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European Factors to Watch-Shares seen sharply down after Greeks say "No"
July 6, 2015 / 6:12 AM / 2 years ago

European Factors to Watch-Shares seen sharply down after Greeks say "No"

(Adds futures prices, details, company news)

LONDON, July 6 (Reuters) - European shares headed for a sharp drop on Monday after Greeks rejected austerity measures demanded in return of a debt deal, raising concerns about the country's exit from the euro zone.

At 0629 GMT, futures for the Euro STOXX 50, Germany's DAX and France's CAC were 1.9 to 2.3 percent lower. Britain's FTSE futures fell 0.8 percent.

"After surprising the market by calling a referendum, the Greek people once again surprised the market by voting 'No'. This puts the Greek government on a collision course with the creditors and the risk of a Grexit has certainly increased," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.

"This will make for a traditional "risk-off" in line with what we saw last Monday, with more risky assets going down and money floating to safe heavens. At the end of the day, the negotiations will continue but the outcome is uncertainty."

Stunned European leaders called a summit for Tuesday to discuss their next move after the surprisingly strong victory by the 'No' camp defied opinion polls that had predicted a tight contest. German Chancellor Angela Merkel's deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.

The vote leaves Greece in uncharted waters: risking a banking collapse that could force it out of the euro. Without more emergency funding from the European Central Bank, Greece's banks could run out of cash within days. That might force the government to issue another currency to pay pensions and wages.

Many economists, including those at U.S. banking giant J.P.Morgan, reckon the outcome of Sunday's referendum will probably hasten Greece's exit from the euro.

"JPM base case now is for Grexit, and we tactically cut banks, one of the best performing ... sectors in the last 3 months, as spreads are likely to widen. We also reduce Eurozone weight in global portfolio from OW (overweight) to N (neutral)," J.P.Morgan Cazenove analysts said in a note.

Greek Finance Minister Yanis Varoufakis announced his resignation on Monday, saying he had been "made aware" that some members of the euro zone considered him unwelcome at meetings of finance ministers.

The Greek stock market will remain closed on Monday.

In overseas markets, China's stock market bucked the trend following a salvo of rapid-fire support measures from Beijing over the weekend.

COMPANY NEWS:

ALLIANZ

Allianz's reinsurance unit Allianz Re is making progress in the consolidation of its legacy problem areas, where it is now benefiting from scale, experience and negotiating power, Allianz Re Chief Executive Amer Ahmed told the weekend Boersen-Zeitung.

DEUTSCHE POST

Deutsche Post and trade union Verdi reached a deal late on Sunday to end a four-week old strike, agreeing pay rises and job guarantees for 140,000 workers and allowing the postal operator to press ahead with plans for low-cost parcel units.

FRESENIUS

Chief Executive Ulf Schneider told the Sueddeutsche Zeitung his company was interested in buying more hospitals and planned to expand abroad. He said the integration of Rhoen-Kliniken was going according to plan and the costs would come in at a lower-than-expected 60 million euros ($67 million).

SUEZ ENVIRONNEMENT

The world's second largest waste and water company said market trends were slightly more favourable in the second quarter of the year after a flat first quarter.

EURONEXT

Greece's debt crisis risks is clouding the outlook for stock market listings after a flurry of flotations in the first half of the year, the head of Paris' stock market said in an interview on Friday.

K+S

A German regional minister gave his backing to potash miner K+S's rejection of an $8.8 billion-euro takeover bid by Canada's Potash Corp of Saskatchewan , saying K+S should remain a German company.

Separately, Bloomberg reported that Potash viewed a 50 euros-per-share K+S valuation as too high.

ROLLS ROYCE

British engineering company Rolls-Royce downgraded its profit forecasts for this year and next, citing continued weakness in oil and gas markets plus lower demand for some of its aero-engine programmes.

EASYJET

Budget airline easyJet reported a rise in June passenger numbers.

BOVIS HOMES

Housebuilder Bovis Homes said it would increase its dividend, as it posted a trading update.

CREDIT SUISSE

New Chief Executive Tidjane Thiam told the Neue Zuercher Zeitung paper he wants quick action to implement results of strategic review he is conducting at the bank.

LUFTHANSA

The airline said on Friday it and trade union Verdi have agreed to pause talks over pay for around 30,000 staff until the end of September to give both sides time to discuss how to reorganise pension schemes.

RWE

Utility RWE is considering a restructuring that could see units such as RWE Generation and RWE Innogy being merged or swallowed up by the parent group as it battles an industry-wide crisis, a source familiar with the matter told Reuters, confirming a report in newspaper Rheinische Post.

------------------------------------------------------------------------------ > Euro, stocks hit by Greek vote; China bounces after rescue moves > Nikkei tumbles on Greek 'No' vote, yen's rise; Toshiba dives > Euro skids on Greek 'No' vote, yen gets safe-haven boost > Gold's safe-haven gains from Greece fizzle on robust dollar > London copper hits lowest since March on China, Greece jitters > Oil prices tumble after Greece vote, China stock market turmoil (Reporting by Atul Prakash; Editing by Sudip Kar-Gupta)

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