European Factors to Watch-Shares to cautiously rebound; eyes on Ukraine

July 21, 2014

Edenburgh-UK (July 21)   European stocks were seen edging higher on Monday, resuming a rebound from last week's lows as traders cautiously
anticipated a peaceful resolution to the Ukraine crisis, with gains set to be limited without further clarity on the situation.
European shares opened on a weaker footing in the previous session after a
passenger plane was shot down over Ukraine on Thursday, although a feared
deterioration in the situation over the weekend did not materialise.
    The pan-European FTSEurofirst 300 ended flat on Friday, with
volatility falling during the day as the loss of the Malaysian jet with 298
people aboard was also seen as intensifying international pressure to resolve
the worst crisis between Russia and the West since the Cold War.
    The United States is yet to introduce new sanctions against Russia for what
it says is Russia's complicity in the downing of the jet, and verbal criticism
is yet to be followed up with action.
    Wall Street led global markets higher on Friday, with Europe's increased
exposure to Russia prompting underperformance during the crisis as well as
making their political leaders less willing to sanction Russia heavily.
    "So far European Union sanctions have come across as somewhat half-hearted,
but given last week's horrific events the pressure for a much tougher approach
towards Russia will be much harder to resist," Michael Hewson, chief market
analyst at CMC Markets, said in a note.
    "This particular story looks like it has some way to run and investors would
be unwise to become complacent about it."
    At 0623 GMT, futures for the Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were flat to 0.2 percent
    On the earnings front, Philips was a stand out performer in a light
day for corporate reports.
    The Dutch lighting and health care company said it expected core profit to
rise in the second half of the year, benefitting from cost cuts.
    However, Britain's biggest retailer Tesco is set to be in focus
after its chief executive quit following a profit warning.


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