January 22, 2014 / 6:35 AM / 4 years ago

European Factors to Watch-Shares seen up, focus on earnings

LONDON, Jan 22 (Reuters) - European shares were expected to open higher on Wednesday, with a rise in U.S. stock futures and a recovery in Asian shares seen prompting investors to cautiously increase their exposure to riskier assets.

At 0731 GMT, futures for the Euro STOXX 50, Britain’s FTSE 100 , Germany’s DAX and France’s CAC were 0.3 to 0.4 percent higher, mirroring gains in overseas equity markets.

U.S. stock futures were 0.1 to 0.2 percent higher. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 percent, while China shares gained 2.6 percent as cash rates in the mainland eased further after the Chinese central bank offered funds this week to ease a cash squeeze.

The European stock market remains vulnerable to a pull-back, however, as an “overbought” market might induce investors to take some profits from the previous session’s new 5-1/2-year high for the pan-European FTSEurofirst 300 index and a new record high for Germany’s DAX.

The 14-day relative strength index of the FTSEurofirst 300, the STOXX Europe 600 and Italy’s FTSE MIB has risen above 70, an “overbought” technical condition that often triggers in a sell-off.

“A short period of consolidation seems likely at this point, although the FTSEurofirst 300 index could see a drop of around 3 percent and a test of the 50-day moving average at 1,300,” said Bill McNamara, technical analyst at Charles Stanley.

The fourth quarter earnings season is also likely to inject volatility in the near-term after shares of some major U.S. companies fell on Tuesday after results. Johnson & Johnson fell almost 2 percent after providing a cautious view on 2014 profits.

Major U.S. companies announcing results on Wednesday included eBay, Abbott, Freeport McMoRan Copper & Gold and SanDisk Corp .

In Europe, where the earnings season is yet to gather pace, ASML reported higher-than-expected fourth-quarter results and the world’s leading provider of tools for making computer chips reiterated its outlook for first-half sales of about 3 billion euros ($4.06 billion).

According to Thomson Reuters StarMine’s SmartEstimates, which focus on predictions by the historically most accurate analysts, the STOXX Europe 600 companies are seen missing fourth quarter consensus by 0.4 percent on revenues and by 1.3 percent on earnings.

On the data front, investors will keep an eye at 0930 GMT on UK jobs numbers - which are expected to show Britain’s unemployment fell to 7.3 percent in November - for hints about the timing of the Bank of England (BoE) likely move to start raising interest rates.

“With the unemployment rate fast approaching 7 percent, the threshold that (BoE) Governor Mark Carney previously claimed was the point at which an interest rate hike would first be considered, the central bank is going to have to do something to reassure households, businesses and the markets that an increase in rates will not happen in the coming months,” Alpari analyst Craig Erlam said in a note.

Across the Atlantic, the Mortgage market index is due at 1200 GMT, ICSC chain stores data will be released at 1245 GMT and Redbook’s chain store sales figures will be out at 1355 GMT. ------------------------------------------------------------------------------ > Asian shares subdued, focus turns to central bank meetings > S&P 500 ends with slight gains; IBM falls late > Nikkei steady ahead of BOJ outcome; Tokyo Steel jumps > U.S. bond prices little changed, tapering concerns weighed > Yen cautious ahead of BOJ outcome, Aussie eyes inflation > Gold near week low on US stimulus prospects, growth outlook > LME copper steady, physical shortage lends support > Brent rises above $107 as outlook for demand growth improves



The world’s leading provider of tools for making computer chips gave an upbeat outlook for the first half of this year thanks to strong demand for tablets, smartphones and other consumer gadgets.


The Swedish steel maker agreed to buy Finland’s Rautaruukki Corp for 10.1 billion Swedish crowns ($1.55 billion) to boost competitiveness in a weaker global steel market.


Mid-sized Spanish lender Bankinter reported a 73 percent jump in profit for 2013 compared to the year before, largely thanks to lower provisions against losses after it cleaned up soured property assets in 2012.


The global miner posted strong quarterly iron ore, coal and copper output, putting it in a position to meet shareholder pressure for higher capital returns as spending on new projects winds down.


The Swiss group said on Wednesday its power division would miss quarterly profit targets after $260 million in charges due to project delays following storms in the North Sea and restructuring costs.


Anglo-Dutch consumer goods maker Unilever could review its investment in Britain should the country leave the European Union, the Guardian newspaper reported the chief executive as saying.


Singapore’s DBS Group Holdings is in advanced talks to buy Societe Generale’s Asian private bank, a deal that would help boost its private banking assets by almost a third, sources familiar with the matter said.


The French telecom operator said it would launch a new subscription package including calls and text messages to and from France within Europe, the latest move in a domestic price war.


Swiss luxury watchmakers predict the market will grow this year, expecting rising demand from North America and Europe to more than offset slowing sales to China.


Germany’s cartel chief said it would be a mistake to rush into creating “capacity markets” for energy, which utilities say they need to be able to survive in the shift to renewables.

Separately, an E.ON board member said he does not expect a super-merger between French and German power firms, despite proposals by French President Francois Hollande to intensify energy cooperation between the two countries.

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It is too soon to say when an anti-trust probe of ThyssenKrupp will end as the case, involving allegations of price fixing for steel supplied to the car industry, is still being evaluated, the chief of Germany’s cartel office said.


Fitch Ratings said Deutsche Bank’s weak fourth-quarter results pointed to a challenging year 2014 for the bank’s operating profitability as additional restructuring costs loom.

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