European stocks may drift lower on Monday, as macroeconomic concerns may prompt investors to take some profits off the table following last week's rally. However, losses could be limited as soft Chinese and U.S. economic data boosted expectations of further economic stimulus from global central banks.
China's industrial output growth weakened to its slowest pace in more than three years in August, official figures showed yesterday, intensifying the debate about whether the economy is poised for a 'soft landing' or 'hard landing'. Elsewhere, revised data out of Japan showed that the economy grew a slower-than-estimated 0.2 percent in April-June from the previous quarter.
Asian markets are trading in a lackluster manner after data released today showed China posted a wider-than-expected trade surplus in August, with imports registering a surprise decline from the year-ago period, a negative sign for the state of domestic demand.
Closer home, Bank of England's Chief Economist and Monetary Policy Committee member Spencer Dale has warned that sustained loose monetary policy over longer periods of time could lead to increases in the risk taking of investors and financial institutions in a way that could store up problems for the future. Prolonged and aggressive monetary accommodation, combined with other unconventional policy tools, comes with potential costs and risks, Dale said in a speech in Dublin.
In corporate news, British oil giant BP Plc. is in advanced talks to sell some of its offshore oilfields in the Gulf of Mexico to Plains Exploration & Production Co. for about $7 billion, the Wall Street Journal reported, citing people familiar with the matter.
Estavis AG said it would write down certain assets in its financial statements for the 2011/12 fiscal year due to strategic redirection of its business model.
Swiss Reinsurance Co. said that an increased focus on economic capital due to new solvency rules and rising pressure on investment returns from record-low interest rates are major factors driving re-insurance pricing.
European stocks extended the previous session's rally on Friday, as strength in shares of banks and miners following the announcement by China of a massive infrastructure investment program to bolster sagging growth somewhat offset a mixed reaction to the U.S. jobs report.
The Euro Stoxx 50 index of eurozone bluechip stocks rose half a percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, edged down 0.1 percent. Around Europe, Switzerland's SMI, France's CAC 40, the U.K.'s FTSE 100 and the DAX of Germany rose between 0.1 percent and 0.7 percent.
U.S. stocks showed a lack of direction on Friday, largely holding on to the substantial gains posted in the previous session, as traders digested a disappointing jobs report and Intel's warning of softer-than-expected demand for the third quarter of 2012. The Dow rose 0.1 percent, the tech-heavy Nasdaq inched up 0.61 points or less than a tenth of a percent and the S&P/500 gained 0.4 percent.
The Labor Department's closely-watched employment report showed that employment increased by less than expected in August, although continued sluggishness in the labor market and a shrinking workforce increased optimism about further monetary stimulus from the Federal Reserve at next week's FOMC meeting.
by RTT Staff Writer
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