European Factors to Watch - Shares to edge up on U.S. debt plan
By Francesco Canepa LONDON, Jan 21 (Reuters) - European stocks were seen opening a touch higher on Monday as a political attempt to break a budget impasse in the United States revived appetite for shares, although buying momentum was subdued as a key index hovered just below 18-month highs. At 0709 GMT, futures for the Euro STOXX 50, France's CAC and Britain's FTSE 100 were 0.2 percent higher, while contracts on Germany's DAX added 0.1 percent. The futures were taking their cue from a late rebound on Wall Street, where the Dow Jones and the S&P 500 posted five-year closing highs after Republicans said the House would consider a bill to raise the U.S. debt ceiling enough to allow the country to pay its bills for another three months. The strategy would buy time for the Democratic-controlled Senate to pass a budget plan that shrinks the federal deficit. "Although this again could be seen as another round of political battle, any progress to avoid the immediate dangers will likely be seen as positive by the market," Credit Agricole said in a note Trading volume may be thinner than usual and markets struggle for direction as Wall Street, the world's largest stock market, is shut for Martin Luther King Jr. Day. The euro zone blue-chip Euro STOXX 50 index closed 0.3 percent lower at 2,709.59 points on Friday. The index has traded in a 1.8 percent range since hitting an 18-month high of 2,735.36 points on Jan. 14, showing buying momentum was waning as some investors locked in their profits on a 11.6 percent rally since mid-November. "I've been seeing selling flows on a regular basis for the past few days," a trader said. "People are especially locking in profits on stocks that did very well, like banks, or single names like Danone." The euro zone banking sector has risen 73 percent since late July while French food group Danone is up 10 percent since mid-October. The trader said charts pointed to a bullish market over the next 18-months after the index broke a string of technical resistances, including the 61.8 percent retracement level of the 2011 selloff at 2,639. In the shorter-term, however, he flagged momentum indicators were starting to show investor fatigue and said the index could pull back to around 2,610, a high hit in March and tested again in September. The Euro STOXX 50's Relative Strength Index, a momentum indicator, has been falling after testing a six-year high earlier this year. HIGHER RETURNS The euro zone blue-chip Euro STOXX 50 index has risen around 33 percent since mid-2012 as bond-buying programmes unveiled by the European Central Bank and other monetary authorities averted the prospect of a break-up in the currency bloc and pushed investors towards assets offering higher returns. Returns on euro zone equities were 9.5 percent above the triple-A rated German bund, while U.S. shares offered a return 7.5 shares higher than the 10-year Treasury, Datastream data showed. "Our advice is to reduce duration and sell out of triple A (bonds), which could be the bad story of the year," Lorne Baring, managing director of wealth management firm B Capital, said. "We've got more equities than we've had since 2010." Baring recently turned "overweight" European equities versus their U.S. peers based on more attractive valuations and expected returns. The STOXX Europe 600 index offers a dividend yield of 3.6 percent for the current year, compared to 2.5 percent for the U.S. Standard & Poor's 500, Reuters data showed. The yield on 10-year Treasuries is around 1.9 percent, just above an annualised inflation rate of 1.7 percent based on the Consumer Price Index. Fund flows data also showed investors showed investors were piling up European shares, which yielded more than safe heaven government debt and U.S. shares. