European Factors to Watch-Shares seen lower ahead of earnings
LONDON, Jan 8 (Reuters) - European shares were set to fall on Tuesday and move further away from a recent 22-month high, with investors becoming cautious before a new earnings season that could determine the market's near-term direction. Fourth quarter earnings, which kick off with results from U.S. aluminum giant Alcoa after the market close on Tuesday, are overall expected to be only slightly better than the lacklustre showing of the third quarter. Analysts' have sharply cut their estimates in the past months. Based on a Reuters analysis, Europe ranks among companies' chief concerns. Uncertainty about the region and its weak economic outlook were cited by more than half of the 25 largest S&P 500 firms that warned on results. "Caution prevails regarding corporate earnings. Both revenues and earnings will be scrutinised closely, with revenues potentially providing a better gauge of confidence as opposed to the often cost-driven earnings outcome," Keith Bowman, equity analyst at Hargreaves Lansdown, said. "On the strategy front, a bias towards defensives still persists, although moves into more cyclical arenas are now occurring." At 0735 GMT, futures for Euro STOXX 50, Germany's DAX and France's CAC were 0.3 to 0.4 percent lower. Financial spreadbetters earlier predicted that Britain's FTSE 100 would open flat. Some analysts, however, remained positive on the market's longer-term outlook. Exane BNP Paribas analysts saw the potential of double-digit total returns in 2013 and said in a note that they expected cyclical shares exposed to business spending to be attractive. "We see little reason to expect a flare up in euro-area tension ahead of the German elections and, alongside the supportive growth/liquidity mix, expect to see further risk premium compression. This drives our preference for Europe over the U.S., 'Periphery' over 'Core', and 'Value' over 'Growth'." On the macroeconomic front, investors will await chain store sales figures from ICSC/Goldman Sachs for the week ended Jan. 5 at 1245 GMT and Redbook's retail sales index of department and chain store sales for January at 1355 GMT. On Monday, the FTSEurofirst 300 index of top European shares fell 0.5 percent to 1,161.57 points after hitting its highest since early 2011 in the morning session. The euro zone's blue chip euro STOXX 50 index fell 0.5 percent to 2,695.56 points. "The index is starting to display signs of exhaustion following a run that has seen it put on 11.5 percent in the space of just seven weeks," Bill McNamara, technical analyst at Charles Stanley, said. "The fact that its 14-day RSI (relative strength index) is beginning to display bullish divergence suggests that participation in the rally could be waning. A pull-back might now be necessary before the index can continue its ascent and a reversion to the short-term uptrend looks like a realistic expectation." The index could fall to 2,670, and if it failed to hold the level, the next downside target would be around 2,626, he added. MARKET SNAPSHOT AT 0734 GMT LAST PCT CHG NET CHG S&P 500 1,461.89 -0.31 % -4.58 NIKKEI 10,508.06 -0.86 % -90.95 MSCI ASIA EX-JP -0.77 % -4.30 EUR/USD 1.3106 -0.07 % -0.0009 USD/JPY 87.35 -0.48 % -0.4200 10-YR US TSY YLD 1.887 -- -0.01 10-YR BUND YLD 1.504 -- -0.01 SPOT GOLD $1,648.25 0.1 % $1.61 US CRUDE $93.01 -0.19 % -0.18 * Asian shares fall on caution before earnings reports * Nikkei down, exporters drag as yen weakness pauses * Wall St edges off 5-year high, awaits earnings * Brent crude locked above $111 ahead of China data * Euro trims losses vs yen on Japan finmin's remarks * London copper climbs on stronger euro, China prospects * Gold edges up on euro, Asia physical buying * Yields edge up before $66 bln US debt sales COMPANY NEWS EADS Airbus said it had beaten Russian competition to be selected as the preferred bidder to supply six A330 aerial refueling tankers to India. Hawaiian Airlines said on Monday it plans to buy Airbus A321neo planes in an order valued at up to $2.8 billion, a move that puts Airbus ahead of Boeing as the airline's main supplier of jets that fly between Hawaii and the U.S. West Coast. AIR FRANCE-KLM Italian holding company IMMSI said no talks were under way for the sale of its 7.08 percent stake in Italian airline Alitalia to Air France-KLM. ANGLO AMERICAN AngloGold Ashanti chief executive Mark Cutifani is stepping down to take over as the head of global mining giant Anglo American, the South African gold producer said on Tuesday. NOVARTIS Novartis will limit acquisition deals to $4 billion in 2013 and does not plan to sell its smaller units including its vaccines, consumer health and animal health business, Chief Executive Joe Jimenez said in an interview with Bloomberg. SANOFI The French drugmaker plans to give an update on its research and development pipeline at the JPMorgan healthcare conference in San Francisco on Tuesday. ACTELION Europe's largest biotech company Actelion confirmed its guidance for product sales to fall by low single digits and for core earnings to grow in mid single digits in 2012 in a presentation published on its website on Tuesday. For more, click on: TECHNICOLOR The digital video specialist unveiled Qeo, a new software that allows devices and applications of all brands and operating systems to speak to one another. AIR LIQUIDE The gases group said it has strengthened its healthcare specialty ingredients business with BiotechMarine, a French specialist in active ingredients for the cosmetics industry. No financial details were given. QIAGEN The genetic testing specialist said it struck three separate agreements that add multiple biomarkers to its development pipeline of diagnostics for personalised healthcare applications. Related news ASSICURAZIONI GENERALI The board of Generali, Italy's biggest insurer, is to discuss buying the 49 percent of a joint venture with Czech group PPF it does not already own, three sources with knowledge of the situation said.
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