European stock market outlook january 31 2012

European stock market outlook january 31 2012 : European shares are expected to rebound on Tuesday, taking cue from a late recovery from lows on Wall Street and helped by hopes Greece is moving closer to avoiding a default that would have hefty consequences on Europe's financial system.

U.S. indexes pared early losses in thin trade late on Monday, with money managers happy to buy on intraday declines on hopes the recent rally, fuelled by upbeat economic data and accommodative policies by central banks across the globe, can be sustained.

Striking a confident note, Greek Prime Minister Lucas Papademos said negotiators had made "significant progress" in talks to strike a restructuring deal for Greek government debt, with the aim of having a definitive agreement by the end of this week.

His comments came as European leaders agreed on Monday on a permanent euro
zone rescue fund and most endorsed a stricter budget discipline.

Capping sentiment in Europe, however, were concerns that Portugal might need
a second rescue as Lisbon's borrowing costs soared in the face of record low
business and consumer confidence.

"It seems the market is pushing Portugal down the same path as Greece, and
bond holders are now coming to reality that they may have to write-off some of
their Portuguese debt holdings further down the line," Chris Weston,
institutional dealer at IG Markets, said.

Of interest to the banking sector, some of the euro zone's biggest lenders have told the Financial Times that they are preparing to tap the European Central Bank's emergency funding scheme for up to twice as much as the ECB supplied in its December auction.

"Reports that European banks are likely to park up trucks at the next ECB LTRO in late February to pick up masses of cheap liquidity is likely to support risk assets and again highlight that the ECB has done its bit to stave off a systemic shock for the banks," IG's Weston added.

Financial spreadbetters expected Britain's FTSE 100 to open 20 to 24 points higher, or as much as 0.4 percent, Germany's DAX to gain 27 to 39 points, or as much as 0.6 percent, and France's CAC-40 to rise 15 to 22 points, or as much as 0.7 percent.

The FTSEurofirst 300 index of top European shares was on track to record a second straight month of gains despite falling 1 percent to a two-week closing low on Monday. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today

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