European Factors Shares seen edging higher

LONDON: European stocks were set to edge higher on Tuesday after sharp falls in the previous session with commodity shares seen giving some support but lingering concerns about the euro zone debt problems could limit gains.

Financial bookmakers expected Britain's FTSE 100 to open 5 to 13points higher Germany's to gain 6 to 9 points and France's CAC-40 Commodity stocks, which featured among the worst performers on Monday likely to provide support to the European market after Brent crude rose on stronger demand prospects from the emerging markets and copper prices gained following a 3 percent fall in the previous session.

However, analysts expect contagion fears surrounding some heavily indebted euro-zone countries likely to keep investors cautious.

On Monday, worries were raised about Spanish Prime Minister Jose Luiz Rodrigo Zapatero's ability to meet fiscal targets after a defeat of Spain's ruling socialists in local elections while on Saturday Standard & Poor's cut its outlook for Italy to "negative" from "stable".

Also weighing on sentiment was news on Monday that Fitch Ratings warned it may downgrade Belgium's AA+ credit rating if the caretaker government misses its deficit targets.

"Despite the positive opening sentiment in Europe is expected to be volatile.Contagion fears are growing following the weekend's downgrade of Italy and the political instability in Spain," said Jonathan Sudaria, night dealer at Capital Spreads.

Asian stocks were steady following sharp falls in the previous session while Wall Street closed at a month's low on Monday on global slowdown worries.

Travel stocks may also be in the spotlight after the cancellation of dozens of flights to and from Scotland on Tuesday following concerns about ash from the Icelandic volcano eruption.

Later in the session, investors will eye German Ifo data at 0800 GMT and euro zone Industrial new orders at 0900 GMT, while across the Atlantic, U.S. New homes will be in focus at 1400 GMT.

COPYRIGHT REUTERS, 2011