February 7, 2013 / 6:30 AM / 5 years ago

Europe Factors to Watch-Shares seen flat to higher; Spain auction eyed

PARIS, Feb 7 (Reuters) - European stocks are seen flat to slightly higher on
Thursday, following the previous day's roller-coaster session, as investors
remained cautious ahead of Spain's bond auction and European Central Bank
President Mario Draghi's press conference.
    At 0731 GMT, futures for Euro STOXX 50 were up 0.23 percent, for
Germany's DAX flat and for France's CAC up 0.2 percent.
    Spain is set to raise up to 4.5 billion euros at a bond auction on Thursday,
with the results due around 0940 GMT. Investors will closely watch the results
to see the potential impact from rising political uncertainty over a corruption
scandal and rekindled fears over the health of the country's economy.
    The ECB is seen holding interest rates on Thursday, with the focus on
Draghi's press conference. The central bank president will face a grilling over
the ECB's sensitivity to the euro's recent sharp rally, as well as over an
Italian banking scandal. 
    The banking sector will be in focus again on Thursday after Credit Suisse
 unveiled fourth-quarter net profit that missed expectations, hurt by
sluggish results from its investment bank. 
    After a brisk rally in January, the STOXX banking sector index has
lost about 4.4 percent over the past week, while the euro zone's blue chip Euro
STOXX 50 index has dropped 5 percent, surrendering all its lofty
gains made since the beginning of the year.
    "The medium and long-term positive trend is still intact, although on the
short-term, we're turning 'neutral', indexes are very close to key support
levels," Aurel BGC chartist Gerard Sagnier said.
    "For the Euro STOXX 50, the support is at 2.610 points, while the
resistances are at 2,660 and 2715."
    European stocks have sharply risen since mid-2012, lifted by bold actions
from central banks to boost liquidity and resolve Europe's debt crisis, however
the region's equities remain cheap compared to U.S. stocks.
    The broad STOXX Europe 600 index trades at 12 times 12-month
forward earnings, its highest price-to-earnings ratio (P/E) in nearly three
years, although still below a 10-year average of 12.2, according to Thomson
Reuters Datastream. 
    European stocks also look cheap when compared to companies' book value. The
average price-to-book ratio of the STOXX 600 is 1.6, well below a 10-year
average of 2.1. 
    By comparison, Wall Street's S&P 500 trades at a P/E ratio of 13.4
and a P/B ratio of 2.2.
 MARKET SNAPSHOT AT 0730 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,512.12   0.05 %     0.83
 NIKKEI                             11,357.07  -0.93 %  -106.68
 MSCI ASIA EX-JP                       550.56  -0.42 %    -2.33
 EUR/USD                               1.3524   0.03 %   0.0004
 USD/JPY                                93.55  -0.09 %  -0.0800
 10-YR US TSY YLD                       1.969       --     0.01
 10-YR BUND YLD                         1.631       --     0.00
 SPOT GOLD                          $1,676.75  -0.02 %   -$0.36
 US CRUDE                              $96.58  -0.04 %    -0.04
  > Asian shares pause, caution before ECB 
  > Wall Street ends flat as investors pull back 
  > Nikkei slips off 4-year high on pause in yen's drop; Sony rises 
  > Bonds steady as stock market rally pauses; ECB in focus 
  > Euro rally stalls again as ECB meeting looms 
  > Gold awaits ECB meeting, PGMs near 17-month highs 
  > LME copper holds below 4-month top ahead of ECB meet 
  > Brent steady near $117 as traders eye ECB meeting, China data 
    Credit Suisse said on Thursday it will cut more costs, after
fourth-quarter net profit missed expectations on sluggish results from its
investment bank.
    Sanofi reported a 24 percent decline in fourth-quarter profit on Thursday
and predicted growth would resume in the second half of 2013 once the impact of
drug patent losses eases. 
    Chief Executive Ben Verwaayen is to step down after the troubled telecom
equipment maker's May 7 annual shareholder meeting when his current contract
expires, Le Monde reported. A company spokeswoman had no immediate comment.

    Italy's third biggest lender said on Wednesday that losses stemming from
three 2006-09 derivatives trades stood at 730.3 million euros, before taking
into account any possible fiscal impact. 
    Monte dei Paschi misled the Bank of Italy over a 1-billion euro hybrid
instrument it used to partly fund its acquisition of rival bank Antonveneta,
Siena prosecutors alleged in a document reviewed by Reuters on Wednesday.

    Builder Salini, which owns just under 30 percent of Impregilo, on Wednesday
offered four euros cash for each ordinary share it does not own in Italy's
largest construction group, valuing the whole company around 1.6 billion euros.
    Stagnating revenues may force the Italian operator to cut its dividend again
as it continues negotiating a possible sale of a stake in its fixed network and
seeks to trim debt to hold on to its present credit rating. 
    Private-equity group Carlyle said it had completed a deal to buy the French
bank's Los Angeles-based asset-management arm, TCW, alongside the unit's

    Chrysler Group LLC agreed to make Banco Santander's U.S. arm its preferred
lender for auto loans on Wednesday, enabling financing for a wider range of its
clients and dealers. 
    The International Airline Group said it had ruled out raising a 113 million
euros ($153 million) bid to buy out the shares it does not already own in
Spanish budget carrier Vueling. 
    Separately, labour unions called 15 days of strikes in February against
Iberia's planned job and wage cuts. 
    The oil giant said it had received offers from Borealis to buy its GPN and
Rosier fertilizer businesses and planned to present the deals to workers'
    The Norwegian conglomerate reported a fourth-quarter EBIT of 1.1 billion
Norwegian crowns ($200.4 million), up 26 percent from a year ago and beating
analysts forecasts, and said it expected a stable grocery markets in the Nordic
countries this year.
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