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European Factors to Watch-Lower start eyed on U.S. debt impasse
October 7, 2013 / 5:35 AM / 4 years ago

European Factors to Watch-Lower start eyed on U.S. debt impasse

By Francesco Canepa
    LONDON, Oct 7 (Reuters) - European stocks were seen opening lower on Monday
in the absence of any signs of progress towards a resolution of the dispute over
the U.S. federal budget and debt ceiling.
    At 0619 GMT, futures for the euro zone Euro STOXX 50, Britain's
FTSE 100, Germany's DAX and France's CAC were between
0.4 percent and 0.6 percent lower.
    U.S. Democrats and Republicans came no closer on Sunday to a budget
agreement that would end a government shutdown, let alone reaching a deal on the
U.S. borrowing limit by Oct. 17 to avoid an unprecedented default.
    Republican House Speaker John Boehner said he would not raise the debt
ceiling without a "serious conversation" about what is driving the debt.
Democrats said it was irresponsible and reckless to raise the possibility of a
default. 
    Many in the market, however, still expected a deal to be reached.
    "We're going to wobble our way down until about Thursday and then there's
going to be a solution and there will be a melt-up," said Justin Haque, a broker
at Hobart Capital Markets.
    He expected to the euro zone blue-chip Euro STOXX 50 to fall by
between 1.5 percent and 2.5 percent before an agreement is reached.
    The Euro STOXX 50 was less than 1 percent away from a two-year high hit in
September but the index has flat-lined for the past two weeks as a deadlock in
the United States and the threat of a political crisis in Italy curbed appetite
for stocks.
    The Euro STOXX volatility index, which measures option prices and is
regarded as a gauge of investor expectations of future share price swings, shot
up 20 percent over the past 10 days to trade close to 20 vol points.
    But the VSTOXX was still well off an August high of 24 vol points, showing
underlying investor confidence in European shares.
    Between July and September, Europe equity funds posted their biggest
quarterly inflow since EPFR Global started tracking them, helped by improving
economic data in the region.
    
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  MARKET SNAPSHOT AT 0517 GMT: 
    
                                               LAST  PCT CHG    NET CHG
 S&P 500                                   1,690.50   0.71 %      11.84
 NIKKEI                                   13,853.32  -1.22 %    -170.99
 MSCI ASIA EX-JP                             542.36  -0.43 %      -2.32
 EUR/USD                                     1.3571  -0.01 %    -0.0001
 USD/JPY                                      97.07   0.23 %     0.2200
 10-YR US TSY YLD                             2.630       --      -0.02
 10-YR BUND YLD                               1.817       --      -0.02
 SPOT GOLD                                $1,314.26   0.28 %      $3.65
 US CRUDE                                   $103.23  -0.59 %      -0.61
 

  
  > Asian shares, dollar, oil dip as US shutdown drags on          
  > U.S. equity futures drop after weekend without move on U.S. finances  
  > Nikkei extends fall into 4th day as U.S. standoff weighs              
  > TREASURIES-U.S. bill rates rise on government default worries       
  > FOREX-Dollar slips as no sign of progress in U.S. budget standoff   
  > Gold edges up as U.S. shutdown drags on, debt limit looms           
  > Copper little changed on U.S. fiscal standoff, China holiday       
  > Brent slips towards as storm wanes, demand concerns linger           
    
    COMPANY NEWS
    
    EADS 
    EADS' Airbus will announce its first jet order from Japan Airlines Co Ltd
 on Monday, three sources familiar with the matter said, breaking open
the last major aviation market dominated by rival Boeing Co.
 
    Airbus orders rose to more than 1,000 aircraft in the first nine months of
the year, beating its target for 2013, after the planemaker booked a raft of
orders which had been pending from European airlines. 
    
    DEUTSCHE LUFTHANSA, EADS 
    The airline cancelled "firm options" for three Airbus A380
superjumbos, citing more conservative growth expectations and fleet planning.
 
    
    AIR FRANCE-KLM 
    The Franco-Dutch airline said passenger traffic rose 0.7 percent in
September, in line with seating capacity on its flights. 
    Air France, which has announced 2,800 job cuts, said that 1,800 of these
would target ground staff and that the voluntary departure plan would generate
an extra restructuring provision of around 200 million euros. 
    
    AIR BERLIN 
    The airline said the number of passengers who flew in its planes declined by
6.4 percent in September to 3.31 million as the carrier cut capacity.
 
    
    ABENGOA 
    Spanish renewable energy and engineering firm Abengoa hopes to raise around
385 million euros ($523 million) by issuing shares on the Nasdaq stock exchange,
according to a notice filed to the U.S. Securities and Exchange
Commission. 
    Shareholder Inversion Corporativa would subscribe to 63 million euros of the
shares at the price fixed in the capital hike, Abengao said on Monday.  
    
    REPSOL 
    Singapore's sovereign wealth fund Temasek and Chinese refiner
Sinopec have approached Spanish oil company Repsol over its 4.7
billion euro stake in Gas Natural, the Financial Times reported on
Sunday. 
    
    SOCIETE GENERALE 
    Russia's second-largest bank VTB has agreed to sell its stake of
around 10 percent in Societe Generale's Russian unit Rosbank to the French bank,
while SocGen will sell VTB a number of Russian assets, a source close to the
deal said.              
    
    AREVA 
    An audit of the French reactor maker's uranium mines in Niger to determine
cost reductions in a new long-term contract is likely to be completed before the
end of this month, France's ambassador to Niger said. 
    
    AXA 
    French private-equity firm Ardian, recently spun off from insurer AXA
AXAF.PA, expects to make two more deals before the end of the year after closing
its latest buyout fund, one of its executives told Reuters. 
    
    NOVARTIS 
    Swiss drugmaker Novartis said its drug omalizumab was almost doubly
effective in improving quality of life for patients with a severe form of hives,
compared with a placebo, according to a late-stage study. 
    
    SAP 
    BlackBerry Ltd, on the block as its smartphone business struggles,
is in talks with SAP as well as Cisco Systems and Google Inc 
about selling them all or parts of itself, several sources close to the matter
told Reuters.

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