October 16, 2013 / 5:22 AM / 4 years ago

European Factors to Watch -Shares set to edge lower as U.S. deadline looms

LONDON, Oct 16 (Reuters) - European stocks were set to edge lower at the
open on Wednesday, with trading expected to be volatile as the U.S. debt crisis
deadline looms.
    At 0623 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were flat to 0.3 percent
    U.S. Senate leaders were still discussing a deal late on Tuesday aimed at
raising the debt limit and reopening federal agencies that have been closed for
two weeks. Senate aides said an agreement was close but earlier hopes that it
could be announced late on Tuesday were not met. 
    "Most people are likely to stay on the sidelines, and I'd look to sell into
any rally. You have to be cautious because the situation is very volatile," Mike
Harris, partner at TJM Partners, said.
    "I would want to wait for a decision before getting more involved, although
I do think it's likely that they force one through."
    European stocks rallied on Tuesday after Senate leaders made optimistic
noises that a deal would be done, however in Asia stocks slipped after House
attempts to get an agreement failed without a vote. 
    The ongoing risk of a U.S. default was reflected by credit ratings agency
Fitch's decision to put the United States on "negative watch," citing the
political brinkmanship over raising the federal debt ceiling. 
    While stocks look set to give away some of the previous session's gains, the
muted response on Wednesday reflected optimism that a deal would ultimately be
struck. German Bund futures opened 7 ticks lower at 139.17 as investors
expected U.S. lawmakers to reach a last-minute debt deal. 
    The Speaker of the U.S. House of Representatives John Boehner could be more
likely to allow a vote over a Senate proposal in the House after his own
initiatives failed to get the support of his own party, analysts said.
    "The latest headlines suggest a deal will be sealed," Stan Shamu, market
strategist at IG, said in a trading note. 
    "It now seems like Mr Boehner will allow a clean Senate bill vote in the
House which is a strong sign he has yielded."
    Despite the continuing uncertainty surrounding the debt ceiling, European
stocks are back above levels last seen before the U.S. government partially shut
down at the beginning of October. The pan-European FTSEurofirst 300 is
just 0.9 percent off of 5 year highs set a month ago.
    While the UK's FTSE and French CAC looked set to fall, the German DAX was
set to outperform, with its futures flat ahead of the open. A gain at the open
would see the German blue-chip index post fresh record highs for a second day

                                            LAST  PCT CHG     NET
 S&P 500                                1,698.06  -0.71 %  -12.08
 NIKKEI                                14,467.14   0.18 %    25.6
 MSCI ASIA EX-JP                          552.94  -0.34 %   -1.89
 EUR/USD                                  1.3523      0 %  0.0000
 USD/JPY                                   98.43   0.28 %  0.2700
 10-YR US TSY YLD                          2.735       --    0.02
 10-YR BUND YLD                            1.909       --    0.00
 SPOT GOLD                             $1,282.19   0.16 %   $2.00
 US CRUDE                                $101.17  -0.04 %   -0.04
  > GLOBAL MARKETS-Asian stocks take cover as U.S. default looms     
  > U.S. stock index futures rise, source says U.S. debt deal near    
  > Nikkei turns lower as US debt stalemate drags on; SoftBank up    
  > TREASURIES-U.S. Oct bill rates jump as debt clock runs down    
  > FOREX-Dollar firms vs yen on hopes for U.S. debt deal        
  > Gold holds gains as U.S. scrambles to resolve budget impasse     
  > METALS-Copper flat as market waits on U.S. debt talks outcome    
  > Brent steady above $110 as US Senate pushes for debt deal    
    The world' biggest luxury group posted an unexpected slowdown in sales
growth at its fashion and leather business, which includes the Louis Vuitton,
Celine and Dior brands. 
    The French investment bank is set to announce a plan to cut 700 jobs by 2015
as part of a drive to reduce costs, according to two union sources and documents
obtained by Reuters. 
    The German insurer has entered into exclusive negotiations with IBM  to
outsource large parts of its in-house information technology services.
    Related news 
    The French food group cut its 2013 financial goals after sales at its
high-margin baby food division fell a worse-than-expected 8.6 percent in the
third quarter following an infant formula product recall in Asia.
    The French ad group, which is merging with U.S. peer Omnicom Group,
stuck to its target for higher full-year organic sales growth despite a slowdown
in the third quarter on weaker emerging markets. 
    A new and promising type of cholesterol drug developed by Sanofi and
Regeneron, when used by itself, cut levels of "bad" LDL cholesterol
almost in half in the first of a dozen late-stage trials of the injectable
    A majority of U.S. Supreme Court justices raised doubts on Tuesday over
whether Daimler AG can be sued in federal court for allegations that a
subsidiary violated the human rights of workers at a plant in Argentina in the
    Related news 
    German opposition parties on Tuesday accused Angela Merkel of pandering to
the car lobby, after her conservatives received major donations from the family
that controls BMW, just as Berlin was lobbying against tougher EU caps on carbon
    Related news 
    Swiss Re said it had entered into an agreement with Pacific
Century Group to invest up to $425 million in FWD Group as part of its
commitment to high growth markets. 
    German business software firm SAP has launched syndication of a 2 billion
euro ($2.7 billion) credit facility to refinance its existing 1.5 billion euro
facility, which was due to mature in December 2015, banking sources said on
    Related news 
    The German truckmaker, a unit of Volkswagen said orders and sales of
commercial vehicles have picked up sharply since the summer as companies are
rushing to buy older but cheaper models ahead of a change in emission rules next
    Related news,
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