February 27, 2013 / 7:50 AM / 5 years ago

European Factors to Watch-Shares seen up as Fed defends stimulus

LONDON, Feb 27 (Reuters) - European stock index futures were slightly higher
on Wednesday after markets fell sharply in the previous session, helped by the
U.S. Federal Reserve's defence of its stimulus programmes for the economy,
although concerns over the euro zone may limit gains.
    The March futures contract for the euro zone's blue-chip Euro STOXX 50
 index was up by 0.7 percent, while futures contracts for Germany's DAX
 and France's CAC were both up by around 0.6 percent.
    U.S. stock markets rose overnight while Asian equity markets advanced on
Wednesday after Federal Reserve chief Ben Bernanke strongly defended the Fed's
monetary stimulus initiatives, easing financial market worries that it may be
about to ease off its bond-purchasing programmes. 
    Nevertheless, traders said worries over the euro zone's sovereign debt
crisis, which were heightened this week by elections in Italy which produced a
political stalemate, and looming U.S. budget cuts - referred to as
"sequestration" - could weigh on equity markets in the near term.
    Central Markets senior broker Joe Neighbour saw the potential of a 5-6
percent fall on European equity markets in the coming month, but added that
measures by world central banks to strengthen the global economy would continue
to support equities in the long run.
    "A five to six percent correction would be fairly normal within the context
of a bull market environment," said Neighbour.
    He also said most investors were more likely to focus on the Fed rather than
Italy's political problems, which could hamper economic reforms in Italy and
drive up its borrowing costs and impact Spain as well, which has also been hit
hard by Europe's debt crisis.
    "With Europe, many people have factored in more problems in the likes of
Spain and Italy. The U.S. is the driving force for global markets, and if
they're doing well, then people feel better," said Neighbour.
    Worries over Italy caused the euro zone's blue-chip Euro STOXX 50 index
 to close down 3.1 percent at 2,570.52 points on Tuesday, its lowest
finish since Nov. 28. The broader, pan-European FTSEurofirst 300 fell
1.4 percent to 1,150.25 points.
    However, both the Euro STOXX 50 and the FTSEurofirst 300 index are between
20-25 percent above their 2012 lows, since a pledge last year by the European
Central Bank (ECB) to protect the euro currency from the area's debt crisis did
much to bolster investor confidence in the region.
    BCA Research wrote in a note that the full-year outlook for global equities
remained positive, given the backdrop of a gradual improvement in the world
economy and the fact that equities offer more than cash or bonds, where returns
have been hit by record low interest rates.
    "This creates a 'sweet spot' for equity investors - modest growth, low
inflation and negative real rates will support corporate earnings and embolden
risk taking," wrote BCA Research.
 MARKET SNAPSHOT AT 0737 GMT                        
                                   LAST    PCT CHG  NET CHG
 S&P 500                       1,496.94     0.61 %     9.09
 NIKKEI                        11,253.9    -1.27 %  -144.84
 MSCI ASIA       <.MIASJ0000P    549.74     0.49 %     2.70
 EX-JP           US>                                
 EUR/USD                         1.3079     0.14 %   0.0018
 USD/JPY                          91.70    -0.29 %  -0.2700
 10-YR US TSY                     1.872         --    -0.01
 10-YR BUND YLD                   1.451         --    -0.01
 SPOT GOLD                     $1,610.3    -0.17 %   -$2.81
 US CRUDE                        $92.88     0.27 %     0.25

  > GLOBAL MARKETS-Asian shares recover after Bernanke calms nerves 
  > US STOCKS-Wall Street rebounds on Bernanke comments, data 
  > Nikkei falls as exporters and financials retreat; Italy vote uncertainty
  > TREASURIES-Yields near 1-month lows as Bernanke defends bond buys 
  > FOREX-Yen holds gains as investors await Italian bond sale 
  > PRECIOUS-Gold holds near 1-1/2-week high as Bernanke backs stimulus 
  > METALS-Copper climbs after Fed reassures on stimulus 
  > Brent holds steady above $112 on Bernanke assurance; EU woes weigh 
    AB INBEV :
    Anheuser-Busch InBev, the world's biggest beer maker, forecast a weak start
to the year in the United States and Brazil after slightly lower earnings than
expected in the final months of 2012. 
    Spanish travel technology company Amadeus IT Holding said on Wednesday it
was "cautiously optimistic" after reporting solid full-year results for 2012.
    The French construction-to-telecoms conglomerate said on Wednesday that 2012
net profit slumped 41 percent to 633 million euros ($827 million), reflecting a
tough mobile telecoms market and a challenging economy. 
    EADS :
    European aerospace group EADS predicted higher profit in 2013 as it
confirmed an upswing in 2012 driven by efforts to halt excess costs and by
strong deliveries of passenger jets. 
    HOLCIM :
    Swiss cement maker Holcim said it expects demand in North America, Asia and
Latin America to offset a sluggish Europe and drive higher cement sales in 2013,
after restructuring charges pushed it to a fourth-quarter loss. 
    ITV :
    ITV, Britain's largest free-to-air broadcaster, posted a 13 percent rise in
2012 earnings, helped by growth in non-advertising revenues, and said it would
pay shareholders a 156 million pound ($236 million) special dividend.
    Swiss Life's 2012 net profit tumbled 85 percent to 93 million Swiss francs
($99.8 million) as a hefty but expected fourth quarter writedown on its German
advisory arm took some of the shine off strong investment income. 
    Vodafone Group Plc has suspended plans to approach Kabel Deutschland Holding
AG about a takeover bid, Bloomberg News cited three people familiar with the
matter as saying.
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