Futures point to bounce in Europe

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FUTURES POINT TO BOUNCE IN EUROPE (0718 GMT)

European shares were expected to show strong gains at the open on Tuesday, suggesting that markets are looking to absorb the Credit Suisse shock just as investors turn their focus to Wednesday's Federal Reserve policy decision.

EuroSTOXX50 and DAX futures were last up over 1%, and FTSE 100 contracts advanced 0.7%. Derivatives on the S&P 500 edged up 0.3%, while in Asia, stocks scraped off lows, though the mood was fragile.

Credit Suisse and UBS shares were both trading higher in Swiss pre-market trade and so were Frankfurt-listed shares in First Republic Bank, which bounced from the previous day's lows, indicating a steadier mood following a turbulent start of the week.

The M&A scene showed meanwhile timid signs of life. Sopra Steria has agreed to buy IT company Ordina for 518 million euros in cash, while Thyssenkrupp was seen rising after Handelsblatt reported that CVC was considering buying its steel unit. Pearson agreed to sell its online learning unit to private equity group Regent.

Elsewhere, German utility RWE pledged a higher dividend and more investments to expand its renewables business. Kingfisher reported a 20% fall in 2022-23 profit and forecast a further fall in its new financial year.

(Danilo Masoni)

SIGNS OF CONFIDENCE RE-EMERGE AFTER BANK STORM (0651 GMT)

Market gyrations are common but the scale of recent moves across asset classes due to a slew of bank takeovers has shocked even the most experienced traders and investors.

Safe-havens such as gold and Treasuries are in high demand along with more speculative instruments, such as tech stocks and bitcoin, as worries over the banking crisis are boosting disparate assets.

While UBS shares were hammered in early trading on Monday after its shotgun marriage with troubled Credit Suisse following an intervention by Swiss authorities, the bank's shares pared most of the losses towards the close.

The biggest pain seems to have been inflicted on holders of Credit Suisse's risky debt, leading lawyers from Switzerland, the U.S. and Britain to talk to many Additional Tier 1 (AT1) bond holders about possible legal action, a law firm said.

On Tuesday, Asian equities staged a tentative recovery as the buyout of Credit Suisse eased immediate worries of a knock-on effect to other banks, while the U.S. dollar was stuck near a five-week low.

European Central Bank President Christine Lagarde said the market turmoil might do some of the ECB's work for it in dampening demand and inflation.

Markets have been on high alert for central banks to raise interest rates sharply to cope with high inflation.

However, there could be some surprises now.

ECB policymaker Robert Holzmann watered down his recent call for three more rate increases of 50 basis points in quick succession.

Holzmann, who heads the Austrian National Bank, told German business daily Handelsblatt two weeks ago the ECB should raise rates by 50 basis points at each of its next four meetings.

The ECB made one such increase at its meeting last week.

Meanwhile, just hours after the state-backed takeover by UBS of troubled Credit Suisse was announced, memorabilia bearing the 167-year-old bank's name and logo was being put up for sale in Switzerland, marking the end of an era for Credit Suisse.

Key developments that could influence markets on Tuesday:

Meetings: Chinese President Xi Jinping and Russian President Vladimir Putin are set to engage in formal talks regarding Beijing's proposals for a war resolution

Meetings: Britain's finance minister speaks to the Economic Affairs Committee

Central bank meetings: The Federal Reserve convenes for its two-day monetary policy meeting. Policy decision is on Wednesday

(Anshuman Daga)