Europe factors-Shares to gain on IMF aid hopes for Italy

LONDON: European shares were set to rise on Monday, with sentiment likely to be improved by reports that the International Monetary Fund was preparing an aid package for Italy and that France and Germany were exploring ways to integrate euro zone countries.

An unsourced report in Italian daily La Stampa said up to 600 billion euros ($796 billion) could be made available at 4-5 percent to give Italy breathing space for 18 months. Such a sum would be beyond the IMF's current capacity and would need new measures such as the issue of new special drawing rights (SDRs) or intervention by the ECB, it said.

The IMF would not comment on any moves to provide financial support, and official sources in Rome said they were unaware of any request for assistance from Italy, which has over 185 billion euros of bonds falling due by the end of April.

"Given the disappointment traders have experienced in the last 12-18 months, it is hard not to feel that this idea La Stampa is running as nothing more than a pipeline dream," said Stan Shamu, strategist at IG Markets. "The bears out there will know that markets do not go down in a straight line and this could be just a relief rally in what will prove to be a prolonged bear market."

Financial spreadbetters predicted Britain's FTSE 100 would open 44-48 points higher, or as much as 0.9 percent, Germany's DAX to gain 79-90 points, or as much as 1.6 percent, and France's CAC 40 to rise 37-40 points, or as much as 1.4 percent.

Investors will keep a close eye on developments in the euro zone. Documents showed detailed operational rules for the region's bailout fund were ready for approval and will clear the way for the 440 billion euro facility to attract cash from private and public investors in coming weeks.

The market was also expected to get some support from news that US retailers racked up a record $52.4 billion in sales over the Thanksgiving weekend, a 16.4 percent jump.

US stock futures jumped on Monday, with futures for the S&P 500, the Dow Jones industrial average and the Nasdaq 100 rising 1.6 to 2.1 percent. Japan's Nikkei stock average also jumped 1.6 percent on Monday, rebounding from the previous week's 2-1/2 year low.

On Friday, the FTSEurofirst 300 index of top European shares ended 0.9 percent higher at 907.92 points after falling for six straight days to seven-week lows. However, the index has fallen 8.8 percent so far this month and is down 19 percent in 2011.

Copyright Reuters, 2011