Deal
talks, weak euro buoy European shares
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[April 14, 2015]
By Jemima Kelly
LONDON (Reuters) - European share markets
touched a 14-year high on Tuesday, supported by takeover talks between
telecoms equipment firms Nokia and Alcatel Lucent, while a shifting
global monetary policy outlook weighed on the euro.
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Five weeks into the European Central Bank's 1 trillion euro
bond-buying scheme, European share indices are at 14-year highs and
the euro is struggling against the dollar and other major
currencies.
The single currency hit a two-year low against the yen on Tuesday,
after a senior Japanese official indicated the yen might have fallen
too far.
The talks between Finland's Nokia and its French rival Alcatel,
which could create a group worth over 40 billion euros ($42
billion), came as a surprise to markets, as reports had suggested
Nokia might be interested in Alcatel's mobile networks arm rather
than the entire firm.
"Buying...their wireless business would have been very suitable,"
said Mikko Ervasti, an analyst at Evli Bank, who rates Nokia a sell.
"It now appears it's about the whole company and also includes units
that are of non-core nature so that is slightly concerning."
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By 0934 Alcatel-Lucent was up 9.7 percent while Nokia was down 6.3
percent. The FTSEurofirst 300 <.FTEU3> index of top European shares
was down 0.3 percent at 1,643.02, having earlier touched its highest
since November 2000.
That followed a 3.7 percent jump last week, helped by further
declines in an already weak euro that is seen supporting an economic
recovery and boosting corporate profits.
The euro fell to as low as 126.08 yen after the comments from
Koichi Hamada, an economic advisor to Japanese PM Shinzo Abe. That
was its weakest since June 2013.
"Hamada's comments lead to speculation that the Japanese government
is uncomfortable with rapid yen weakness," said Yujiro Goto,
currency strategist at Nomura. "In the short term, it may slow down
the yen's weakness against the dollar, but against the euro, we
expect it to strengthen."
Against the dollar, the euro was 0.2 percent lower at $1.0546.
Greek shares reopened after a four-day holiday weekend, trading 1
percent lower. Athens on Monday denied a report it was
preparing for a debt default if it did not reach a deal with its
creditors by the end of the month and said negotiations were
proceeding "swiftly" towards a solution.
U.S. RETAIL SALES
The main data focus was U.S. retail sales data due at 1230 GMT,
watched by investors for evidence that spending is picking up after
a sluggish start to the year.
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An upbeat result would add to the case for rate hikes from the
Federal Reserve later this year, and would support the dollar.
The greenback is back near a 12-year high against a basket of major
currencies, having recovered after losing as much as 4 percent
in the aftermath of a much weaker-than- expected jobs report at the
start of the month.
Earlier in Asia, Chinese shares had struggled to build on seven-year
peaks a day before the country updates on economic growth, while
much of the rest of Asia took a breather after recent hefty gains.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3
percent to 512, shying away from September's top of 516. A break
there would take it to ground last trod in early 2008.
In commodities, crude prices rose on expectations U.S. shale oil
output will record its first monthly decline in over four years, but
analysts warned that the broader market remained oversupplied as
China's exports rose.
($1 = 0.9480 Euros)
(Additional reporting by Anirban Nag and Francesco Canepa in London
and Wayne Cole in Sydney; editing by John Stonestreet)
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