REFILE-European Factors to Watch-Shares to retreat from 20-month highs

Thu Jan 3, 2013 7:56am GMT

LONDON, Jan 3 (Reuters) - European shares were set to retreat from 20-month
highs on Thursday, with "overbought" trading conditions on several indexes and
waning euphoria over the U.S. fiscal deal prompting some investors to take
profit.
    At 0738 GMT, futures for Euro STOXX 50, Germany's DAX and
France's CAC were 0.2 to 0.3 percent lower, a day after a rally fuelled
by a U.S. budget deal to prevent huge tax hikes and spending cuts that would
have pushed the world's largest economy into recession. 
    "It would be naive to think that the U.S. economy is in good shape purely on
the back of the budget bill. There are open question marks on spending cuts and
whether the debt ceiling can be lifted," Joshua Raymond, strategist at City
Index, said. 
    The approval by U.S. legislators averted immediate concerns like tax hikes
for almost all U.S. households, but did nothing to resolve other political
showdowns on the budget that loom in coming months. Spending cuts of $109
billion in military and domestic programs were only delayed by two months.
    The FTSEurofirst 300 index ended 2.1 percent higher at 1,157.40
points on Wednesday, but charts showed the index was in an "overbought"
territory, with its 14-day relative strength index (RSI) trading above 70,
indicating it could retreat in the near term. A level below 30 is considered
"oversold".
    Financial spreadbetters earlier predicted Britain's FTSE 100 would
open as much as 0.2 percent higher. The index, which includes several
heavyweight mining shares, could get some support after data from China, the
world's top metals consumer, showed the country's services sector expanded in
December. 
    Investors will keep an eye on macroeconomic numbers for hints on whether the
rally could be sustainable. Focus will be on data from the United States, where
the ADP national Employment Report is due at 1315 GMT. Economists in a Reuters
survey forecast that 133,000 jobs were created in December, up from 118,000 new
jobs in the previous month.
    Initial jobless claims figures will be released at 1330 GMT. In the previous
week, there were 350,000 new filings.
         
     Market snapshot at 0740 GMT:
                                                                 
                                                LAST    PCT CHG   NET CHG
     S&P 500                                1,462.42     2.54 %     36.23
     MSCI ASIA EX-JP                                     0.21 %      1.19
     EUR/USD                                  1.3144     -0.3 %   -0.0040
     USD/JPY                                   87.17    -0.19 %   -0.1700
     10-YR US TSY YLD                          1.820         --     -0.02
     10-YR BUND YLD                            1.438         --      0.00
     SPOT GOLD                             $1,685.35    -0.06 %    -$1.00
     US CRUDE                                 $92.86    -0.28 %     -0.26
 
    * Asia stocks eke out gains on China hopes, oil eases        
    * Wall St starts new year with a bang after 'cliff' deal     
    * Brent falls towards $112; China data offsets US concerns   
    * Copper rallies on U.S. fiscal deal and strong China data   
    * Gold holds gains after U.S. fiscal deal                    
    * Budget deal pushes benchmark yields to 3-month high        
        
    COMPANY NEWS
    
    FIAT 
    Car sales in France, Spain and Italy in 2012 fell to the lowest levels in
years, with December registration data underscoring the challenges facing the
broader European economy.
    
    NEXT 
    Britain's No.2 clothing retailer nudged its full-year profit forecast higher
on Thursday as it posted a rise in fourth quarter sales. 
 
    SAINT-GOBAIN 
    The building materials group said on Wednesday it has acquired American
Fluoroseal Corporation, a U.S.-based manufacturer of fluoropolymer bags for
medical use. No financial details were given. 
     
    BANKS  
    Asian and European banks - including Deutsche Bank and Commerzbank -
registered as U.S. swap dealers this week, joining Wall Street rivals in
complying with new rules that aim to shed light on the opaque $650 trillion
derivatives market. 
    
    DEUTSCHE BOERSE 
    In 2012, Deutsche Boerse's derivatives trading volume fell 18 percent and
turnover on cash markets dropped 23 percent reflecting lower market volatility.
 
    
    REE 
    Spain's Red Electrica (REE) is considering filing a complaint against
Bolivia with the International Center for Settlement of Investment Disputes
after Jan. 6 over the nationalisation of one of its subsidies in May, El
Economista reported citing unnamed sources.  
    
    ACCIONA 
    The Catalan government withdraws a 1 billion euro water privatisation
contract it had signed with an Acciona consortium for the next 50 years after
considering an appeal by Agbar, La Vanguardia reported, citing the ruling.  
 
 TECHNIP  
    Technip has secured a contract with Mosaic Company for a new ammonia
plant under consideration by the global crop nutrient company. 
    
    ZODIAC AEROSPACE 
    The aerospace group said it has acquired Innovative Power Solutions, a
U.S.-based maker of aircraft electricity systems, without giving financial
details of the deal.
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