposal from Republican leader John Boehner
to avoid the so-called fiscal cliff failed to get support from his party.
    At 0710 GMT, futures for Euro STOXX 50, for Germany's DAX 
and for France's CAC were down 0.4-0.7 percent.
    Republican lawmakers rejected Boehner's proposal designed to win concessions
from President Barack Obama in the "fiscal cliff" talks, reviving fears of $600
billion worth of tax hikes and spending cuts that could drag the U.S. economy
back into recession. 
    "This lack of agreement pretty much guarantees that any solution is likely
to push beyond the January deadline and increase market uncertainty at a time
when volumes will be a lot lighter than usual," Michael Hewson, senior market
analyst at CMC Markets, wrote in a note.
    The impasse sent U.S. stock index futures sharply down, with futures for the
S&P 500 down 1.5 percent, Dow Jones futures down 1.2 percent and
Nasdaq 100 futures down 1.5 percent.
    The euro zone's blue chip Euro STOXX 50 index has surged 9.5
percent since mid-November, propelled by growing optimism that the worst of the
euro zone crisis is behind and by expectations of a deal in Washington to avoid
the "fiscal cliff".
    The sharp rally has pushed the index into an 'overbought' level not seen
since 2006, with its 14-day relative strength index (RSI) - a widely-used
technical momentum indicator - hitting 72, fuelling worries of an imminent
    "It seems unlikely that any legislation to address the main fiscal cliff
policies will be passed before the end of the year," Nomura economist Lewis
Alexander wrote in a note.
    "We expect negotiations to continue into the new year. It may take the
imminent threat of a breach of the debt limit in February, or March at the
latest, to force an agreement... The longer uncertainty persists, the greater
the negative impact on the economy."        
 MARKET SNAPSHOT AT 0708 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,443.69   0.55 %     7.88
 NIKKEI                              9,940.06  -0.99 %   -99.27
 MSCI ASIA EX-JP                       540.59  -0.94 %    -5.12
 EUR/USD                               1.3195  -0.35 %  -0.0047
 USD/JPY                                83.92  -0.52 %  -0.4400
 10-YR US TSY YLD                       1.756       --    -0.04
 10-YR BUND YLD                         1.414       --     0.00
 SPOT GOLD                          $1,644.14  -0.18 %   -$3.00
 US CRUDE                              $89.29  -0.93 %    -0.84
  > GLOBAL MARKETS-Shares slide on worries about U.S. budget impasse 
  > U.S. stock futures drop after Boehner "cliff" vote falls short 
  > Tokyo's Nikkei share average closes down 0.99 pct 
  > TREASURIES-U.S. 10-year notes rally as "fiscal cliff" hopes fade 
  > Euro falls, yen rises as Boehner drops "fiscal cliff" plan 
  > Gold near 4-month low on U.S. budget talks standoff 
  > Copper rebounds from 3-week low; U.S. fiscal talks in focus 
  > Brent slips below $109 as U.S. fiscal talks stall 
    Spanish construction and services group FCC said on Thursday it
would suspend its dividend for 2012 so it could focus on paying off debt and
boosting its balance sheet in a tough economic environment. 

   The operator of the French capital's Charles de Gaulle and Orly airports cut
its medium-term earnings targets in response to lower-than-expected passenger
traffic growth. 
    The engineering giant said it plans to cut almost 1,100 jobs in Germany as
the company trims costs to make its energy operations more profitable.
    France's nuclear watchdog ASN said EDF could proceed with works to reinforce
the base of its Fessenheim nuclear reactor 1, a plant scheduled to shut by the
end of 2016. 
    Enbridge Inc will buy a 50-percent stake in its second wind-power
project in the province of Quebec from EDF's Canadian renewable-energy unit for
C$170 million ($172 million), the company said. 
    Spanish energy company Endesa's Latin American power unit Enersis 
approved a controversial $6 billion planned capital increase on Thursday.
    The French luxury group is in exclusive talks to sell its Cyrillus and Vert
Baudet children's apparel brands to investment fund Alpha, online newspaper
Wansquare reported. 
   The Bosnian unit of the world steel major wants to lay off more than half its
2,600-strong workforce because the plant has the lowest productivity in Europe,
a union leader said. 
    Adidas rival Nike on Thursday reported forecast-topping quarterly profit on
strong demand in North America while its orders volume indicated steady
worldwide demand. 
    KBC Group said the Belgian government had cut the fee the bank pays for
state guarantees on its debt, adding the change would not have a material impact
on fourth-quarter results. 
    The European Union is challenging the terms of a French government-backed
debt rescue for the carmaker's financing arm, Les Echos reported.
    Holcim has reduced its shareholding in Siam City Cement Company Limited
(SCCC) from 36.8 pct to 27.5 pct. 
    The French lender has told staff representatives it will focus on cutting
costs at its investment bank without a new layoffs plan, sources said.
    Abilio Diniz, chairman of Grupo Pao de Acucar SA, filed for
arbitration against Casino, the Brazilian retailer's majority shareholder,
alleging an attempt to weaken his position in the company. 
    The German sportswear maker will pay 42.2 million euros ($55.9 million) to
its former Spanish sales partner Estudio 2000 in return for winning all Spanish
trademark rights, Puma said on Thursday, citing a ruling by an arbitration court
    The Dutch semiconductor equipment maker will cut about 110 jobs at its
manufacturing operation in Singapore as part of a cost reduction programme
announced earlier this year, the company said. 
    The French advertiser acquired U.S. digital advertising agency Rokkan.
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