Morning News Call - EMEA, July 26

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MARKET VIEW

European shares are expected to edge higher on Tuesday, mirroring gains in Asian stock markets, on hopes that an agreement in Washington to raise the debt limit will ultimately be reached, while stronger metals prices are likely to support mining companies.

Spreadbetters see Britain's FTSE 100 and Germany's DAX opening up 0.2 percent, while France's CAC-40 is seen 0.5 percent higher.

Asian shares edged higher, rebounding from Monday's fall, after a speech by U.S. President Barack Obama gave no sign a deadlock in Washington over raising the debt limit was easing. So far investors have shown few signs of panic even as Republicans and Democrats have failed to bridge their differences with just a week to go to the Aug. 2 deadline the U.S. Treasury has set for when it may fail to pay out on Treasuries.

The MSCI index of Asia-Pacific shares outside Japan was up 0.8 percent and is up about 1 percent on the month and year, withstanding the occasional bouts of volatility from the U.S. deficit debate and euro zone debt crisis.

Swiss bank UBS said on Tuesday it would slash costs and acknowledged it would miss targets set in 2009 after reporting disappointing second quarter profits hurt by sluggish markets and a strong franc. The bank said it would slash costs by $1.9 billion to $2.5 billion in the next two to three years without giving further details. Net profit fell to 1.0 billion Swiss francs, undershooting analysts' estimates for 1.23 billion francs. Meanwhile, Deutsche Bank's quarterly pretax profit missed expectations, hit by lower trading volumes just as the flagship lender named Anshu Jain and Juergen Fitschen co-chief executives. Other companies reporting results on Tuesday include BP and Fiat.

The dollar hit a record low against the Swiss franc and a four-month trough versus the yen, as investors remained sceptical that Obama's call for compromise would lead to a swift breakthrough in deadlocked debt talks. The dollar hit an all-time low of 0.8006 Swiss francs and hovered near 78.00 yen after briefly falling below that level to 77.91 yen.

U.S. Treasuries slipped for a second day, with long-term Treasuries under the most pressure from the worries about a rating downgrade. Ten-year notes were down 4/32 in price to yield 3.017 percent, up a basis point, and thirty-year bonds fell 5/32 to yield 4.328 percent, also up a basis point.

Oil prices held steady as Obama urged Republican and Democratic leaders to reach a fair compromise on raising the debt ceiling. Brent crude was unchanged at $117.95 a barrel at 0330 GMT, after sliding as low as $117.32. U.S. oil was 21 cents higher at $99.42, after earlier dipping to $98.80.

Gold was also steady as investors waited to see if Obama's appeal for an agreement on the debt talks would provoke signs of progress, while the ongoing euro zone debt crisis lent support. Spot gold was little changed at $1,613.40 an ounce by 0308 GMT.

MARKET SNAPSHOT AT 0515 GMT

S&P 500 INDEX FUTURES 1,335.80 up 0.19% up 2.60

DJIA FUTURES 2,574.00 up 0.19% up 24.00

NIKKEI 10,116.51 up 0.66% up 66.50

MSCI ASIA, EX-JP 578.37 up 0.82% up 4.70

EURO/USD 1.4485 down 0.74% down 0.0107

USD/JPY 78.08 up 0.25% up 0.20

SPOT GOLD $1,613.46 down 0.04% down $0.59

US CRUDE $99.57 up 0.37% up $0.37

10-YR US TSY YLD 3.0218% up 0.0180

10-YR BUND YLD 2.7740% up 0.0140

GLOBAL TOP STORIES

The United States edged closer on Tuesday to a devastating default as Republicans and Democrats deadlocked over competing plans to raise the debt ceiling, one week before a deadline to act.

China's top search engine Baidu forecast revenue well ahead of Wall Street's expectations as large advertisers increased spending, sending its shares up around 7 percent.

At least 100,000 people rallied in Oslo and tens of thousands more marched in cities across Norway on Monday in a nationwide expression of grief and unity over the massacre of 76 people by Anders Behring Breivik.

China's rail minister, facing public outrage over Saturday's deadly train crash, has ordered a two-month safety check on railway operations and apologised for the accident which killed 39 people, state media reported on Tuesday.

Singapore wealth fund GIC said U.S. government bonds remain a safe investment despite fears of a looming debt default, but noted longer-term concerns about fiscal strains in the U.S. and Europe were prompting it to shift more money into emerging markets.

EUROPEAN COMPANY NEWS

BP boss Bob Dudley is under pressure to outline his post-oil spill strategy and revive the share price when he unveils second-quarter earnings on Tuesday. A 50 percent jump in crude prices is predicted to boost underlying profits 21 percent to $6 billion, but the improvement is likely to look anaemic compared with BP's rivals.

Founder Securities, the Chinese partner of Credit Suisse, has set a suggested price target to raise up to 6.42 billion yuan ($996 million) from its planned initial public offering in Shanghai, IFR reported.

LVMH, the world's biggest luxury group, is expected to post sparkling first-half results later on Tuesday in the latest indication the luxury sector has been shielded from global economic concerns. LVMH on Monday denied it would raise its offer for outstanding Bulgari shares.

Strong U.S. sales for Chrysler and growth in Brazil will help offset a weak European market for Fiat, combined financial results are set to show on Tuesday as the two car makers move closer towards a full merger.

News Corp's major shareholder Prince Alwaleed bin Tala has rebuffed calls to change the company's dual-class structure or leadership, the Financial Times reported in its Tuesday edition.

TODAY'S COMPANY ANNOUNCEMENTS

Belgium Aperam Q2

Belgium Econocom Q2

Belgium Mobistar H1

France Euler Hermes H1

France Faurecia H1

France Icade Q2

France Lafuma Q3 Sales

France LVMH Q2

France Naturex Q2 Sales

France Vinci Q2 Sales

Germany Deutsche Bank Q2

Germany DAB Bank Q2

Ireland Covidien Q3

Italy Cementir Holding Q2

Italy Fiat Q2

Italy Recordati H1

Luxembourg Aperam Q2

Netherlands KPN Q2

Norway Norsk Hydro Q2

Norway Kesko Q2

Poland PKN Preliminary

Portugal Banco BPI Q2

Portugal Media Capital Q2

Spain Vueling Q2

Sweden Betsson Q2

Switzerland Sika H1

Switzerland UBS Q2

Switzerland Xstrata H1 Output

United Kingdom African Barrick Gold Interim

United Kingdom ARM Holdings Q2

United Kingdom Ashley House Preliminary

United Kingdom BG Group Q2

United Kingdom BP Q2

United Kingdom Communisis Interim

United Kingdom GlaxoSmithKline Q2

United Kingdom Imperial Tobacco Group Trading

United Kingdom Informa Interim

United Kingdom ITM Power Preliminary

United Kingdom Pace Interim

United Kingdom PZ Cussons Preliminary

TODAY'S TOP ECONOMIC EVENTS (all times GMT)

0600 - Germany GfK consumer sentiment for Aug seen at 5.6 vs. prior figure of 5.7.

0645 - France consumer confidence for July seen at 82 vs. 83 in June.

0830 - United Kingdom preliminary GDP qq for Q2, forecast for 0.2 pct vs. 0.5 pct. GDP yy seen at 0.8 pct vs. prior figure of 1.6 pct.

1200 - IMF Managing Director Christine Lagarde speaks on the state of the world economy and priorities for global policymakers before the Council on Foreign Relations.

1300- United States S&P Case-Shiller house price index yy for May expected to dip to minus 4.5 pct from 4 pct, in what would be the 12th straight