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European Stocks To Extend Losses On Cyprus Uncertainty


European stock index futures point to a lower open, with worries about Cyprus likely to keep investors on the edge. Facing rising risks of a financial meltdown, Cyprus authorities are racing against time to cobble together an alternative plan to raise EUR 5.8 billion by Monday, as demanded by the EU in return for a EUR 10 billion-lifeline. The banks in Cyprus are ordered to remain shut until Tuesday to prevent a run on deposits.

Later today, the Cypriot Parliament is expected to begin debate on a bank-resolution and capital controls bill that would help the government find the money needed to unlock the EU-IMF aid as rapidly as possible. With chances of getting an aid from Russia appearing bleak, the Central Bank of Cyprus has proposed a bill that will help the banking sector avoid the danger of bankruptcy and protect all insured deposits in their entirety up to EUR 100,000.

Meanwhile, the island's second-largest lender Popular Bank imposed a 260 euro per day limit to cope with "high demand for cash" from its ATMs. Adding to concerns about Europe, ratings agency Standard and Poor's downgraded Cyprus credit rating to 'CCC' from 'CCC+' with a 'negative' outlook.

In a statement after a teleconference on Thursday, Eurogroup President Jeroen Dijsselbloem said the Eurogroup stands ready to discuss the draft new proposal with the Cypriot authorities and assist the Cypriot people in their reform efforts as long as the main parameters remain the same.

Asian stocks are trading mostly lower, led by Japan as the yen strengthened after Haruhiko Kuroda's first press briefing. Investors are disappointed by a lack of specific proposals from the new central bank chief on the prospects of further monetary easing.

Back home, investors await Germany's Ifo business confidence figures due later in the session for further clues on the health of Europe's largest economy after Thursday's report showed German manufacturing unexpectedly contracted in March.

In corporate news, French advertising and communications services firm Havas SA reported net income for the full year 2012 of 126 million euros compared to 120 million euros in the previous year.

Genzyme, a biotech subsidiary of drug maker Sanofi SA announced that its multiple sclerosis drug Lemtrada or alemtuzumab remained effective in the one-year extension study of its pivotal late-stage trials.

Spanish bank Banco Bilbao Vizcaya Argentaria SA said that it will invest $3.5 billion in Mexico over the next four years to renovate its branches, invest in information technology and for construction of new operations centers as well as a new corporate headquarters.

Lender Banco Santander SA and Belgian multi-channel bank KBC Group NV would sell 21.4 percent of Poland's Bank Zachodni WBK SA for 4.9 billion zloty ($1.5 billion), media reports suggest. The lenders are expected to fix the sale at 245 zloty ($76.01) per share, near the bottom of the indicated range.

As part of its efforts to gain full control of German commercial vehicles maker Maschinenfabrik Augsburg-Nürnberg, auto giant Volkswagen AG has offered to buy its shares from minority shareholders at 80.89 euros per share.

European stocks ended broadly lower on Thursday after the European Central Bank announced that it will stop emergency funding to Cypriot banks on Monday, if the troubled country fails to agree on a bailout program with its European partners by then. Disappointing Eurozone economic data also added to investor concerns over the banking crisis in Cyprus. France's CAC 40 lost 1.4 percent, Switzerland's SMI fell 1.1 percent, the German DAX shed 0.9 percent and the U.K.'s FTSE 100 ended 0.7 percent lower.

U.S. stocks fell overnight, offsetting the gains posted in the previous session, as weak corporate earnings and worries about the situation in Cyprus overshadowed a batch of relatively upbeat U.S. economic data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region. The Dow shed 0.6 percent and the S&P 500 dropped 0.8 percent. The tech-heavy Nasdaq lost a percent, dragged down by Oracle after the software giant reported downbeat third-quarter results.

by RTTNews Staff Writer

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