MARKET COMMENT: S&P/ASX 200 Likely Down On Cyprus, European Economic Jitters

2300 GMT [Dow Jones] Australia's S&P/ASX 200 is expected to suffer from jitters over Cyprus and disappointing European economic data, with IG strategist Evan Lucas tipping a 0.7% opening fall to 4923, after a 0.7% fall in the Stoxx 600 and a 0.8% decline in the S&P 500 overnight. With the ECB threatening to cut off emergency funding to Cypriot banks on Monday if Cyprus doesn't come up with a plan to secure a financial bailout, Mr. Lucas says Friday's S&P/ASX 200 fall could be bigger than expected. The European economy was the other main concern overnight, as German manufacturing PMI data undershot expectations. With LME copper down 0.5% and Nymex crude oil falling 1.1% in response to deteriorating conditions in Europe, the resources sector could bear the brunt of Friday's decline, although BHP's (BHP.AU) ADRs point to a modest opening fall to A$33.38, down 0.3% on Thursday's close. Financials are also likely to come under pressure amid concerns that funding costs could rise if Cyprus is forced out of the euro zone and financial contagion spreads to Europe. Macquarie has upgraded NAB (NAB), Qantas (QAN.AU) and Virgin Airways (VAH.AU), and Billabong (BBG.AU) is set to reopen after Thursday's trading halt, after the company said late in the day that takeover talks were continuing. The benchmark S&P/ASX 200 closed down 0.2% Thursday at 4959.4. ([e-mail])

 
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