European stocks were set to start weaker on Wednesday, tracking losses on Wall Street after the Federal Reserve renewed interest rate worries, while retailers are in focus as UK clothing retailer Next issues a trading update following the crucial Christmas shopping season.
"We are calling European markets lower this morning after yesterday's slide in the U.S.," said Harley Salt, a trader at spread betters IG Index.
Germany's DaimlerChrysler, Volkswagen and BMW are seen supported after the auto makers reported a rise in U.S. sales.
U.S. crude oil prices edged lower at $43.75 a barrel and may come under further pressure after 1530 GMT when a U.S. government report is expected to show a rise in supplies of heating fuels after a bout of unseasonably warm weather at the end of December.
On the economic data front, the euro zone services PMI is due at 0900 GMT and economists in a s poll expect to see a slight rebound in growth in the euro zone's dominant services industry in December.
Stock markets in Sweden and Finland will trade for only half a day ahead of a public holiday on Thursday.
Here's how the day looks:
MARKETS
: * Financial spread betters in London expect the FTSE 100 to start 22-23 points lower, the CAC-40 is seen down 6-28 points, and the DAX is set to shed 20-26 points.
* The FTSEurofirst 300 index of leading European shares ended at a fresh 2-1/2 year high as strong gains from drug makers offset weak mining stocks, which retreated in step with weak metal prices.
* U.S. stocks tumbled on Tuesday, with the Nasdaq closing at a one-month low, after the Federal Reserve said in minutes from a December meeting that interest rates remained too low to contain inflation and this renewed market fears of a hike in interest rates in the short term.
* The dollar inched up against the euro and extended large gains made in the previous session when the Fed surprised markets by making it clear that it was worried about inflation and suggested it would keep lifting U.S. interest rates.
* U.S. Treasuries were mixed in Asia trade after the Federal Reserve surprised markets the prior session, with the minutes of central bank's last meeting showing officials felt interest rates were too low to contain inflation. Benchmark U.S. 10-year yields were trading at around 4.29 percent.
Comparable 10-year European government bonds yielded 3.638 percent.
* U.S. crude oil futures were marginally lower on Wednesday ahead of key U.S. data, which was expected to show a rise in heating fuel supplies as mild winter temperatures suppressed demand in the United States.
* In Tokyo, the Nikkei average ended lower with chip-related technology stocks tracking losses in their U.S. peers after the Federal Reserve suggested it would keep raising rates.
* Other Asian indexes such as the Kospi , Hang Seng and Straits Times were mixed.
* Gold priced edged lower in Asia as the dollar held gains against the euro, but physical demand was weak even though prices were near two-month lows.
COMPANY NEWS
NEXT
The British clothing retailer issues a trading update, a day after toys-to-sweets chain Woolworths reported poor sales over the crucial Christmas period.
BT Group
The British telecoms operator said it had no plans to increase its stake in Italian Internet provider I.NET (after I.NET's shares rose strongly on rumours of a buyout.
AMADEUS
Amadeus, the Spanish travel reservations firm which is up for sale, is expected to pick a preferred bidder and enter exclusive takeover talks within the next 10 days, sources close to the process told . SCHERING
German drugmaker Schering expects late-stage experimental cancer drug PTK/ZK to fetch it 1 billion euros in annual sales, its chief executive was quoted as saying in a German newspaper. COLRUYT
The Belgian discount supermarket chain raised its full-year earnings forecast after it reported a better-than-expected 25 percent rise in first-half operating profit.
TF1
France's leading television channel, TF1, expects its advertising revenue to have grown by over 6 percent in 2004, beating previous guidance of 5 to 6 percent, and is optimistic for this year, its chairman told .
SCHWARZ PHARMA
German pharmaceuticals firm Schwarz Pharma said it had won the right to claim damages from Israeli generic drugmaker Teva, after a U.S. court ruled Teva had infringed its patent.
SIEMENS
German engineering conglomerate Siemens and Hew, a unit of Swedish electricity firm Vattenfall, have sold a combined 40 percent stake in a Chinese power plant to a firm owned by China's Huaneng Group and CITIC Group for US$168 million, newspapers reported on Wednesday.
SODEXHO
France's Sodexho Alliance, the world's second biggest catering company, reported a 1.6 percent fall in first-quarter sales as the euro's strength against the dollar pounded growth.
PREMIER FOODS
The British pickle and sauce maker issues a trading update.