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European Stocks May Rebound After Sell-off

4/24/2012 2:10 AM ET

European shares are likely to rise on Tuesday, reversing some of yesterday's losses, but mounting political uncertainty in France and the Netherlands and lingering concerns over the euro zone debt situation could keep gains in check.

Political concerns continue to haunt investors as Mark Rutte, Netherlands' Prime Minister, resigned yesterday in a crisis over budget cuts. A parliamentary debate to discuss the political crisis, the interim budget cuts and a schedule of snap polls is expected to take place today, and Rutte is due to address the parliament in the afternoon.

Asian shares are trading on a mixed note, fluctuating between gains and losses, as eurozone worries and threats of slowing global economic growth rendered investor mood cautious. The Australian dollar hit a two-week trough as a very soft reading on producer inflation paved the way for an interest rate cut next week.

In domestic corporate news, French utility GDF Suez SA reiterated its guidance for 2012 earnings after reporting over 10 percent rise in first-quarter revenue, thanks to strong contributions from key business lines, including International Power.

Tire maker Michelin reported a 5 percent year-over-year rise in its first-quarter net sales to 5.3 billion euros and reaffirmed its 2012 objective of reporting a clear increase in operating income and positive free cash flow, before the impact of the sale of the Paris building.

United Continental Holdings is in exclusive negotiations with Boeing Co. to buy around 200 narrow body jets, the Bloomberg reported, quoting two people familiar with the matter.

Nestle SA, which agreed to buy Pfizer Inc.'s nutrition business for $11.9 billion, may sell some assets worth around $1.8 billion to resolve antitrust concerns in countries where it faces hurdles, another Bloomberg report said, quoting people with knowledge of the matter.

Swedish financial services group Nordea Bank AB posted higher first-quarter profit attributable to shareholders of 773 million euros compared to 740 million euros a year ago.

Spanish lender Banco Santander SA has asked investment banks to come up with proposals for how to structure a stock market listing of its Mexican unit within the next 6-12 months, the Wall Street Journal reported, citing people familiar with the matter.

European shares plunged to a three-month low on Monday, as disappointing April PMI data for China and the eurozone and political concerns in France and the Netherlands rattled investors. The Spanish economy slipped back into recession in the first quarter of 2012, a Bank of Spain monthly report said, fueling concerns that the country may fail to meet the deficit targets, which may force the government to seek an international bailout.

The Euro Stoxx 50 index of eurozone bluechip stocks tumbled 2.9 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 2 percent, while around Europe, the U.K.'s FTSE 100, Switzerland's SMI, France's CAC 40 and the German DAX finished down between 1.9 percent and 3.4 percent.

On Wall Street, stocks saw considerable weakness before ending the session well off their worst levels of the day overnight, as economic and political uncertainty in Europe coupled with a report alleging that Wal-Mart Stores stymied an investigation of bribery in Mexico spooked investors. The Dow and the S&P 500 closed down about 0.8 percent each, while the tech-heavy Nasdaq shed a percent.

by RTT Staff Writer

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