November 14, 2013 / 6:25 AM / 4 years ago

Europe Factors to Watch-Stocks set to bounce after Yellen comments

PARIS, Nov 14 (Reuters) - European stocks are set to rise on Thursday,
bouncing from three-week lows hit in the previous day, after dovish comments by
U.S. Federal Reserve Vice Chair Janet Yellen eased worries that the Fed could
start winding down its stimulus measures this year.
    At 0721 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were up 0.7-1.1 percent.
    Yellen, in remarks released ahead of her closely-watched Senate confirmation
hearing on Thursday to succeed Fed chief Ben Bernanke, said the central bank has
"more work to do" to help the economy, indicating she was in no hurry to start
trimming the bank's massive bond-buying programme, which has fuelled a sharp
rally in equities this year. 
    "This sets the scene for a fairly dovish testimony at the Senate hearing,"
IG market strategist Stan Shamu wrote in a note.
    "The question now is whether she can survive the wave of criticism that the
Fed's bond-buying program is likely to face from politicians. She will really
have to justify maintaining the program at the current pace, as the Fed's
balance sheet blows out to $4 trillion. As a result, Yellen might actually play
the fence to an extent in a bid to keep everyone happy."
    The euro zone's blue-chip Euro STOXX 50 index, which fell 0.5
percent on Wednesday, is up about 21 percent since late June, a rise mostly
fuelled by central banks' huge liquidity injections as well as by improvements
in European economic data.
    The sharp five-month rally has propelled valuation ratios to levels not seen
since before the financial crisis started in 2007, with the broad STOXX Europe
600 index trading at 13.4 times 12-month forward expected earnings,
above a 10-year average of 12. ()
    Tech shares will be in the spotlight after U.S. major Cisco Systems Inc
 warned its revenue would dive as much as 10 percent this quarter, and
keep contracting until after the middle of 2014, sending its stock down more
than 10 percent in late trade. 
    Shares in luxury goods makers will also be in the spotlight after profit
warnings from both Tod's and Gucci owner Kering.
    With Europe's earnings season drawing to an end, results have been
disappointing, with half of companies missing profit forecasts while nearly two
thirds have missed revenue forecasts, according to data from Thomson Reuters
    This is a sharp contrast with results posted in the second quarter, during
which only 42 percent of companies missed profit forecasts.
    On the macro front, investors awaited economic growth figures for the euro
zone, due at 1000 GMT, but data released earlier on Thursday showed France's
economy contracted 0.1 percent in the third quarter, slowing sharply from growth
of 0.5 percent in the previous three months, and falling short of expectations
for slight growth of 0.1 percent. 
    Data also showed German economic growth slowed to 0.3 percent in the third
quarter of the year, in line with consensus, with domestic demand fueling the
expansion and exports weighing on growth. 
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,782.00   0.81 %    14.31
 NIKKEI                             14,876.41   2.12 %   309.25
 MSCI ASIA EX-JP                       538.68   0.98 %     5.23
 EUR/USD                               1.3455  -0.22 %  -0.0029
 USD/JPY                                99.73   0.51 %   0.5100
 10-YR US TSY YLD                       2.730       --    -0.02
 10-YR BUND YLD                         1.729       --    -0.01
 SPOT GOLD                          $1,283.14   0.35 %    $4.53
 US CRUDE                              $93.87  -0.01 %    -0.01
  > GLOBAL MARKETS-Asian stocks up as Yellen flags Fed support 
  > S&P 500 E-mini futures hit record high after Yellen's comments 
  > Nikkei soars to near 6-month high, extends gains on Aso comments 
  > FOREX-Dollar nurses losses after dovish Fed comments, yen slips 
  > PRECIOUS-Gold extends gains as Yellen calms stimulus tapering fears 
  > METALS-Copper rebounds from 3-month low after Yellen comments 
  > FOREX-Dollar nurses losses after dovish Fed comments, yen slips 
    Italy's biggest lender by assets expects Europe's banking union to free up 7
billion euros ($9.4 billion) of capital from its German subsidiary HVB as
capital requirements are equalised across the euro zone, the Financial Times
reported on Wednesday. 
