(Updates with Wall Street outlook, fresh prices)
By Natsuko Waki
LONDON, Feb 12 (Reuters) - European stocks bounced from a
recent two-week low and Wall Street was set for a firmer start
on Tuesday, underpinned by stronger-than-expected results from
GM <GM.N> and a firmer German economic survey.
Stronger stocks failed to boost overall investor risk
appetite, however, as European credit market sentiment
deteriorated further due to concerns about forced selling of
structured credit products. Platinum hit record highs again due
to supply problems.
GM reported fourth-quarter results which were higher than
expected and also reached an agreement with the United Auto
Workers Union. The ZEW survey showed German investor morale
improved in February for the first time since May 2007.
Other positive results from European firms added to
sentiment that the six-month-old credit crisis and the ensuing
tightening credit standards have yet to batter wider corporate
activity.
"Financial professionals (surveyed by the ZEW) are obviously
expecting that the economic dip will remain limited in terms of
time," said Andreas Scheuerle, economist at DekaBank. "There is
hope that we will see an improvement in the late summer and the
dip will not turn into a phase of stagnation."
The FTSEurofirst 300 index <> was up 1.1 percent on
the day, having hit its weakest since late January on Monday,
while MSCI main world equity index <.MIWD00000PUS> was up half a
percent. U.S. stock futures were up around 0.3 percent <SPc1>.
Financial stocks underperformed as speculation intensified
of a large writedown at Dutch group ING <ING.AS> and investors
fretted about Credit Suisse <CSGN.VX>'s remaining exposure to
the financial crisis.
Credit Suisse trimmed full-year subprime writedowns to 2.0
billion Swiss francs and reported a 49 percent fall in
fourth-quarter net profit.
Experts estimate the credit crisis will eventually cost the
global banking sector around $300-400 billion.
DETERIORATING CREDIT MARKETS
The banking sector might suffer further if credit markets
deteriorate further, which could force banks to sell their
credit products. In Europe, the closely-watched iTraxx Crossover
index <ITCRS5EA=GFI> widened to 565 basis points.
"There continues to be speculation of structured credit
unwinds, which is weighing on credit and especially investment
grade," said Jim Reid, credit strategist at Deutsche Bank.
"As spreads widen, so triggers for structured products are
breached which forces them to sell assets which in turn runs the
risk of destabilising other structures."
A plan by Standard Chartered <STAN.L> to provide $7 billion
of backing to its structured investment vehicle (SIV)
Whistlejacket lapsed, in another example of how the credit
crunch is causing problems.
In the currency market, the euro was steady at $1.4529
<EUR=>, after hitting a two-week low last week as speculation
grew that the European Central Bank may be softening its
anti-inflation rhetoric by focusing on downside growth risks.
PLATINUM SHINES
Platinum hit a record high for the ninth straight trading
day <XPT=>, rising as high as $1,965 an ounce as supply concerns
lingered due to a power crisis in South Africa.
Gold <XAU=> was steady at $919.00 an ounce, holding within
sight of a record high set earlier in February.
Firmer commodity prices underpinned emerging markets, where
stocks <.MSCIEF> rose 0.8 percent on the day and emerging
sovereign spreads <11EMJ> tightened 2 basis point.
The March Bund future <FGBLH8> fell 33 ticks.
U.S. light crude <CLc1> fell 1.3 percent to $92.37 a barrel
as investors focused on a slowing U.S. economy.
(Additional reporting by Natalie Harrison; editing by David
Stamp)