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0709 GMT: LAST PCT CHG NET CHG S&P 500 1,485.98 0.34 % 5.04 NIKKEI 10,747.74 -1.52 % -165.56 MSCI ASIA EX-JP -0.34 % -1.89 EUR/USD 1.3331 0.1 % 0.0013 USD/JPY 89.65 -0.44 % -0.4000 10-YR US TSY YLD 1.840 -- 0.00 10-YR BUND YLD 1.571 -- 0.01 SPOT GOLD $1,690.00 0.4 % $6.66 US CRUDE $95.10 -0.48 % -0.46 > Asian shares retreat from highs, yen volatile before BOJ > Dow, S&P 500 end at 5-yr highs on early earnings beats > Nikkei sluggish as expectations for BOJ action priced in > Treasuries' prices climb as buyers emerge after sell-off > Yen bounces off 2 1/2-year low ahead of BOJ verdict > Gold inches up on Japan easing hopes > Copper edges higher as China's economy picks up pace > Brent steadies on oversupply concerns; outlook steady COMPANY NEWS SANTANDER Spain's Santander is considering making a 2 billion pound($3.2 billion) bid for National Australia Bank's UK business to accelerate its British expansion, the Sunday Times reported citing unnamed sources. BNP The French bank has agreed to spin off a fund that invests in clean energy projects, which will now be rebranded Glennmont Partners, according to the Financial Times. The fund will continue to invest the 437 million euros raised in 2010. VOLKSWAGEN VW's Bentley unit aims to double vehicle sales to 15,000 by 2018, the unit's head told Die Welt newspaper. Separately, Matthias Mueller's contract as head of Porsche has been extended until 2014, he told Automobilwoche. Related news DAIMLER Daimler Chief Executive Dieter Zetsche expects his contract to be renewed after his current term as head of the car and truck maker expires at the end of this year, he told a German newspaper. FERROVIAL Manchester Airports Group (MAG) said on Friday it had agreed to buy London's Stansted airport from Heathrow Airport Holdings for 1.5 billion pounds ($2.4 billion). POSTNL A French activist investment fund, Lutetia Capital, has asked the Dutch mail group for a discussion about the firm's strategy to create value, and says PostNL is undervalued, Dutch daily Het Financieele Dagblad reported on Monday. PostNL confirmed to the paper it has received a letter from Lutetia but declined further comment. DEUTSCHE POST A renewal of the law covering postal services could be put into effect in the current legislative period, following a delay, Der Spiegel reports. The proposed law would require Deutsche Post to submit contracts with big customers to the federal network office to ensure there was no price dumping that could hurt competition. EIFFAGE APRR, the toll road unit of the French construction and concessions group, said full-year revenues slightly rose as higher fees offset a decline in traffic. RICHEMONT The luxury goods group, maker of Cartier jewellery, gave a cautious outlook on Monday after slowing wholesale demand for its pricey products pushed third-quarter sales growth below forecasts. For related news, click on BASF The chemicals company said it and Petronas have terminated heads of agreement for a joint speciality chemicals venture. Related news AREVA The French nuclear company said on Friday it has signed a five-year 1.25 billion euro revolving credit facility with a syndicate of 19 banks, which replaces a previous facility expiring in 2014. E.ON The company has urged unions to return to talks and is seeking a fair compromise on wages, board member for personnel Regine Stachelhaus told Welt am Sonntag newspaper. Related news HEIDELBERGCEMENT HeidelbergCement's chief executive said investors hoping for big dividend hikes will have to wait while the cement maker focuses on further trimming its debt pile, a German newspaper reported. Related news SIEMENS Siemens' loss-making lighting unit and spin-off candidate Osram aims to post a 512 million euro ($681 million) pretax profit by 2015 thanks to tough cost cutting, a German magazine reported. Separately, the Financial Times reported that Nokia Siemens Networks (NSN) - a joint venture of Siemens and Nokia is planning to raise as much as 700 million euros from public markets in the spring. Related news FRAPORT The Frankfurt airport operator said more than 200 flights to and from Frankfurt had been cancelled on Sunday due to snow and ice on the ground. More flights were cancelled on Monday. Related news EADS Chief Executive Tom Enders told Der Spiegel magazine decisions on when and where to develop aircraft in the future would be made on economic grounds and he would not tolerate interference by the German government. Related news AIR BERLIN The company wants to cut employee salaries as part of its cost-saving effort, Focus and Der Spiegel magazines reported. Air Berlin declined to comment on the reports. Related news
- Tweet this
- Share this
- Digg this
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.