    The French bank has agreed to buy the Belgian state's 25 percent stake in
BNP Paribas Fortis for 3.25 billion euros in a move that will help the country
keep its commitment to lower public debt. 
    British luxury brand Burberry met forecasts for flat profit in a first half
period that reported revenue above 1 billion pounds ($1.60 billion) for the
first time. 
    The French luxury and sports group issued a profit warning, blaming one-off
charges related to Puma's restructuring and the disposal of loss-making mail
order business La Redoute. 
    The world's largest maker of liquid crystals for display screens raised its
full-year outlook after posting third-quarter adjusted EBITDA that rose 10
percent, surpassing the average estimate in a Reuters poll.  
    Germany's second-biggest utility posted flat EBITDA of 6.71 billion euros
for the first nine months of the financial year, lower than the 6.80 billion
average analyst forecast in a Reuters poll. 
    Zurich Insurance Group posted a 64 percent rise in third-quarter net profit
on Thursday, beating expectations, but warned it would not achieve some of its
three-year targets. 
    The French conglomerate Bouygues stuck to its full-year forecasts after
higher construction orders and savings at its telecom and media businesses
helped lift third-quarter profits. 
    Bouygues Chief Financial Officer Philippe Marien said it was keeping its
options open regarding its stake in Alstom and was in no rush to make a decision
as he welcomed the train and turbine maker's planned restructuring. 
    The German steelmaker stuck with its outlook for 2013 pretax loss of about
400 million euros ($536 million) after it said on Thursday that weak demand and
prices caused its third-quarter loss to widen. 
    Spanish savings bank group La Caixa said on Wednesday it is to cut its
majority stake in Caixabank, the country's third-biggest lender, with a 1.5
billion-euro ($2 billion) share placing and convertible bond issue. 
    The Dutch grocer reported lower-than-expected operating profit in the third
quarter, as consumers spent less on their shopping, especially in the
    The Airbus parent raised its forecast for passenger jet orders and
deliveries as it posted a 22 percent increase in underlying nine-month operating
profit to 2.3 billion euros. 
    The potash miner expects its annual operating profit will shrink by as much
as a quarter this year, when EBIT should amount to over 600 million euros.
    A federal advisory panel recommended approval of Sanofi's experimental
Lemtrada multiple sclerosis drug, but said the drug should be reserved for
patients who have failed other therapies. 
    The Italian publisher has signed preliminary contracts to sell its
headquarters in central Milan to U.S. fund Blackstone for 120 million
euros, it said on Wednesday. It also said it expected 2013 revenues down 12
percent and a full-year net loss, as the advertising markets in Italy and Spain
continue to be hit by an economic downturn. 
    The board of the Italian airline has approved a revised industrial plan,
meant to help make the cash-strapped carrier more profitable, and extended the
deadline for the end of its 300 million euros capital increase to Nov. 27. The
extension gives top shareholder Air France-KLM more time to sign up.
    The Italian luxury shoemaker said it would be difficult to meet consensus
forecasts for full-year earnings as the company posted flat revenue and sales
for the first nine months on Wednesday. 
    Swiss Re said it had terminated discussions with Phoenix Group over
a possible combination of the British life insurer with the Swiss reinsurer's
Admin Re business. 
    The Belgian financial services group said it would need to take a provision
of up to 775 million euros in the fourth quarter linked to loans and mortgages
in Ireland. 
    The French catering-to-vouchers group forecast a rise in full-year 2013/2014
revenue and profit, helped by robust demand in Latin America and cost savings.
    Telekom Austria reported a 5 percent drop in third-quarter sales and a 13
percent fall in core earnings on higher handset subsidies in Austria and lower
roaming revenues in Croatia.
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