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European Factors to Watch-Shares to slip further on U.S. budget impasse
October 9, 2013 / 5:42 AM / 4 years ago

European Factors to Watch-Shares to slip further on U.S. budget impasse

LONDON, Oct 9 (Reuters) - European shares were expected to extend losses on
Wednesday on a lack of progress to resolve a U.S. budget impasse, although the
nomination of dovish Federal Reserve Vice Chair Janet Yellen to head the central
bank could limit losses.
    U.S. President Barack Obama will announce her nomination later in the day.
If confirmed by the Senate, Yellen will replace Ben Bernanke whose second term
ends in January. She has been a forceful advocate for aggressive action to
stimulate the economy through low rates and bond purchases. 
    "Yellen's nomination is certainly a good thing for the markets. She is one
of the main supporters of a loose monetary policy and the markets will be
assured that changes in the policy will be minimal, as long as underemployment
persists," Koen De Leus, senior economist at KBC, in Brussels, said.
    "However, markets are getting more nervous day by day. The longer the
uncertainty of the debt ceiling and the government shutdown lasts, the more
damage is inflicted to the economy."
    Investors' focus remained on the U.S. budget talks that dragged on for a
second week. Obama said on Tuesday he would be willing to negotiate budget
issues with Republicans only if they agree to reopen the government and raise
the debt limit. 
    Expectations are fading for a resolution to be reached before the
mid-October deadline when Congress must decide whether to raise the borrowing
limit or face the risk of an historic debt default. While there is no panic in
the market yet, the uncertainty prompts investors to avoid taking big positions.
    At 0634 GMT, futures for the Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were flat to 0.3 percent
    The pan-European FTSEurofirst 300 index, which fell for a second
straight day in the previous session to close 0.8 percent lower, could set a
one-month low on Wednesday. However, the index is still up 8.6 percent so far
this year.
    On the macroeconomic front, focus will be on German industrial output
figures at 1000 GMT, U.S. weekly mortgage market index at 1100 GMT and the
minutes from the Federal Open Market Committee's Sept. 17-18 meeting at 1800
     MARKET SNAPSHOT AT 633 GMT                                
                                             LAST     PCT CHG   NET CHG
     S&P 500                             1,655.45     -1.23 %    -20.67
     NIKKEI                             14,037.84      1.03 %    143.23
     MSCI ASIA EX-JP                       544.84     -0.26 %     -1.43
     EUR/USD                               1.3551     -0.15 %   -0.0020
     USD/JPY                                97.43      0.59 %    0.5700
     10-YR US TSY YLD                       2.645          --      0.01
     10-YR BUND YLD                         1.815          --      0.00
     SPOT GOLD                          $1,318.14     -0.01 %    -$0.16
     US CRUDE                             $103.67      0.17 %      0.18
  > Shares under pressure as U.S. debt worries grow                  
  > Year's winners lead Wall St lower as default angst rises                
  > Nikkei turns higher but mood still cautious on U.S. deadlock            
  > Prices slip but uncertainty limits downside                           
  > Dollar gets relief vs yen as Yellen tapped to lead Fed                
  > Gold steady on U.S. budget gridlock, debt ceiling fears               
  > London copper drifts as U.S. impasse drains risk appetite            
  > Brent slips below $110 as US budget crisis drags on                    
    French president Francois Hollande called on the telecoms equipment maker to
save as many jobs as possible in France after it said it plans to cut 10,000
posts worldwide. 
    The U.S. Food and Drug Administration said on Tuesday it has approved Bayer
AG's drug to treat two types of pulmonary hypertension.
    Westpac Banking Corp., Australia's second-biggest lender by market
value, bid about A$2.1 billion ($2 billion) for Lloyds Banking Group Plc's
assets in the country, Bloomberg reported, quoting a person with knowledge of
the matter.
    Finnish pulp and paper company Stora Enso warned of lower profits in the
fourth quarter versus a year earlier, blaming weak demand and prices for paper
in Europe. 
    Spanish lender Bankia and construction company FCC are working together to
sell their individual stakes in property firm Realia to a sole investor,
Expansion reports on Wednesday, citing financial sources. 
    The Spanish bank's British arm is resisting joining the government's
mortgage guarantee scheme "Help to Buy", according to Expansion, because of
fears of a housing bubble in Britain. However, the bank may still join the
programme despite its doubts, the newspaper says.
    Deutsche Telekom unit T-Mobile US is set to print the
second-largest high-yield bond deal of the year on Tuesday, after strong demand
enabled it to almost double the size of the issue to USD5.6bn. 
    Nestle is looking to sell its Jenny Craig diet business and is speaking to a
small group of potential buyers about the brand, according to three sources
familiar with the matter. 
    French Defence Minister Jean-Yves Le Drian told Les Echos newspaper he was
confident that India would sign a deal to buy Rafale fighter jets, built by
Dassault Aviation, next year.

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