Reuters: Most Read Articles: Europe Factors to Watch-Shares set to sink after French, Greek votes

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Europe Factors to Watch-Shares set to sink after French, Greek votes May 7th 2012, 06:17 Mon May 7, 2012 2:17am EDT By Blaise Robinson PARIS, May 6 (Reuters) - European stocks were set to tumble on Monday, adding to the previous session's sell-off, as election results in Greece and France sparked worries over public support for austerity measures seen by most investors as key to fixing the euro zone's debt crisis. At 0607 GMT, futures for Euro STOXX 50, for Germany's DAX and for France's CAC were down 1.7-2.6 percent, following a 1.7-2.0 percent sell-off on Friday following lower-than-expected U.S. monthly jobs data. The market reaction will be exaggerated by a public holiday in Britain on Monday. Japan's Nikkei average was down 2.8 percent, catching up with the sharp losses on Friday on Wall Street and in Europe, and after elections in France and Greece raised concerns on whether euro zone economies will continue to pursue austerity measures. "The vote in France, as well as in Greece, is a backlash against German's posture in this debt crisis," David Thebault, head of Quantitative sales trading, at Global Equities. "People are saying: 'enough austerity'. This might be a turning point for the region that could change Germany's fiscal orthodoxy, bring a consensus on the need for Eurobonds and transform the European Central Bank into a 'European Fed' focusing on economic growth, not just inflation." Greek voters shrugged off the risk of a euro zone exit and punished their ruling parties, which failed to win enough votes to form a ruling coalition in Sunday's election. With about 95 percent of the vote counted, conservative New Democracy and Socialist PASOK, who have dominated Greece for decades and are the only two major parties supporting an EU/IMF bailout program that keeps Greece afloat, won less than 33 percent of ballots and only 150 out of 300 parliament seats. "It's an anti-Merkel vote. People across Europe are fed up with tough austerity measures imposed by German policymakers, and this could be a turning point," said Riccardo Designori, financial analyst at Brown Editore, in Milan. In France, voters elected as expected a new president, Francois Hollande, a Socialist who has pressed for an end to German-led austerity policies. "The bigger story here is that this shows that politics is getting out of control in Europe, the gap between politicians and voters is widening, that's what you see in Greece, that's what you see in France," said Steen Jakobsen, chief economist at Saxo Bank, in Copenhagen. "Clearly, voters across Europe have started to send the message: 'we are not ready to do the reforms', and that's worrying. We are on the brink of a major crisis in Europe, economically and socially." The euro zone's blue chip Euro STOXX 50 index, which has lost 14 percent since mid-March, is on track to hit a 4-1/2 month low at the open on Monday, with the next strong support level at 2,182.76 points, representing a low point hit in December, about 2.9 percent below Friday's close. The index's pull-back started in March - sparked by poor economic data out of Europe and the United States as well as the return of fears over the ability of Spain to trim its deficit and kick-start its economy - has dragged valuation ratios to levels not seen in four months, with the blue-chip index trading at 8.7 times 12-month forward earnings. There were signs of investor complacency late last week, with the put-to-call ratio of options linked to the Euro STOXX 50 dropping to 0.7, showing a lack of appetite for protection against further equity losses. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0612 GMT LAST PCT CHG NET CHG S&P 500 1,369.10 -1.61 % -22.47 NIKKEI 9,119.14 -2.78 % -261.11 MSCI ASIA EX-JP 506.86 -2.29 % -11.86 EUR/USD 1.3004 -0.17 % -0.0022 USD/JPY 79.78 0.03 % 0.0200 10-YR US TSY YLD 1.832 -- -0.05 10-YR BUND YLD 1.559 -- -0.03 SPOT GOLD $1,639.28 -0.17 % -$2.77 US CRUDE $97.08 -1.43 % -1.41 GLOBAL MARKETS-Stocks slump after French, Greek elections Nikkei drops 2.6 pct to hit 3-mth low after Greek polls Euro tanks to 3-month low after Greek vote upsets Oil extends slide after French, Greek polls METALS-Shanghai copper drops after French, Greek polls PRECIOUS-Gold fall on firm dollar after Europe elections TREASURIES-U.S. bonds rise as Europe elections raise risk COMPANY NEWS: BANKIA The Spanish government and the Bank of Spain are preparing a sweeping reform of Bankia, including a big injection of cash and changes to the lender's management, El Pais reported on Monday. The bank may tap Spain's state-backed bank restructuring fund, the FROB, by selling it 500 million euros ($656 million)in covertible bonds - known as CoCos, ABC newspaper reported on Saturday. Bankia declined to comment. CARREFOUR The French hypermarket chain saw its market share in France slide to a new all-time low from March 19 until April 15, retail magazine LSA said on its web site, citing data from market research firm Kantar. Carrefour's market share dropped to 21 percent from 22.7 percent in the year-ago period, the site reported. BASF The world's largest chemical maker by revenue believes southern Europe is in a recession and expects the continent's economy to barely grow this year, its chief financial officer said on Friday. LAGARDERE The media-to-aerospace conglomerate said on Friday that Sheikh Saoud Bin Abdulrahman Al Thani had been appointed to the board of its sports and entertainment arm, representing the interests of Qatar, which is now the French company's largest shareholder. BAYER The drugmaker said on Saturday it had challenged an Indian patents office order that allowed domestic rival Natco Pharma to sell a cheap generic version of the German firm's liver and kidney cancer drug Nexavar in India. ROCHE Swiss drugmaker Roche said on Monday it has decided to terminate the dal-OUTCOMES trial and all the studies in the dal-HEART programme, global development scheme involving six clinical trial. UBS UBS needs an investment bank to serve its wealthy clients, the Swiss bank's new chairman was quoted as saying on Sunday, adding that he believed Germany would ultimately accept the terms of a withholding tax deal to solve a dispute over tax dodgers. PETROPLUS Insolvent oil refiner Petroplus said on Friday its delisting from the Swiss bourse will be delayed as the exchange decides whether to hear a shareholder appeal. Link this Share this Digg this Email Reprints

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