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Europe Factors to Watch-Shares set to extend sell-off; eyes on China
June 24, 2013 / 5:32 AM / 4 years ago

Europe Factors to Watch-Shares set to extend sell-off; eyes on China

PARIS, June 24 (Reuters) - European stocks are set to drop on Monday, adding
to last week's sharp losses, as investors fretted about the prospect of reduced
U.S. monetary stimulus and brewing worries over China's banking sector.
    At 0622 GMT, futures for Euro STOXX 50, for UK's FTSE 100,
for Germany's DAX and for France's CAC were down 0.1-0.8
percent.
    Chinese shares tumbled on Monday, with the Shanghai Composite down
4.7 percent, after official news reports over the weekend suggested Beijing will
not change its tightening policy as it looks to crack down on shadow banking,
blamed for a cash crunch on the mainland. 
    "Investors are worrying that the tensions in China's banking sector could
aggravate the country's slowdown in growth, right when the Fed is talking about
trimming its QE and people cut exposure to emerging markets," a Paris-based
trader said.
    "This looks like the perfect storm, although Chinese authorities could
probably quickly ease the tensions."
    China's overnight repo rate, a key gauge of liquidity in the
country's interbank market, was down by 193 basis points to 7.32 percent on a
weighted-average basis on Monday morning, retreating from a peak of 11.74
percent last Thursday. 
    Europe's telecom sector will be in the spotlight on Monday, after Vodafone
 agreed with Kabel Deutschland to buy the German cable
operator for 7.7 billion euros. 
    The banking sector will also be in focus, after European officials over the
weekend failed to agree on how to share the cost of bank collapses, as Germany
resisted attempts by France to water down rules designed to spare taxpayers in
future crises. 
    European shares fell on Friday in heavy trade, with the FTSEurofirst 300
 index turning negative on the year for the first time in 2013, as the
prospect of reduced U.S. monetary stimulus hit markets worldwide.
 
    "This mere suggestion of stimulus withdrawal has shown how fragile the
current stock market rally has been and it could be some time before markets
settle down to where they should be as investors start become more discerning
about company fundamentals," Michael Hewson, senior market analyst at CMC
Markets, wrote in a note.
    
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  MARKET SNAPSHOT AT 0626 GMT:
                                                        
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,592.43   0.27 %     4.24
 NIKKEI                             13,062.78  -1.26 %  -167.35
 MSCI ASIA EX-JP                       482.90  -1.87 %    -9.22
 EUR/USD                               1.3094  -0.21 %  -0.0028
 USD/JPY                                98.47   0.59 %   0.5800
 10-YR US TSY YLD                       2.606       --     0.06
 10-YR BUND YLD                         1.773       --     0.04
 SPOT GOLD                          $1,281.56  -1.17 %  -$15.19
 US CRUDE                              $93.27  -0.45 %    -0.42
 
  > GLOBAL MARKETS-Asia shares slide on China worries, Fed outlook 
  > US STOCKS-Wall Street ends slightly up but slumps for the week 
  > Nikkei surrenders early gains, hurt by China worries 
  > FOREX-Dollar rises as Fed exit plan sends Treasury yields soaring 
  > PRECIOUS-Gold falls on stronger dollar, physical demand muted 
  > METALS-Copper falls for 5th day in six on China woes, dollar 
  > Brent dips below $101 on demand worries, firmer dollar 
    
    COMPANY NEWS:
    
    KABEL DEUTSCHLAND VODAFONE 
    Europe's telecom sector will be in the spotlight on Monday after Vodafone
 agreed with Kabel Deutschland to buy the German cable
operator for 7.7 billion euros. 
    
    SANOFI 
    An improved version of Sanofi's blockbuster insulin Lantus is better than
the older drug at controlling blood sugar lows at night, a common side effect in
diabetics treated with insulin, according two late-stage tests published on
Saturday. 
    
    SWISS RE 
    The world's second-largest reinsurer confirmed its 2011-2015 financial
targets and said it wanted to reduce debt levels by 2016 and focus on dividend
growth. 
    
    FIAT 
    The carmaker has renewed a three-year, 2 billion-euro ($2.64 billion)
revolving credit line, it said on Friday, a vital step in its plan to acquire
the Chrysler shares it does not already own. 
    
    BANCA POPOLARE DI MILANO 
    Shareholders of the mid-sized cooperative lender approved on Saturday a
rights issue for up to 500 million euros and named Giuseppe Coppini as
supervisory board chairman, the company said in a statement. 
    
    ENEL 
    Enel is waiting for better market conditions to issue a bond and is ready to
sell more assets to Gazprom, CEO Fulvio Conti told Milano Finanza on Saturday.
 
    
    BASF 
    Germany is looking favourably on a no-cash transaction that will hand
Gazprom full control of its partner BASF's gas trading and storage
activities in exchange for BASF taking more equity in Siberian gas fields.
 
    
    RWE, E.ON 
    Credit rating agency Moody's late on Friday downgraded RWE's ratings to
Baa1, giving the utility a stable outlook. Moody's affirmed E.ON's A3/Prime-2
ratings and changed its outlook to negative.

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