May 30, 2012 / 5:37 AM / 5 years ago

Europe Factors to Watch-Shares set to reverse Tuesday's gains

PARIS, May 30 (Reuters) - European stocks were set to fall on Wednesday,
surrendering gains made in the previous session as lingering fears over Spain's
troubled banking sector rattle investors and send the euro currency to a
two-year low.	
    At 0622 GMT, futures for Euro STOXX 50, for Germany's DAX 
and for France's CAC were down 0.5-0.8 percent.	
    An Italian debt auction will also be in focus on Wednesday, with the country
offering 4.50 to 6.25 billion euros of five- and 10-year bonds. Five-year yields
are set to climb above 5 percent, rising sharply from a month
    After the European closing bell on Tuesday, Spain's central bank said in a
statement its governor Miguel Angel Fernandez Ordonez will step down on June 10,
one month earlier than expected. 	
    The European Commission is expected to set out its economic strategy for the
euro zone on Wednesday, detailing measures to balance growth with fiscal
consolidation, with Spain and Italy in the spotlight. 	
    A government source told Reuters on Tuesday that Spain will put forward a
three-year plan to control central government spending, covering 2012-2014, when
it presents a draft budget to Congress in the coming months. 	
    Three unlisted Spanish savings banks, Liberbank, Ibercaja and Caja 3, said
on Tuesday they will merge, in a bid to bulk up their capital position as they
struggle with billions of euros of bad property debt. 	
    "Whilst the ECB sit on the sidelines, it seems Spain is just going through
the motions," Said Andrew Taylor, markets strategist at GFT Markets, in Sydney.	
    "The steady and controlled move lower across most risk markets that saw a
test of recent lows should ring alarm bells for traders intent on picking turns.
Even though the current oversold markets are in need of a rally, traders need to
be wary of jumping in on rumours and unsubstantiated claims," he said.	
    The FTSEurofirst 300 index of top European shares rose 0.7 percent
on Tuesday, boosted by talk of further steps by the European Central Bank to
support the region's banks.	
    So far this year, Spain's IBEX has tumbled 27 percent, strongly
underperforming European peers.	
    "The IBEX is now the second worst index performer this year, just behind the
Sri Lankan Colombo all-shares index, and the market just can't find any support
with rallies getting immediately sold," said Chris Weston, institutional trader
at IG Markets.	
    On the technical front, charts show the blue chip Euro STOXX 50 
index's 50-day moving average about to cross below the 200-day moving average, a
strongly bearish technical signal called 'death cross'.	
    "For most European markets, last week's bounce was quite weak and so far the
move has been developing into a sideways pattern, which has a corrective and
therefore a bearish character in the bigger picture," Michael Riesner, head of
equity technical analysis at UBS Investment Bank, wrote in a note.	
    "Even if we should see a temporary extension of the current bounce early
this week, given the weak patterns and structures in the market, we continue to
see the risk of at least one more down leg into June, which still suggests
prices below 2100 in the Euro STOXX 50."	
 MARKET SNAPSHOT AT 0632 GMT                            
                                         LAST  PCT CHG  NET CHG
 S&P 500                             1,332.42   1.11 %     14.6
 NIKKEI                              8,633.19  -0.28 %   -23.89
 MSCI ASIA EX-JP                       469.88  -0.92 %    -4.36
 EUR/USD                               1.2474   -0.1 %  -0.0012
 USD/JPY                                79.43  -0.11 %  -0.0900
 10-YR US TSY YLD                       1.719       --    -0.03
 10-YR BUND YLD                         1.365       --     0.00
 SPOT GOLD                          $1,551.06  -0.22 %   -$3.48
 US CRUDE                              $90.32  -0.48 %    -0.45
    GLOBAL MARKETS-Shares and euro slip as Spain bank woes hurt 	
    Wall St rises on Greek bets, Facebook falls 10 pct          	
    Nikkei loses 1 pct; strong yen weighs                       	
    FOREX-Euro hits 2-year low, dogged by Spain's debt woes     	
    PRECIOUS-Gold hits one-week low on euro weakness            	
    METALS-Copper falls on Spanish banking woes                 	
    Brent stays below $107, heads for worst month in 2 yrs      	
   The Dutch telecoms group repeated that an offer by Mexican tycoon Carlos
Slim's America Movil to buy up to 27.7 percent of the company was too
low and it would continue to explore all strategic options. 	
    The chief executive of UniCredit, Italy's biggest bank by assets,
said he did not think that Greek or Spanish woes could trigger a run on Italian
    The German government will require the mail service operator to pay back 298
million euros ($373.6 million) in state aid including interest in order to
comply with an EU ruling from earlier this year. 	
    France's new Socialist government opposes a 400,000 euro indemnity payment
for former chief executive of Air France-KLM Pierre-Henri Gourgeon as it seeks
to clamp down on executive pay, Finance Minister Pierre Moscovici said.
    The Slovak government will slap a special tax on utilities in regulated
sectors, among which are the two French companies, to boost the euro zone
country's budget, Prime Minister Robert Fico said. 	
    The company plans to buy back shares worth 100 million euro by the end of
July 2012.	
    A French court ruled that Google is not responsible for filtering
content on YouTube, dealing a blow to the French broadcaster which sought
damages for copyrighted sports and movies which ended up on the video-sharing
    The chief executive of the French nuclear reactor maker told Les Echos
newspaper that "nothing justifies" the low level of its share price and that the
group is on track to meet its targets. The CEO also confirmed that there would
be no job-cut programme in France. 	
    The real estate firm said it raised 300 million euros in the bond market
through three private placements. These transactions attracted strong interest
from several investors across Europe. 	
    The chief executive of the maker of seamless tubes told Les Echos newspaper
that there were no longer any major risks and that it would meet its new
objectives relating to its new factories in the United States and Brazil.

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