LIVE MARKETS-Europe before the bell: "A really big bazooka"

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EUROPE BEFORE THE BELL: "A REALLY BIG BAZOOKA"

European shares were set for a strong bounce back from their worst day in over six months on Wednesday after German leaders agreed on a 500 billion euro infrastructure fund to revamp the military and revive growth.

The historic debt overhaul in Germany came as also China unlocked more fiscal stimulus, likely providing another reason to cheer for investors in the export-oriented European economy. Beijing promised greater efforts to support consumption and cushion the impact of an escalating trade war.

EuroSTOXX50 and DAX futures soared 1.9-2.3%, with the German news seen driving further gains in defence stocks like Rheinmetall RHMG.DE and Saab SAABb.ST, even though some investors see them now more vulnerable to a pullback. Builder Hochtief HOTG.DE was also set for strong start.

"A really big bazooka," wrote Berenberg economist Holger Schmieding, commenting on the German measures. "These proposals for an immediate loosening of Germany’s fiscal rules will likely be enacted. They are a fiscal sea change for Germany."

Hints by U.S. Commerce Secretary Howard Lutnick of a possible tariff compromise with Canada and Mexico added to the good mood.

Elsewhere, Adidas ADSGn.DE expects sales growth slowing slightly to up to 10% this year, as it sees continued double-digit growth for the adidas brand. One trader called the guidance disappointing. Adidas fell 3.8% in Frankfurt.

Bayer BAYGn.DE raised the prospect of a return to profit growth after reiterating a decline was expected for this year.

(Danilo Masoni)

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