European Factors to Watch - Shares seen higher on U.S. deal optimism
LONDON, Nov 29 (Reuters) - European shares were expected to open higher on Thursday, boosted by rising expectations that U.S. lawmakers will reach an agreement to postpone growth-curbing austerity measures. At 0718 GMT, futures for the Euro STOXX 50 and France's CAC traded 0.7 percent higher, while contracts on Germany's DAX and Britain's FTSE 100 were up 0.5 percent and 0.3 percent, respectively. Buying momentum was building up across risk assets after U.S. House of Representatives Speaker John Boehner voiced optimism that Republicans could broker a deal with the White House to avoid a US$600 billion 'fiscal cliff' of austerity measures that could stall growth in the world's largest economy. President Barack Obama added to the good feeling, saying he hoped to get a deal done in the next four weeks. "Market action once again is expected to be dominated by the ongoing budget negotiations in the U.S., where a deal between Democrats and Republican seems to be getting closer," Markus Huber, a senior trader at ETX Capital, said. He flagged 7,413 points as a key level on Frankfurt's Dax index, which closed up 0.2 percent at 7,343.41 on Wednesday, saying a close above that level would make a test of the yearly highs at 7,478 likely and end a consolidation pattern started in mid-September could be coming to an end. On the downside, he said recent momentum would be intact as long as the Dax keeps above Wednesday's low at 7,265 points. Boehner's and Obama's comments helped European equities recoup losses late on Wednesday and fuelled a rally in U.S. and Asian shares, as well as in copper and oil prices, which depend on economic growth. The Euro STOXX 50 closed 0.1 percent higher at 2,546.84 on Wednesday and was now facing short-term resistance at 2,563, which corresponds to Tuesday's high. The euro zone blue-chip index has traded in a broad range between 2,450 and 2,600 points since early September as a boost from central bank stimulus measures was offset by concerns about the fiscal outlook in the U.S. and troubled euro zone countries such as Spain and Greece. Strategists said any further gain in equities this year would depend on an agreement to set U.S. public finances on a sustainable path or, at least, a delay of the fiscal cliff. "Markets are becoming increasingly headline driven, with risk appetite gyrating on any fresh lead on fiscal cliff developments," Credit Agricole said in a note. "Data releases are generally taking a back seat to fiscal cliff developments but once again there will be stark contrasts between Europe and the U.S., with weakening economic sentiment indicators in Europe on the one hand and an upward revision to U.S. Q3 GDP on the other". German unemployment figures for November were due for release at 0855 GMT, with an unchanged 6.9 percent reading expected, although ETX's Huber warned of downside risk to that figure as the German economy increasingly feels the pinch from the effects of austerity measures being implemented across Europe. Euro zone economic sentiment, due on Thursday, was expected to have fallen for an eighth straight month in November, although the pace of decline was starting to slow. The European Commission sentiment indicator, due at 1000 GMT, was expected to come in at 84.2, down from 84.5 in October. The preliminary U.S. GDP reading for the third quarter, due at 1330 GMT, was expected to be revised up to 2.8 percent, from a prior reading of 2.0 percent. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 720 GMT LAST PCT CHG NET CHG S&P 500 1,409. 0.79 % 10.99 3 NIKKEI 9,400. 0.99 % 92.53 8 MSCI ASIA <.MIASJ000 0.94 % 4.91 EX-JP PUS> EUR/USD 1.2945 -0.05 % -0.000 USD/JPY 82.13 0.1 % 0.0800 10-YR US <US10YT=RR 1.637 -- 0.00 TSY YLD 10-YR BUND <EU10YT=RR 1.377 -- 0.00 YLD SPOT GOLD $1,718 -0.03 % -$0.47 84 US CRUDE $86.70 0.24 % 0.21 GLOBAL MARKETS-Asian shares up on hopes of U.S. budget deal > Wall St jumps in another 'fiscal cliff' swing > Japan's Nikkei advances on optimism over U.S. fiscal deal > Treasuries gain on standoff in U.S. budget talks > Yen eases from 1-week high, euro firm on U.S. fiscal hopes > Gold inches up after sell-off; U.S. fiscal worries weigh > LME copper edges up, US fiscal hopes support > Brent rises on Mideast tensions, U.S. budget hopes COMPANY NEWS SIEMENS Siemens struck a deal to buy Invensys' rail business for 1.74 billion pounds ($2.8 billion) as part of a major overhaul to focus on its core expertise and boost productivity. TELEFONICA Spain's Telefonica said on Wednesday it would slash 776 million euros ($1 billion) from its over 50 billion euros of debt after receiving 97 percent uptake in a swap of preference shares for stocks and bonds. NOKIA Microsoft Corp Chief Executive Steve Ballmer said smartphones running Microsoft's new Windows software were selling four times as much as they did at this time last year. Microsoft has never given sales numbers of Windows phones, primarily made by Nokia, Samsung and HTC. VIVENDI The media group is examining four non-binding offers above 6 billion euros for its Brazilian broadband company, GVT, according to a source familiar with the situation. DEUTSCHE TELEKOM Telekom's plans for building out Internet provision have run into criticism from an expert group advising the German government. "There is a danger that a new monopoly will be created during the last mile and competition will suffer," Daniel Zimmer, chairman of the monopoly commission, told the Frankfurter Allgemeine Zeitung newspaper. PPR Fnac, the music and book division of the French retail and luxury group, said it had agreed to sell its Italian business to investment fund Orlando Italy. AHOLD The Dutch retailer has increased its cost cutting programme to 600 million euros from 350 million, it said on Wednesday after market close. FRENCH BANKS A French law designed to curb banks' risky trading also would tighten oversight of brokers, insurers and consumer-credit providers, according to a draft version obtained by Reuters. BANCO POPULAR Banco Popular fully covered its 2.5 billion euro capital hike the same day the European Commission approved the recapitalisation plan of four nationalised Spanish banks. ZURICH INSURANCE GROUP The company said it was confident of being able to maintain an attractive and sustainable dividend, and reiterated its business operating profit after tax return on equity target of 16 percent, though it said in the current tough environment returns could be reduced by two percentage points. SWISS RE Swiss Re is to invest $500 million in infrastructure projects, the latest investor to seek out stable returns by buying into assets such as roads, railways and utilities. VOLKSWAGEN AG Volkswagen and FAW Group have agreed to extend their partnership beyond its expiration date of 2016, the German automaker said on Thursday, brushing aside reports by some German media outlets that FAW infringed on Volkswagen's intellectual property rights. PSA PEUGEOT CITROEN China's Changan Automobile Group is selling its 50 percent stake in a car venture with PSA to its listed unit, Chongqing Changan Automobile Co , sources with direct knowledge of the matter said, in a sale worth 2 billion yuan ($320 million). GDF SUEZ, ARCELORMITTAL France is not reviewing the sale of shares in power group GDF to finance a rescue of ArcelorMittal's Florange steelworks, Industry Minister Arnaud Montebourg said. The French government has found an industrialist willing to invest 400 million euros to renovate the Florange steelworks, the minister said. NORSK HYDRO Norwegian aluminium maker Norsk Hydro said it saw demand for aluminium outside China increasing 2-4 percent next year and that it aimed to maintain the absolute dividend level for 2012. K+S The German state of Thuringia's environment ministry said it regretted a decision by authorities in the neighbouring state of Hesse that allows K+S to continue releasing salt water run-off from mining activities into a river that runs between the two states.
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