Europe Factors to Watch-Shares set to rally; eyes on Ukraine
PARIS, Aug 18 (Reuters) - European stocks were set to rally on Monday, reversing the previous session's losses, helped by easing worries over geopolitical risks from Ukraine and Iraq. Ukrainian forces have raised their national flag over a police station in the city of Luhansk that was for months under rebel control, Kiev said on Sunday, in what could be a breakthrough in Ukraine's efforts to crush pro-Moscow separatists. q Also reassuring investors, Russia's Foreign Ministry said on Monday a 'certain progress' was achieved during talks between Russia, Germany, France and Ukraine in Berlin on Sunday on ways to end the military conflict in eastern Ukraine. In Iraq, Kurdish fighters pushed to retake Iraq's largest dam on Sunday and the United States conducted a second day of air strikes in the area in a drive to reverse gains by Islamic State insurgents who have overrun much of the country's north. At 0625 GMT, futures for Euro STOXX 50, for UK's FTSE 100, for Germany's DAX and for France's CAC were up 0.6-1.6 percent. News on Friday that Ukrainian forces had destroyed a Russian military column in Ukrainian territory fuelled fears of an escalation in the conflict, and hit European equities, with Germany's DAX falling 1.4 percent. The European auto sector will be in focus on Monday after Russian daily Vedomosti said Russia may tighten retaliatory sanctions against Western nations to include a ban on imports of cars if the United States and the European Union impose additional sanctions on Moscow. Daimler will also be eyed after China's official Xinhua news agency reported on Sunday that the luxury brand division Mercedes-Benz has been found guilty of manipulating prices of after-sales services. European stocks have tumbled in the past few weeks, with the FTSEurofirst 300 losing as much as 7.4 percent between late June and early August while Germany's DAX dropped as much as 11 percent, knocked by fears that an escalation of the Ukrainian crisis and tensions between the West and Moscow could derail Europe's fragile economic recovery and hit corporate results. The German equity market's recent underperformance has dragged down the average price-to-earnings ratio of local shares to a level not seen since October 2013, according to data from Thomson Reuters Datastream. The MSCI Germany index trades at 12 times expected earnings while the MSCI Europe trades at 13.6 times earnings, making Germany's P/E ratio relative to Europe the cheapest in nearly 10 years, data shows. By comparison, Wall Street's S&P 500 trades at 15 times expected earnings. Europe bourses in 2014: (link.reuters.com/pad95v) Asset performance in 2014: (link.reuters.com/rav46v) ------------------------------------------------------------------------------ MARKET SNAPSHOT AT 0624 GMT: LAST PCT CHG NET CHG S&P 500 1,955.06 -0.01 % -0.12 NIKKEI 15322.6 0.03 % 4.26 MSCI ASIA EX-JP 508.43 -0.04 % -0.19 EUR/USD 1.339 -0.06 % -0.0008 USD/JPY 102.36 0.02 % 0.0200 10-YR US TSY YLD 2.359 -- 0.01 10-YR BUND YLD 0.986 -- 0.02 SPOT GOLD $1,301.30 -0.24 % -$3.09 US CRUDE $96.66 -0.71 % -0.69 > GLOBAL MARKETS-SHARES UP BUT GAINS LIMITED AS UKRAINE SOURS MOOD > US STOCKS-WALL ST ENDS MIXED, RECOVERS FROM UKRAINE-DRIVEN SLIDE > NIKKEI CHOPPY AS MARKET EYES UKRAINE, JACKSON HOLE; CHUGAI JUMPS > FOREX-STERLING OFF TO SPRIGHTLY START, MARKETS EYE JACKSON HOLE > GOLD EXTENDS LOSSES TO BELOW $1,300 AS EQUITIES GAIN > METALS-LONDON COPPER REBOUNDS FROM NEAR TWO-MONTH LOW > BRENT FALLS ON HIGHER LIBYAN OUTPUT, LOWER GEOPOLITICAL RISK COMPANY NEWS: DAIMLER The German car maker's luxury brand division Mercedes-Benz has been found guilty of manipulating prices for after-sales services in China, the official Xinhua news agency reported, citing authorities in Jiangsu province. TELECOM ITALIA, VIVENDI, TELEFONICA The Italian telecoms group is preparing to offer up to 7 billion euros ($9.4 billion) to outbid Spain's Telefonica in the race to acquire Vivendi's Brazilian broadband unit GVT, according to a Bloomberg report on Sunday. COMMERZBANK The lender expects profit margins in private banking to bottom out as rivals charge higher prices, Boersen-Zeitung reported on Saturday, citing wealth management chief Gustav Holtkemper. PORSCHE Porsche Automobil Holding SE persuaded a U.S. federal appeals court to uphold the dismissal of a lawsuit by more than 30 hedge funds that claimed to suffer big losses because the German automaker fraudulently cornered the market in Volkswagen AG shares. FINMECCANICA Canadian plane and train maker Bombardier and Japanese industrial giant Hitachi are the two frontrunners to buy Finmeccanica's rail subsidiaries, several sources close to the auction process said. CREDIT SUISSE Credit Suisse helped put together billions of dollars in securities that were issued by offshore investment vehicles of Banco Espirito Santo SA and then sold to the Portuguese bank's retail customers, the Wall Street Journal reported on Sunday. ROCHE Chugai Pharmaceutical Co Ltd 4519.T shares rose 21 percent to a record high following a media report that Roche Holding AG is in talks to buy the almost 40 percent stake in the Japanese firm that it doesn't already own for about $10 billion. AREVA The French nuclear group won a contract to replace six steam generators at South Africa's Koeberg nuclear power plant, state utility Eskom said on Saturday. (Reporting by Blaise Robinson, editing by Tricia Wright)
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