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European Shares Set To Rebound After Sell-off

4/5/2012 2:28 AM ET

European shares are set to rebound from a two-day sell off on Thursday, as investors seek bargains in beaten down stocks ahead of the Easter weekend. Focus will be on the Bank of England, which meets today to make its decision on interest rates and its asset purchase program. Many economists expect the central bank to maintain interest rates at a record low of 0.5 percent and maintain its level of cash stimulus.

Asian shares are turning in a mixed performance, reversing some initial losses, as commodities rebounded and Chinese shares rallied after a three-day holiday.

China's Shanghai Composite index is up 0.8 percent on optimism that capital inflows will improve after the China Securities Regulatory Commission decided to raise the limit on foreign investment in Chinese securities by $50 billion to $80 billion. Non-banking financial companies are outperforming after Premier Wen Jiabao called for the break-up of a banking "monopoly" on lending.

Key benchmark indexes in Indonesia, Singapore and South Korea are rising modestly, while Japan's Nikkei index is down 0.4 percent, Hong Kong's Hang Seng is losing 0.7 percent and Australia's All Ordinaries lost half a percent. Investors also await data on U.S. jobless claims due later in the day and Friday's employment report for direction.

In domestic corporate news, Daimler AG said it has received shareholder nod to pay a dividend of euro 2.20 for the year 2011, compared to euro 1.85 paid last year.

Oil giant Royal Dutch Shell Plc. is exploring the possibility of building a plant in Louisiana that will convert natural gas into diesel fuel, the Wall Street Journal reported, citing people familiar with the matter.

French drugmaker Sanofi and Regeneron Pharmaceuticals Inc. said that the Biologics License application for the investigational agent Zaltrap concentrate for solution has been granted priority review by the Food and Drug Administration.

European shares tumbled on Wednesday, with banks and miners posting steep losses, as a weak Spanish bond auction and the reluctance of the Federal Reserve to launch another round of monetary stimulus sparked risk aversion. As expected, the European Central Bank left its key interest rate unchanged at a record low 1 percent, pursuing its tough balancing act between taming persistently high inflation and bolstering the eurozone's weak economy. The Euro Stoxx 50 index of eurozone bluechip stocks shed 2.5 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.7 percent, while around Europe, Switzerland's SMI, the U.K.'s FTSE 100, France's CAC 40 and the German DAX fell between 1.5 percent and 2.8 percent.

Likewise, U.S. stocks fell sharply overnight, as the prospects of no additional monetary stimulus from the Federal Reserve, renewed concerns about funding difficulties for weaker euro zone countries following a poorly subscribed Spanish bond auction and a weaker than expected reading on U.S. service sector, which makes up about two-thirds of the U.S. economic activity, spooked investors. The Dow and the S&P 500 dropped around a percent each, while the tech-heavy Nasdaq fell 1.5 percent.

by RTT Staff Writer

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