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European Stocks May Snap Nine-day Winning Streak

(RTTNews) – European stocks may edge lower on Tuesday, tracking losses on Wall Street overnight and in Asia today amid doubts about the genuinity of China’s resolve to allow more flexibility in its currency’s exchange rate. China’s yuan move might be a mere strategy to ease international criticism of its fixed exchange rate policy ahead of the G20 meeting, analysts said.

The People’s Bank of China on Saturday said that it would make the yuan more flexible, but dismissed the idea of an instant revaluation, noting that it is already near fair value.

Meanwhile, sentiment may also remain weak, as Britain’s Chancellor George Osborne unveils the toughest set of tax increases and spending cuts in a generation when he delivers his emergency budget to parliament later today.

Osborne told the BBC over the weekend that the coalition government had inherited “a truly awful financial situation” from Labour and that the country is “on the road to ruin” unless immediate action is taken.

In corporate news, Dutch life insurer Aegon NV is expected to make an update on its plans to sell its struggling U.K. business at its investor day Tuesday.

Spain’s Banco Santander SA is trying to revive talks to merge its U.S. business with M&T Bank Corp after negotiations collapsed last month, the Bloomberg said.

Fitch Ratings downgraded BNP Paribas SA’s credit rating by a notch to AA- citing “structural issues” linked to the French banking giant’s business mix.

International ratings agency Standard & Poor’s held its credit ratings on six Spanish banks, although it increased its estimate for loan loss provisioning for these banks.

Distribution and outsourcing group, Bunzl Plc provided an update relating to the six months ending 30 June 2010 prior to entering its close period. The company said that overall trading is in line with full year expectations with Group revenue growth of 2%.

The European markets rose for the ninth day on Monday, reflecting a positive reaction to China’s expression of intent to relax its currency policy. The FTSEurofirst 300 index of pan-European blue chips closed 1.04% higher, the U.K.’s FTSE 100 index rose 0.92%, France’s CAC 40 index gained 1.33% and Germany’s DAX index closed up 1.22%.

On Wall Street, stocks failed to sustain an early rally and turned lower over the course of the session on Monday, as news of China easing its currency policy raised concerns about increased costs for U.S. corporations and consumers.

All the major averages finished in negative territory, pulling back from the one-month closing highs set on Friday. The Dow eased 0.1%, the Nasdaq declined 0.9% and the S&P 500 ended down 0.4%.

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