Nestle, Italian bank deal prop up European shares
* Oil bounce also supports market (Adds details, updates prices)
LONDON, Dec 19 European stocks are poised to rise at the open on Wednesday as growing expectations of a budget deal in the United States and of further monetary stimulus from Japan underpinned sentiment. The European banking sector will be in the spotlight after Swiss bank UBS was hit with a $1.5 billion bill and admitted to fraud on Wednesday in order to settle charges of manipulating global benchmark interest rates. The fine, the second largest to be received by a bank, was in line with expectations and shares in UBS were expected to open 0.3 percent higher in Zurich. "I think the fines for Libor rigging have been priced in for some time now," said Zahid Mahmood, senior dealer at London Capital Group. "While they are substantial to say the least and they will certainly impact a banking sector that has been under attack for a while, I don't think they will have any material impact to temper the broader rally we are undergoing due to the various economic and political reasons, such as additional central bank stimulus, broader signs showing global economic improvement," the trader said. In the broader market, futures for the Euro STOXX 50 and France's CAC were up 0.3 percent, while contracts on Britain's FTSE 100 added 0.2 percent and Germany's DAX futures were 0.1 percent higher at 0714 GMT. The euro hit multi-month highs and Japan's Nikkei average rose above the 10,000 mark for the first time in more than eight months on Wednesday, as signs of progress towards averting a "fiscal cliff" of growth-curbing austerity measures and expectations of more aggressive monetary stimulus from the Bank of Japan lifted riskier assets. "European markets look once again supported and you'd be brave to aggressively short this market, given the current news flow and momentum," Chris Weston, chief market strategist at IG, said in a trading note. "Pull-backs in so many asset classes are non-existent, and we are seeing break-outs not just in European markets and certain Asian bourses, but in key major currencies." Weston expected Spain's IBEX 35 to be the standout performer with a 0.5 percent higher open on Wednesday, after it broke out of a downward channel earlier this week. He cautioned Britain's FTSE 100 which closed 0.4 percent higher at 5,935.90 on Tuesday, would struggle to break a major psychological resistance at 6,000 unless market sentiment surrounding Europe was further boosted by a major consensus-beat in Germany's Ifo business morale survey, due at 900 GMT. The closely watched Ifo was expected to have risen for a second straight month, reaching 102 from 101.4 in November, according to a Reuters poll. EURO ZONE RALLY The euro zone blue-chip Euro STOXX 50 index gained 0.6 percent to close at 2,643.50 points on Tuesday, a level not seen since mid-2011. The index was poised to end the year in positive territory for the first time since 2009 after a 14 percent rally in the past twelve months, largely fuelled by cash injections by global central banks to stimulate the economy and soothe the sovereign debt markets. The Euro STOXX 50 Volatility Index, or VSTOXX, Europe's widely-used measure of investor risk aversion, hit a five-year low on Tuesday and slipped below Wall Street's own 'fear gauge', the VIX, only for the fo urth t ime in the past 10 years, s ignalling inve stors we re positioning fo r additional gains in European equities. Earnings momentum in the euro zone momentum had also bottomed out but it remained a reason for caution as estimate downgrades still outweighed upgrades by nearly 5 percent in the past three months, Datastream data showed, consistent with bleak growth expectations in the region. "There is a clear disconnect between earnings momentum and the market performance," Emmanuel Cau, a strategist at JPMorgan, said. Datastream data showed the broad STOXX Europe 600 trading at 11.5 times 12-month forward earnings, a multiple last seen in May 2010, and Cau estimated forecasts would need to rise if share prices were to continue their rally. "Momentum will have to turn up, but we think that it is unlikely to happen very quickly and that's why we fear the market reprice the weaker earnings." -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0721 GMT LAST PCT CHG NET CHG S&P 500 1,446.79 1.15 % 16.43 NIKKEI 10,160.40 2.39 % 237.39 MSCI ASIA EX-JP 546.16 0.4 % 2.16 EUR/USD 1.3236 0.05 % 0.0007 USD/JPY 84.26 0.07 % 0.0600 10-YR US TSY YLD 1.812 -- -0.01 10-YR BUND YLD 1.421 -- 0.00 SPOT