Nikkei retreats from 1-week high; ministers' tax comments sour mood

Thu Aug 15, 2013 7:28am BST
TOKYO, Aug 15 (Reuters) - The Nikkei average shed 2.1
percent on Thursday, pulling back from a one-week high reached
the previous day, after falls on Wall Street overnight and
Japanese ministers' comments a potential corporate tax-cut
soured the mood.

The benchmark Nikkei ended down 297.22 points to
13,752.94, led by futures selling, while the broader Topix
dropped 1.7 percent to 1,151.82. Trading volume was
light.

During the trading session on Thursday, Japanese government
spokesman Yoshihide Suga and Finance Minister Taro Aso both
downplayed this week's report in the Nikkei business daily that
the government is considering a corporate tax cut.

European Factors to Watch-Shares seen edging lower, focus on data

Thu Aug 15, 2013 7:32am BST
LONDON, Aug 15 (Reuters) - European shares were expected to fall slightly
from their 2-1/2-month highs on Thursday, tracking losses on Wall Street and in
Asia, on persistent concerns the U.S. Federal Reserve might start cutting its
stimulus from next month.

St. Louis Federal Reserve President James Bullard said late on Wednesday the
Fed risked pushing inflation even lower if it tapered bond purchases too
aggressively.

Selling on Wall Street accelerated after his comments as some investors
speculated a decision to trim stimulus could be taken within weeks. A Reuters
poll also showed on Wednesday a majority of economists expect the Fed to reduce
bond purchases at its Sept. 17-18 policy meeting.

At 0622 GMT, futures for Euro STOXX 50, Britain's FTSE 100
, Germany's DAX and France's CAC were 0.1 to 0.3 percent
lower.

Japan's Nikkei fell 2.1 percent on Thursday, while U.S. shares
dropped 0.4 to 0.7 percent in the previous session, when
the FTSEurofirst 300 index managed to end 0.3 percent higher on data
showing the euro zone had emerged from recession.

Investors will keep a close eye on more economic data and earnings for hints
about the market's near-term direction. On Thursday, Holcim, the
world's largest cement maker, reported flat second-quarter profit, while Zurich
Insurance's net profit fell nearly 30 percent.

According to Thomson Reuters StarMine, 86 percent of the STOXX Europe 600
companies have announced second-quarter results so far, of which 56
percent have met or beaten forecasts. However, Europe lags the United States,
where 72 percent of the S&P 500 companies have met or beaten predictions. More
than 90 percent of the U.S. firms have reported results.

"Equities have survived another earnings season intact. Since Alcoa
announced results six weeks ago, the STOXX 600 has risen 5.1 percent and the S&P
500 by 3.3 percent. We suspect the focus on micro issues will now turn into a
focus on macro issues," Graham Bishop, senior equity strategist at Exane BNP
Paribas, said.

He said investors' attention will turn to green shoots and structural reform
in the euro zone, further traction in the UK and the U.S. and economic
stabilisation in China.

The market's focus at 1230 GMT will be on the first-time claims for U.S.
jobless benefits for the week ended Aug. 10, with economists expecting a total
of 335,000 new filings, against 333,000 in the prior week. In the UK, July's
retail sales numbers, due at 0830 GMT, are expected to rise to 0.6 percent from
0.2 percent in the previous month.

"UK GDP has already shown signs of improvement since the start of the year
and another increase in retail sales would be a sign that activity is gaining
momentum," Annalisa Piazza, analyst at Newedge Strategy, said in a note.

In the bonds market, German Bund futures opened flat at 140.95,
keeping close to seven-week lows of 140.56 hit on Wednesday after data showed
the euro zone economy recovered from a lengthy recession in the second quarter.

FTSE100 firmly lower in early deals

GBP Retail Sales m/m 1.1% 0.7% 0.2%

UK retail sales jump 1.1% in July

Retail sales in the UK jumped by 1.1% in July, according to the Office for National Statistics (ONS).

The rise was significantly larger than expected and means sales are up 3% compared with last year - the fastest annual rise since January 2011.

The positive sentiment on the High Street adds to indications that the UK's economy is beginning to recover from its deep recession.

The retail industry accounts for about 5.7% of the economy.

The ONS said good weather had helped generate increased sales at supermarkets, with barbeque food, outdoor items, clothes and alcohol.

FTSE100 suffers heavy losses by midday ahead of US data

USD Core CPI m/m 0.2% 0.2% 0.2%

USD Unemployment Claims 320K 334K 333K

USD CPI m/m 0.2% 0.2% 0.5%

USD Empire State Manufacturing Index 8.2 10.2 9.5

USD TIC Long-Term Purchases -66.9B 31.3B -27.2B

USD Capacity Utilization Rate 77.6% 77.9% 77.8%

USD Industrial Production m/m 0.0% 0.5% 0.3%

USD Philly Fed Manufacturing Index 9.3 15.6 19.8

USD NAHB Housing Market Index 59 57 57

FTSE 100 slumps to triple-digit losses