By Blaise Robinson
PARIS, June 19 (Reuters) - European stocks were set to inch up on Tuesday following the previous roller-coaster session, although gains were seen limited ahead of Spain's short-term debt auction, while Danone will be in focus after a profit warning linked to Spain's recession.
At 0622 GMT, futures for Euro STOXX 50, Germany's DAX and France's CAC were up 0.1-0.2 percent.
Jittery investors were bracing for key debt auctions by Spain on Tuesday and Thursday, at which the country is seen paying record high rates.
Spain's Treasury will issue between 2 billion and 3 billion euros ($2.52 billion-$3.79 billion) of 12- and 18-month debt on Tuesday, and between 1 billion and 2 billion euros of bonds due in 2014, 2015 and 2017 on Thursday.
The yield on Spanish 10-year bonds hit a fresh high of above 7 percent on Monday, a key threshold above which borrowing costs become too expensive for a country to afford over the long term. Such levels have previously led to bailouts in Greece, Ireland and Portugal.
"(Today's) risks will initially be to the downside whilst Spain holds its 12 and 18 month debt auction," GFT market strategist Andrew Taylor said.
"This shouldn't provide any new revelations and I expect markets to rally towards the end of the day in short cover trading in anticipation of the Fed's meeting tomorrow."
The euro zone's blue chip Euro STOXX 50 index ended 1.2 percent lower on Monday, with Italy's FTSE MIB losing 2.9 percent and Spain's IBEX dropping 3 percent, as renewed fears over the two countries' borrowing costs reversed an early rally sparked by Greek election results that lessened the likelihood of the country's imminent exit from the euro zone.
Adding to worries over euro zone peripheral economies, French food group Danone warned early on Tuesday that it cut its 2012 operating profit margin target, blaming a deteriorating economic climate in Southern Europe, notably Spain. Shares of Danone traded in Frankfurt were down 4 percent.
Investors were also cautious ahead of this week's Federal Reserve's policy meeting. The central bank officials head into the June 19-20 meeting under pressure to take further steps to boost the stalled U.S. economic recovery and revive the faltering labour market.
A recent poll by Reuters found that a rising number of economists expect the Fed will come up with some form of quantitative easing action, if not in the coming week then soon, in response to the weakening jobs market.
"The Fed doesn't have much ammunition left, even unconventional ones, to support the economic recovery. Short-term and long-term rates are already extremely low," said Christian Parisot, head of global research at Aurel BGC.
"The central bank should opt for an extension of 'Operation Twist', while a QE3 would not have much impact on the economy and could fuel a rally in oil prices."
Tech shares will be in the spotlight after U.S. software major Oracle Corp reported stronger-than-expected quarterly profit on Monday.
-------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0622 GMT
LAST PCT CHG NET CHG S&P 500 1,344.78 0.14 % 1.94 NIKKEI 8,655.87 -0.75 % -65.15 MSCI ASIA EX-JP 479.31 0.04 % 0.20 EUR/USD 1.2608 0.26 % 0.0033 USD/JPY 78.98 -0.15 % -0.1200 10-YR US TSY YLD 1.572 -- 0.00 10-YR BUND YLD 1.432 -- 0.02 SPOT GOLD $1,629.86 0.12 % $1.92 US CRUDE $82.96 -0.37 % -0.31
GLOBAL MARKETS-Asia stocks soft as Spain in focus
US STOCKS-Europe hits Wall St, Oracle rallies late
Nikkei slips from one-month high; Sharp rises
FOREX-Euro licks wounds as focus shifts from Greece to Spain
METALS-London copper steadies; euro zone eyed
Brent hovers around $96, near 16-month low as Europe weighs
Gold rises for 8th day, euro zone worries support
The French food group said it was cutting its 2012 operating profit margin goal, citing a deteriorating economic climate in Southern Europe, notably Spain, and higher-than-expected raw material costs. Shares in Danone traded in Frankfurt were down 4.2 percent in early trade.
The Dutch telecoms firm has asked Latin American cell phone giant America Movil to waive some voting rights if it builds up a significant stake, a Dutch newspaper reported on Tuesday quoting an executive at the Mexican firm.
Italy's largest bank by assets, plans to further streamline its internal structure, CEO Federico Ghizzoni said on Monday, while playing down the possibility of more branch closures or layoffs.
The world's largest fashion retailer said on Monday it had bought its flagship Zara store in London for 155 million pounds ($242.88 million) from German fund manager Deka.
Santander said on Monday it would offer a scrip dividend for all four dividend payments for 2012, compared to 3 out 4 of its 2011 payments.
BANCA MONTE DEI PASCHI DI SIENA
S&P placed its credit ratings on Monte dei Paschi on CreditWatch with negative implications. It said asset quality had deteriorated more than that of its domestic peers. It also said while MPS had reduced the capital shortfall it understood the bank still needed about 1.5 billion euros in regulatory capital.
EDF / BOUYGUES
The French utility EDF has selected a Bouygues and Laing O'Rourke joint venture as its preferred bidder to build a new nuclear power station at Hinkley Point in Somerset, England. The contract could be worth up to 2 billion pounds ($3.1 billion) and EDF will make a final invesment decision by the end of the year. (Reporting by Blaise Robinson; Editing by Atul Prakash)