August 21, 2013 / 6:32 AM / in 4 years

European Factors to Watch-Shares to edge up in technical move

LONDON, Aug 21 (Reuters) - European stocks were set to open flat to higher on Wednesday, taking their cue from gains on Wall Street and as a key index found technical support, although appetite for shares was sapped by expectations of an upcoming reduction in U.S. monetary stimulus.

Futures for the Euro STOXX 50, Britain’s FTSE 100, Germany’s DAX and France’s CAC were between flat and 0.2 percent higher at 0625 GMT.

The euro zone’s Euro STOXX 50 has shed 2.6 percent in the past week as the market started to factor in the increasing chance of a reduction to the Federal Reserve’s equity-friendly asset purchase programme in light of stronger U.S. economic data and more hawkish comments from Fed’s officials.

But the index closed off its intra-day low on Tuesday, echoing a rebound in U.S. equities and having found technical support at 2,769, the 23.6 percent retracement of the rally since late June.

“Despite yesterday’s drop, the dynamic remains bullish from a short-term point of view,” said Philippe Delabarre, an analyst at Paris-based technical analysis firm, Trading Central, noting the index is further supported by its August 7 bottom at 2,776 points.

“Therefore, as long as 2,715 is a support threshold (corresponding to the 38.2 percent Fibonacci retracement of the rise between June and August 16), our target is at least 2,887 points (the index’s top in July 2011).”

After the European market close, traders will look closely at the minutes of the Fed’s July policy meeting, due to be published at 1800 GMT, for clues as to when and by how much the central bank will cut its stimulus programme.

Bond buying schemes by the Fed and other major central banks have driven investors out of lower-yielding assets and into shares in the past year, helping the euro zone Euro STOXX 50 index rise roughly 27 percent since June 2012.

“Discussions on the impact and efficacy of the current (bond) ...purchases may offer hints on the size and composition of potential changes as the taper proceeds,” Credit Agricole, which expects a $20 billion reduction to the Fed’s $85 monthly security purchases, wrote in a note.

“We believe (Fed officials) wanted more information before making a decision but were predisposed to slow the flow of asset purchases sooner rather than later, barring a significant deterioration in the labor market outlook.”

German Bund futures opened 9 ticks lower at 140.52, with investors wary of making big bets ahead of the release of Fed minutes later in the day. Germany will sell new two-year bonds on Wednesday, with analysts saying a recent rise in yields on the back of Fed tapering expectations should lure investors into the auction.

> Asia stocks slip anew, can’t escape Fed fears > Wall St bounces to end four-day skid; retailers gain > Nikkei drops to 7-week lows as emerging market tension weighs > TREASURIES-Yields fall as buyers step in > Dollar hovers near 6-mth low vs euro, Fed minutes awaited > Gold inches up, awaits Fed minutes for clues on stimulus > Copper slips on caution ahead of Fed minutes > Brent crude slips under $110, eyes on Fed



The world’s third largest brewer reported higher first-half earnings than expected with a surge in profit in developing economies and tight control of costs in mature markets.


The Danish brewer reported a nearly flat second quarter operating profit against analysts expectations of a rise, and kept its full-year outlook unchanged.

Operating profit (EBIT) before special items fell slightly to 3.44 billion Danish crowns ($615.8 million) in the April to June quarter, compared with 3.47 billion a year earlier and below an average forecast for 3.58 billion in a Reuters poll of analysts.


Mexican telecoms group America Movil said it had secured the financing necessary to buy all of the shares in the Dutch telecoms group it does not already own.


A top Northrop Grumman Corp official said his company was making “a lot of progress” in talks with the German government about the country’s stalled purchase of four Euro Hawk drones, and what is needed to certify their airworthiness.


The Danish wind turbine manufacturer is expected to post a drop in second quarter operating profit to 5.5 million euros ($7.4 million), a Reuters poll of analysts showed.


The proposed tie-up of KPN’s E-Plus unit and Telefonica’s Telefonica Deutschland unit, the company’s respective German divisions, will require close scrutiny by the German Cartel Office, the antitrust watchdog’s head Andreas Mundt told Frankfurter Allgemeine Zeitung.


The German cartel office is happy to let the European Commission decide over the planned takeover of Germany’s largest cable provider Kabel Deutschland by Vodafone, , the antitrust watchdog’s head Andreas Mundt told Frankfurter Allgemeine Zeitung.

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