GOLD $1,674.96 0.32 % $5.42 US CRUDE $87.89 -0.05 % -0.04 > Shares, euro rise on hopes of U.S. "cliff" deal, BOJ easing > Wall St climbs on economy bets as it looks past 'cliff' > Nikkei rises above 10,000 led by exporters, financials > Treasuries fall on hopes of fiscal deal > Yen hits 16-month low vs euro, BOJ meeting in spotlight > Gold bounces on weak dollar; but near 4-mth low > Copper prices tread water as U.S. nears fiscal cliff deal > Brent nears $109 on hopes of US budget crisis resolution COMPANY NEWS UBS Swiss bank UBS was hit with a $1.5 billion bill, the second-largest fine ever levied on a bank, and admitted to fraud on Wednesday in order to settle charges of manipulating global benchmark interest rates. GENERALI Moody's on Tuesday placed the Baa2 senior debt rating, the Baa3 subordinated debt rating and the Ba1 preferred stock debt ratings of the Italian insurer on review for downgrade. The Baa1 insurance financial strength rating at Assicurazioni Generali SpA was unaffected by the announcement. Unicredit Chief Executive Federico Ghizzoni said on Tuesday he is comfortable with the sale of the Bank of Italy's stake in Generali to state-backed fund Fondo Strategico Italiano (FSI). FRENCH BANKS French President Francois Hollande's long-awaited bank reform will be unveiled on Wednesday, almost a year after his campaign pledge of a "long war" against the financial sector. LVMH Louis Vuitton's new chief executive has quit suddenly from the helm of luxury group LVMH's top brand because of health reasons. SAP Top rival Oracle reported fiscal second-quarter revenue and earnings that beat consensus on Tuesday and said it was gaining share against SAP in Europe. SOCIETE GENERALE The French bank's finance head Bertrand Badre is to join the World Bank as chief financial officer on March 1 after a year spent steering France's No. 2 bank through asset sales, cost cuts and the euro crisis. SCHNEIDER ELECTRIC The French engineering company said it plans to scrap its supervisory board and name Jean-Pascal Tricoire as both chairman and chief executive officer of the group. BANKIA Bankia chief Jose Ignacio Goirigolzarri said he would like the nationalised entity to be privatised through successive share listings, though he did not rule out the possibility the bank could be sold. "An auction is a possibility, but it's not the main scenario," Goirigolzarri said in an interview with Actualidad Economica, published in newspaper Expansion. Bankia said on Tuesday it is paying 608 million euros to British insurer Aviva for its stake in a joint venture, to settle a dispute over the breaching of an exclusive distribution agreement. BUNZL The packaging firm said overall trading in 2012 has been consistent with expectations, with group revenue growth for the year expected to be approximately 6 percent at constant exchange rates, and it unveiled two acquisitions in Canada and Australia. MERCK KGAA The drugmaker said its cancer drug Stimuvax did not reach its target of improving survival of lung cancer patients in a late-stage study. FINMECCANICA The board of Finmeccanica is expected to discuss asset sales at a board meeting later on Wednesday. Italian newspaper says no decision will be taken at this board meeting on the sale of unit AnsaldoEnergia, for which Siemens , Doosan and the Italian state-backed strategic fund FSI have expressed an interest. ZODIAC AEROSPACE The aerospace group forecast a rise in like-for-like sales for its current financial year as it posted a 17 percent rise in first-quarter revenue. TELEFONICA Telecoms company Telefonica said on Tuesday it would invest $2 billion in Argentina in 2013 and 2014 to increase its client base and improve capacity, especially its mobile network. The group, which is expected to list its Latin American business, also said it transferred about half of the shares of its Peruvian unit to its Latin American holding company in a further step towards an Initial Public Offering. REPSOL China's sovereign wealth fund China Investment Corp (CIC) is interested in Repsol's natural liquefied gas division, El Confidencial reported on Wednesday, citing unnamed sources.
* Oil bounce also supports market (Adds details, updates prices)
MILAN, June 26 European shares got off to a firm start to the week on Monday as banks rallied after Italy reached a deal on two failed regional banks and consumer bellwether Nestle hit a record high after becoming the next target of activist investor Third Point.
* Financials, energy stocks fall (Recasts, adds detail and quote, updates prices at close)