LONDON, Nov 1 (Reuters) - European shares were expected to edge higher on Friday, with encouraging China factory data and growing speculation that the European Central Bank could further ease its monetary policy prompting investors to cautiously buy stocks.
Futures for Britain’s FTSE 100 rose 0.3 percent, with the mining-heavy market seen getting support from stronger metals prices after data showed the manufacturing sector in China, the world’s biggest metals consumer, grew at its fastest pace in 18 months in October.
However, futures for the Euro STOXX 50, Germany’s DAX and France’s CAC were flat to 0.1 percent higher, indicating that investors were reluctant to place strong bets on the last trading day of the week and waited for clarity on some major issues.
A surprise slowdown in euro zone inflation has sparked speculation the ECB may take action to bolster the economy, while the U.S. central bank did not sound as alarmed about the state of the economy earlier this week as anticipated, raising concerns a cut in the Fed’s bond-buying operations could begin earlier than the end of March.
“With two of the world’s major central banks possibly about to go in divergent ways, traders have the difficult task of weighing up which will have the greatest impact on risky assets,” Jonathan Sudaria, dealer at Capital Spreads, said.
“The less dovish FOMC statement naturally put a downer on the taper trade but ... signs that the euro zone was hurtling towards deflation and rising unemployment have perked up those calling for the ECB to start enforcing their mandate of price stability,” he added in a note.
Societe Generale predicted a 25 basis points cut in ECB Refinance rate in December.
Investors will keep an eye on further data releases, with UK manufacturing purchasing managers’ index for October due at 0928 GMT, U.S. final Markit Manufacturing PMI for the current month at 1258 GMT and the Institute for Supply Management’s October manufacturing index at 1258 GMT.
-------------------------------------------------------------------------------- > Asian shares sag, dollar up after upbeat U.S. data > Wall St ends session lower but posts gains for October > Nikkei up on SoftBank, Panasonic; Sony plunges 10 pct on profit-warning > Bond prices fall as data offers hope on economy > Euro buckles as subdued inflation sparks ECB stimulus hopes > Gold near 2-week lows on stronger dollar, U.S. data > Copper eyes biggest weekly gain in six, China data supports > Brent rises above $109; set for biggest weekly gain in 2 months
U.S. government-controlled mortgage company Fannie Mae sued nine of the world’s largest banks, including Deutsche Bank, accusing them of colluding to manipulate interest rates and seeking more than $800 million of damages.
The head of hedge fund TCI said he is backing the boss of aerospace giant EADS in his “aggressive” approach to slash costs and grow profit, and expects management to announce further cuts in its defence unit soon.
Royal Bank of Scotland said on Friday it would create an internal “bad bank” to manage the run-down of its riskiest assets after the government stopped short of ordering a full break up.
Spain’s Gas Natural Fenosa signed a deal to buy 2.5 million tonnes per year of liquefied natural gas (LNG) on a long-term basis from the Yamal plant, which is being developed by Total and Russia’s Novatek.
British aircraft parts supplier Meggitt lowered its full-year revenue guidance after trading over the last four months had been slightly below its expectations.