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European Shares May Rise After 3-day Drop

2/24/2012 2:18 AM ET

European shares may rise after a three-day fall, supported by solid economic data from Germany to the United States and South Korea as well as hopes of further monetary easing.

Bank of England policymaker Paul Fisher said that he is keeping an open mind on yet another round of quantitative easing, given the ongoing economic uncertainty. "At this moment in time I would have a completely open mind going into the next round as to whether we would want to do more QE or not," Fisher said in an interview to City A.M. published today.

Investor sentiment may also improve after Greek Parliament endorsed the debt swap deal with its private creditors, clearing one of the main hurdles for securing a rescue package worth 130 billion euros, approved by its international creditors earlier this week.

Under the deal, banks and other private creditors will have to write down 53.3 percent of the nominal value of their Greek bond holdings, slashing the country's debt burden by 107 billion euros. The Parliamentary nod for the bond swap clears the way for the Greek government to launch a formal offer today.

Asian shares are trading mostly higher, reversing initial losses, as strong German business confidence and U.S. labor market data helped eased concerns about global growth. Also, a survey carried out by the Bank of Korea revealed that South Korean consumer confidence rose to a three-month high in February, largely due to signs of an improvement in the U.S. economy.

Closer home, investors await GDP reports from Germany and the U.K. for further clues to the economic outlook. Italy is set to enter the debt market with a bond auction, with the government aiming to raise a maximum of EUR 3 billion from the auction of zero coupon bonds maturing on January 2014. The government also plans to issue inflation indexed bonds, with a maximum target of EUR 1.5 billion.

In corporate news, German conglomerate Bayer AG proposed to elect its former CEO Werner Wenning as chairman of its supervisory board with effect from October 1. He will succeed Manfred Schneider, who will remain in office until September 30.

Chemicals giant BASF SE said it targets to exceed the 2011 record levels in sales and EBIT before special items for 2012.

Greek refiner Hellenic Petroleum said it would be "easy" to replace Iranian oil supplies once the EU ban on imports comes into effect on July 1.

Telecom Italia Group announced its preliminary results posting 2011 revenues of 29.96 billion euros, up 8.7 percent from 27.57 billion euros a year ago.

India's Adani group is evaluating the potential acquisition of British Gas' stake in gas distribution company, Gujarat Gas, Indian media reported.

European stocks struggled for a third consecutive session on Thursday, as a recession warning from the European Commission overshadowed some encouraging news on German business sentiment. In its interim forecast, the EC said the Euro zone is expected to contract 0.3 percent this year, compared to the 0.5 percent expansion estimated in the autumn forecast.

The Euro Stoxx 50 index of eurozone bluechip stocks lost 0.4 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, eased 0.1 percent. Around Europe, the German DAX shed half a percent and France's CAC 40 ended virtually unchanged, while the U.K.'s FTSE 100 gained 0.4 percent and Switzerland's SMI edged up 0.1 percent.

U.S. stocks posted modest gains overnight, as better-than-expected data on initial jobless claims and signs of stabilization in the housing market helped offset some disappointing earnings news. The Dow and the S&P 500 rose around 0.4 percent each, while the tech-heavy Nasdaq gained 0.8 percent.

by RTT Staff Writer

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