Monday, Aug 27, 2012

--Stocks set to start trading little changed

--Ifo index in the spotlight

--Jackson Hole symposium to dominate sentiment later in the week

By Martin Essex

European stocks are set to open flat at the start of a week that begins with Germany's Ifo index of German business sentiment Monday and ends with the Jackson Hole symposium, where both Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi will be speaking.

"The end of this week looms as a key event risk for investors, with both Ben Bernanke and Mario Draghi set to speak at the Jackson Hole symposium. With London closed for a bank holiday, we are currently set for a flat start to the new European trading week," said Cameron Peacock, market analyst at IG Markets.

Ahead of the opening of Europe's stock markets, he called the DAX index in Frankfurt up two points at 6973 and the CAC-40 in Paris unchanged at 3433.

"For many traders, in particular bulls, this [symposium] is the point where they will finally get confirmation of their much-pleaded next round of monetary easing," said Jonathan Sudaria, a dealer at London Capital Group.

"However, for many, the case still seems unclear...With the U.S. economy grinding out marginal growth, the need for a third dose of supposedly unconventional policy is highly questionable and the expectation that the ECB could have come to a consensus on action looks optimistic," he added.

In Asia on Monday, stocks were mixed as expectations for more easing of monetary policy by the world's central banks were offset by Chinese economic gloom, while Samsung shares fell following a U.S. court ruling.

The Nikkei in Tokyo was up 0.2%, but the Hang Seng Index in Hong Kong lost 0.5%, the Kospi in South Korea slipped 0.1% and the Shanghai Composite lost 1.3%. Samsung Electronics Co. (005930.SE) shares shed 7.5%, their biggest single-day percentage drop in nearly four years, with analysts saying the company's big loss in its court battle against Apple Inc. (AAPL) in the U.S. increases uncertainty over the South Korean company's future products.

On Wall Street Friday, U.S. stocks rallied, with the Dow Jones Industrial Average bouncing back after four sessions of losses. It rose 100.51 points, or 0.8%, to 13,157.97, leaving blue chips 0.7% lower on the week. The S&P 500 index gained 9.05 points, or 0.7%, to 1,411.13, down 0.5% from the week-ago close. The Nasdaq Composite added 16.39 points, or 0.5%, to 3,069.79, off 0.2% for the week.

In European foreign exchanges Monday, the euro was modestly weaker than in late New York business Friday. At 0615 GMT, it was trading at $1.2502, down from $1.2512 Friday. The dollar was mostly firmer, quoted at Y78.74, up from Y78.70.

"September will be crucial for foreign exchange, with a number of key events taking place in Europe and the U.S. We think developments in Europe will be broadly euro supportive in the very short term, but the support will be fleeting. The Fed will likely refrain from further quantitative easing at the September Federal Open Market Committee, which we expect to be USD-supportive," said analysts at Barclays in a note to clients.

Elsewhere, German Bund futures opened lower, with the September Bund future down 0.13 at 143.87 at 0620 GMT. But oil prices were firmer, with the October Brent crude future up $1.31 at $114.90 a barrel and the October Nymex future up $1.00 at $97.15. The gold price was up $2.30 at $1671.50 an ounce.

Write to Martin Essex at martin.essex@dowjones.com or on Twitter @MartinEssexDJN

(END) Dow Jones Newswires

August 27, 2012 02:34 ET (06:34 GMT)