Euroshares outlook - higher after Wall Street recovery and oil's fall below $139

Europe's largest exchanges look set for another nervous start as Wall Street closed off intraday lows, with mixed performances form semiconductor stocks, a flurry of economic data and a rally in the price of oil to digest.

The DJIA fell 92.65, or 0.84 percent, close at 10,962.54 as an earlier recovery ran out of steam.

Broader stock indicators ended mixed. The Standard & Poor's 500 index fell 13.39, or 1.09 percent, to 1,214.91, while the Nasdaq composite index rose 2.84, or 0.13 percent, to 2,215.71.

Fears of escalating instability in the financial sector kept investors on edge despite a steep retreat in oil.

Just days after the government said it would aid Fannie Mae and Freddie Mac if necessary, Federal Reserve Chairman Ben Bernanke told Congress the U.S. economy faces "numerous difficulties."

The Nikkei was down 50.14 points, or 0.4 pct, at 12,704.42 in intraday trading, but the Hang Seng ended the morning up 97.33 points, or 0.5 percent at 21,272.10.

New York's main oil contract, light sweet crude for August delivery, was 22 cents higher at $138.96 a barrel, having dropped $6.44 to settle at $138.74 on the New York Mercantile Exchange.

Oil was down $8.5 dollars as European markets closed.

Back in Europe, ASML Holding NV warned full-year sales might fall by up to 20 percent, much lower than its earlier forecast for a 10 percent decline.

Net profit improved to 192 million euros from 145 million euros, boosted by a one-off tax gain of 70 million euros.

Amid rising concern about the state of the housing market in the UK, today's trading statement's from Land Securities and Wolseley will likely be a key focus.

And a trading statement from JD Wetherspoon should provide further clues on changing spending patterns in the UK.

In other news, Credit Agricole SA said its board of directors has reiterated its "full confidence" in chief executive Georges Pauget as the bank seeks to implement its 2008-10 action plan.

Le Monde reported last week that Pauget and chairman Rene Carron could threaten to quit in the wake of criticism from regional banks that control the majority of the group's capital.

In M&A news, GDF and Suez are hosting an EGM about their merger today.

On the economic front, Eurostat is expected to confirm that euro zone inflation jumped to 4.0 percent in June from 3.7 percent in May, reaching a new high for the period since the launch of the euro. This will mean that consumer prices increased 0.4 percent month-on-month.

After muih stronger than expected inflation data in the UK, unemployment is expected to have risen for the fifth consecutive month in June.

Analysts expect another 11,000 rise during the month, up on the 9,000 recorded in May. Average earnings, which includes bonuses, rose only 3.8 percent in the three months to May from the year before.

The BoE gets agitated when wage increases rise by 4.5 percent or more.

U.S. CPI is expected to have increased by 0.8 percent in June following a 0.6 percent increase in the previous month, driven yet again by high food and energy prices.

U.S. industrial production is expected to be unchanged in June and the National Association of Homebuilders (NAHB) survey of homebuilder sentiment is expected to remain at a record low of 18 in July.

The Federal Reserve is also due to release the minutes to its June 25 monetary policy meeting, at which the Federal Open Market Committee left interest rates unchanged at 2.00 percent while raising concerns over inflation.

deborah.hyde@thomson.com dlh/vs

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