* European stocks jump 1 percent on bank, pharma news
* Japan's Nikkei hits longest 43-year losing streak
* Wall Street set for higher open
* Euro rises on interest rate expectations
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 2 (Reuters) - European shares jumped on
positive company news on Wednesday, shrugging off sharp losses
in Asia, including the worst losing streak in 43 years in Japan,
while the euro rose ahead of an expected interest rate hike.
Oil was steady below its recent record territory but was
still around $141 a barrel, feeding concerns about inflation.
Wall Street looked set for a modestly upbeat start.
Volatile European stocks were buoyed by Deutsche Bank
<DBKGn.DE>, which said it expected to make a profit in the
second quarter of the year and therefore did not need to turn to
shareholders for extra cash.
The bank made the remarks after its shares, along with other
banks, took a pummelling on fears for financing. Banks have been
at the epicentre of the subprime mortgage and credit crisis.
Deutsche's shares were up close to 5 percent, helping lift
the pan-European FTSEurofirst <.FTEU> by 1.1 percent.
AstraZeneca <AZN.L> gained more than 5 percent after the
group won a key U.S. patent battle over its second-biggest
selling drug, Seroquel for schizophrenia and bipolar disorder.
But Europe was bucking the international trend.
Japan's Nikkei average <> fell 1.3 percent as worries
about the global economy hit exporters such as Canon Inc
<7751.T>. The loss marked its 10th straight negative day, its
longest losing streak since February-March 1965.
"The worst factor for the market is oil prices that don't
stop rising. Investors are in a complete wait-and-see stance,"
said Koichi Ogawa, chief portfolio manager at Daiwa SB
Investments.
The Nikkei lost 176.83 points to end at 13,286.37, the
lowest close since April 16. The broader Topix <> shed 1.4
percent to 1,301.15, its lowest finish since April 17.
And other news was bearish. Confidence in the UK housing
sector, for example, was knocked after Taylor Wimpey <TW.L>
failed to complete a capital raising.
Shares in Marks and Spencer <MKS.L> also hit a 7-year low
after the clothes, food and homewares group issued a shock
profit warning, adding that others were likely to follow suit in
a deepening consumer downturn.
OIL SUPPLY, RISING EURO
Oil stayed below its record high on Monday above $143 a
barrel. U.S. crude <CLc1> was up 9 cents to $141.04 a barrel.
The International Energy Agency on Tuesday cut its global
oil supply capacity forecast by 2.7 million barrels per day to
95.33 million by 2012, boosting prices already lifted by tension
between Iran and Israel.
Traders also bought crude on the weak dollar, which softened
against the euro on Wednesday ahead of Thursday's European
Central Bank meeting, which is widely expected to raise interest
rates to deal with quickening euro zone inflation.
The euro hit two-month highs against the dollar and looked
set to stay firm ahead of the ECB meeting.
The ECB is widely expected to lift interest rates to 4.25
percent from 4.0 in order to anchor inflation and markets are
starting to brace for hawkish-sounding comments from President
Jean-Claude Trichet.
The euro was up 0.1 percent against the dollar at $1.5807
<EUR=>, having earlier topped at $1.5847 -- a level last seen in
late April. It was 0.6 percent firmer versus the Japanese
currency at 168.49 yen <EURJPY=>.
"There's some heavy flows going through the market which has
pushed it to the new level," said Mitul Kotecha, head of FX
strategy at Calyon.
The dollar was up 0.5 percent at 106.58 yen <JPY= and was
flat against a basket of major currencies <.DXY>.
On euro zone bond markets, two-year cash yields were up 7
basis points at 4.646 percent <EU2YT=RR> while 10-year Bunds
<EU10YT=RR> yielded 4.665 percent, around 3 basis points higher
than in late Tuesday trade.
(Editing by Mike Peacock)
