GLOBAL MARKETS: European Stocks Seen Opening A Tad Lower

LONDON -- European stocks are expected to open a touch lower Wednesday, despite good economic data from the U.S. in the previous session and positive trading in Asia.

Matt Buckland, a dealer at CMC Markets, said stocks will be susceptible to profit-taking after reaching fresh 2009 highs this week.

On Monday, the pan-European Stoxx 600 index ended with a gain of 0.9% and at its highest close since Oct. 7. Since January, the index has gained nearly 20% and has jumped more than 15% this quarter.

Buckland called London's FTSE 100 index down four points, or 0.1%, at 4912.8, Frankfurt's DAX down six points, or 0.1%, at 5551.1 and Paris's CAC-40 down nine points, or 0.2%, at 3671.6.

The German Ifo business climate and expectations data will also be in focus Wednesday. In a note, BNP Paribas said there is potential for a strong print this month, supported by good economic data, including the jump in the ZEW expectations series during August.

Meanwhile, Asian stock markets were mostly higher Wednesday, supported by gains on China's stock markets.

Still, investors remained cautious and were keeping a wary eye on the gyrations in Chinese shares after a sharp drop in Shanghai on Tuesday dragged regional markets lower.

Japan's Nikkei 225 was up 1.4% while South Korea's Kospi Composite gained 0.7% and Hong Kong's Hang Seng index inched up 0.5%.

Trade in Chinese stock markets was very choppy. The Shanghai Composite opened 0.9% lower but was last up 2.1%, led by bargain hunting in equipment makers and renewable energy companies.

"Investors are buying because the market was oversold yesterday and half-year earnings for many companies were decent, but whether the rally will be sustainable is still hard to say," said Chen Huiqin at Huatai Securities.

Signs of a recovery were seen in solid readings for U.S. home prices and consumer confidence Tuesday, which helped drive U.S. stocks to new closing highs for the year.

These reports sparked a broad market rally that had all three major indexes closing at new highs for 2009.

The Industrial Average rose 0.3% to 9539.3. It was the sixth gain in a row for the bellwether index and marked its highest close since Nov. 4.

The Standard & Poor's 500 rose 0.2% to 1028.0, gaining for the fifth time in six sessions. The Nasdaq Composite increased 0.3% to 2024.2, closing at its highest point since Oct. 1.

Major foreign exchange pairs traded in tight ranges, although the yen was weakened a little by the rise in Chinese shares. Traders also remained cautious because the euro and the dollar failed to sustain their gains against the yen in New York trade Tuesday even though Wall Street stocks rose.

At 0630 GMT, the euro was trading at Y134.70, barely changed from Y134.71 in late New York trade Tuesday, and at $1.4313, up from $1.4298. The dollar was quoted at Y94.15, down from Y94.19.

Elsewhere, the October Nymex crude oil futures contract was up 14 cents at $72.19 per barrel. Citigroup analyst Tim Evans noted that both OPEC and non-OPEC production have been "inching higher" as demand remained weak. "I continue to see risk that we hit an air pocket similar to the one we hit in the first two weeks of July, when the market dropped $15 a barrel in nine sessions," said Evans.

Spot gold was at $948.15 per troy ounce, up $2.27 from the New York close.

The European government bond market was little changed early Wednesday, ahead of the Ifo index data. The September bund futures contract was down 0.03 at 122.41.