European Commentary
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European Shares Seen Subdued

3/20/2012 3:09 AM ET

European shares are seen opening slightly lower on Tuesday, with miners in focus after BHP Billiton said growth in China's demand for iron ore would soon drop "to single digits."

Meanwhile, China raised fuel prices by 6-7 percent for the second time in 2012, dampening investor sentiment further. Commodities retreated and the euro is inching away from its highest level in a week against the dollar as risk appetite receded mildly and investors waited for further evidence of economic recovery before investing additional money into riskier assets.

Asian markets are trading mostly lower, with China's Shanghai Composite index pacing the declines with a 1 percent loss, as concerns over slowing growth and a lack of fresh triggers prompted investors to move to the sidelines. The Japanese market is closed for a public holiday.

On the macroeconomic front, inflation data from the U.K. and industrial production figures from Switzerland are due to be released in the European session. Also, Greece is aiming to raise EUR 1 billion by auctioning 13-week T-Bills with maturity June 22.

In corporate news, Britain's Chancellor of the Exchequer George Osborne has launched a lending scheme aimed at providing cheaper loans to small businesses. Barclays, Santander, Lloyds and Royal Bank of Scotland have backed the scheme, but HSBC chose to opt out saying it is not commercially viable for it to offer cheaper loans.

Deutsche Postbank AG announced that its supervisory board has elected Frank Strauss to be the company's chairman of the management board as of July 1, 2012.

German chemicals distributor Brenntag AG announced the expansion of its management board to four from three members.

Mining giant Rio Tinto Plc said it had agreed to sell its minority stake in Australian uranium explorer Extract Resources.

BHP Billiton said it remains confident in the long-term demand outlook for iron ore, underpinned by China's urbanization and industrialization. But, the miner noted that despite strong growth, China's 2025 projections still lag behind current comparables in the U.S.

European shares slipped from 8-month highs on Monday, due largely to weakness in bank stocks as investors sought further evidence of recovery in the economies of Europe and the United States before chasing the recent liquidity-driven rally.

The Euro Stoxx 50 index of eurozone bluechip stocks and the Stoxx Europe 50 index, which includes some major U.K. companies, ended little changed, while around Europe, the German DAX, the U.K.'s FTSE 100, Switzerland's SMI and France's CAC 40 ended down between 0.1 percent and 0.5 percent.

On Wall Street, stocks rose overnight as data showed confidence among U.S. homebuilders held in March at its best level since 2007 and tech giant Apple announced plans to initiate a dividend and a share repurchase program. The Dow edged up 0.1 percent, the tech-heavy Nasdaq climbed 0.8 percent and the S&P 500 rose 0.4 percent.

by RTT Staff Writer

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