Markets Likely To See Further Downside - European Commentary

The major index futures point to a lower opening for the European markets on Friday. Global cues are weak, with the U.S. markets plunging on renewed subprime concerns and the major stock markets across the Asian region trading in the red on Friday, tracking the weakness on the Wall Street. While bargain hunting following Thursday's carnage may support the markets to some extent, investors are likely to exercise caution ahead of key data next week. Crude and metal prices have continued to decline, putting pressure on oil and resources stocks. On the economic front, the data scheduled to be released in the European region are France's industrial & manufacturing production for June, Euro-Zone's June OECD leading indicator and the Italian CPI. In the U.S., export & import price index and monthly budget statement for July are slated for release. The European markets fell sharply on Thursday after BNP Paribas, France's biggest bank, said it was freezing three funds that invested in U.S. subprime mortgage market. The FTSEurofirst 300 index of pan-European blue chips closed up 1.8% at 1,526.04, while the narrower DJ Stoxx 50 index fell 1.9% to 3,751.48. Around Europe, the U.K.'s FTSE 100 index fell 1.92% to 6,271.20, while France's CAC 40 index dropped 2.17% to 5,624.78 and Germany's DAX index slipped 2.00% to 7,453.59. The pound fell against the dollar on Thursday on subprime woes. At around 1:54 a.m. ET, the euro was losing ground against the dollar and was quoted at US$1.3655. The pound was trading at US$2.0188. On Thursday, oil lost 78 cents to settle at US$70.21 in London, following a healthy fuel stockpile in the U.S. At 1:14 a.m. ET on Friday, Brent crude September futures were trading at US$70.30, up 9 cents. Among metals, gold fell as traders reduced their exposure to risky assets, while copper extended Wednesday's losses on higher inventories. Prices of tin, lead, nickel, aluminum and zinc also dropped. In Europe, the stocks that may see some action are, Old Mutual, Ales Groupe, Ausy, Bouygues, Cegedim, Cerep, CNP Assurances, Le Noble Age, Net2S, Provimiand Total. Old Mutual is scheduled to release first-half earnings. Ales Groupe and Ausy reported first-half sales increases of 1.7% and 7.8% respectively, while Bouygues and Cegedim said second-quarter sales rose 8% and 41% respectively. Cerep's second-quarter sales rose 23% and CNP Assurances reported second-quarter premium income growth of 6 %. While Le Noble Age reported 45% increase in sales in the second quarter, Net2S said second-quarter sales remained flat at 20 million euros after the company sold assets. Provimi posted 14% increase in first-half sales and Total said it discovered ``high-quality crude'' while drilling in deep waters off Angola. In Germany, Salzgitter, ThyssenKrupp and Allianz are likely to witness some movement.