Market Commentary and Intraday News

European Stocks Seen Little Changed After Rally

259 days ago

(RTTNews) - European stocks are seen opening little changed on Friday as investors may take some profits off the table following yesterday's rally.

Welcoming the ECB decision to buy bonds issued by heavily indebted countries, the International Monetary Fund said it is ready to work with the European Central Bank in the effective implementation of its new crisis-fighting measures. "We see the ECB's action as an important step toward strengthening stability and growth in the euro area," IMF Managing Director Christine Lagarde said.

However, there are still questions as to whether the bond-buying plan can save Spain and Italy from default and whether the Fed would announce any major moves at the upcoming two-day policy meeting scheduled for September 12 and 13. Encouraging U.S. data released overnight further serve to raise doubts about whether Bernanke will hint at new bond purchases.

Commodities are trading mixed and the euro is holding near a two-month high against the dollar, as investors look ahead to the release of U.S. non-farm payrolls data tonight.

Asian markets are gaining sharply across the board, with China's Shanghai Composite index pacing the gainers with a 4 percent rally after China approved 25 urban rail projects across the nation to spur sagging economic growth. Key benchmark indexes in India, Hong Kong, Japan and South Korea are up about 2 percent each as the ECB's latest unlimited bond-purchase program boosted risk appetite.

In economic releases, industrial production and foreign trade data from Germany are due to be released in the European session.

In corporate news, Swiss mining company Glencore International Plc.'s takeover bid for Xstrata Plc. is nearing collapse as Qatar Holding LLC, Xstrata's second-largest shareholder, is likely to vote against the deal unless the merger offer is sweetened.

AstraZeneca Plc. announced results from a PLATO sub-analysis that evaluated the effect of smoking status on clinical outcomes in patients with acute coronary syndrome.

European stocks rallied on Thursday after Draghi unveiled his latest crisis-fighting tool to help lower borrowing costs of fiscally troubled nations such as Spain and Italy. The Euro Stoxx 50 index of eurozone bluechip stocks jumped 3.4 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, added 2.3 percent, while around Europe, Switzerland's SMI, the U.K.'s FTSE 100, the German DAX and France's CAC 40 climbed 2-3 percent.

U.S. stocks rose sharply overnight, as traders reacted positively to the ECB's bond-buying program along with a batch of upbeat U.S. economic data on private sector jobs growth, claims for unemployment benefits and service sector growth. The Dow and the S&P 500 jumped about 2 percent each to hit four-year closing highs, while the tech-heavy Nasdaq climbed 2.2 percent to end at its best closing level in over eleven years.

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