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Feb 5 (Reuters) - Welcome to the home for real time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her
on Messenger to share your thoughts on market moves:
helen.reid.thomsonreuters.com@reuters.net PUFF GOES THE 2018 RALLY, EXCEPT FOR
ITALY (0836 GMT) The strength of the sell-off we're seeing has wiped off 2018 gains for all
major indexes in Europe. An exception is Italy's FTSE MIB, which remains up nearly 5
percent, while UK midcaps have fared the worst year-to-date. (Tom Pfeiffer) ***** EUROPE
FLASHING RED (0813 GMT) All main country benchmarks in Europe are losing ground in
early deals today and it's hard to find any positive signs around. 588 stocks out of the 600
that are listed on the pan-regional STOXX are falling and no sub-sector is moving in positive
territory. Here's your snapshot: (Danilo Masoni) ***** IT'S A "HEALTHY CORRECTION", CS
RECKONS (0756 GMT) Europe is most likely set to join the sharp equity sell-off today but
the global investment committee of Credit Suisse keeps a cool mind and sees opportunities.
"The continuing rise in bond yields seems to have put the brakes on stock gains. Our global
Investment Committee takes the solid economic and earnings growth into consideration and
sees the latest development as a healthy correction that offers good buying opportunities in
equities," the Swiss bank says in its investment daily. (Danilo Masoni) ***** WHAT'S ON
THE RADAR FOR THE EUROPEAN OPEN (0751 GMT) A sharp sell-off in Asian trading is
set to spread to Europe on Monday with stock futures down 0.7 to 1 percent as rising bond
yields continue to take their toll on stock markets near record highs. Euro area PMIs at 0900
GMT will give a read on whether the region is keeping up its blistering pace of growth, but
SocGen analysts warned a strong reading could spell further turbulence for stocks if it drives
yields higher. On a slightly calmer day for earnings, notable companies reporting include
budget airline Ryanair, engineering group Sandvik and miner Randgold Resources. Ryanair
shares are indicated down 2 to 3 percent in pre-market after the company struck a cautious
tone on fares, while Sandvik is seen gaining 2 percent at the open after fourth-quarter profit
topped forecasts. Fiat Chrysler shares are also seen down 3 to 5 percent after sources said
the U.S. Justice Department is seeking 'substantial' fines in the emissions case. Fiat's U.S.
shares ended down 7.2 percent on Friday. (Helen Reid) ***** EARLY MORNING
EUROPEAN HEADLINE ROUND-UP (0740 GMT) There are some earnings updates to
focus on today including from Ryanair, Sandvik and Randgold. Below a summary of the
headlines we're looking at: Lloyds Bank to ban credit card owners from buying
cryptocurrencies Ryanair CEO warns of strikes, says some pilot demands 'laughable'
Lufthansa aims to replace top management at Brussels Airlines Merck's consumer health
sale at risk as Nestle bows out - sources Infineon CEO sees no spin-offs, IPOs for units -
Euro am Sonntag Italian shipbuilder Fincantieri takes control of STX France Activist investor
Elliott sheds most of Dufry stake MEDIA-iPhone X owners report problems with incoming
calls- FT Heathrow terminals should be opened up to competition says IAG Broadcom to
raise Qualcomm bid in push for talks, sources say Daily Mirror owner to clinch takeover of
rival titles this week -Sky Engie board puts four candidates forward for chairman role -report
Daimler, Bosch to test self-driving cars soon - Automobilwoche Schaeffler has e-mobility
orders worth $1.25 bln -Automobilwoche MEDIA-SAP sees good chance for 30 pct margin
in 2019 -Euro am Sonntag Fitch: Unilever's Strong 2017 Results Do Not Rule Out
Downgrade Tesco â€says Booker's Wilson to be UK and Ireland boss after takeover
Engineering group Sandvik Q4 operating profit tops forecast VW seeks delay in U.S. trial
after lawyer references monkey testing, EXCLUSIVE-Merck's consumer health sale at risk
as Nestle bows out - sources Randgold 2017 profit up 14 pct, doubles dividend BRIEFlastminute.com
Expects For 2017 Net Loss Of EUR 8-9 Mln German coalition negotiators
may drop proposal to abolish air transport tax ANALYSIS-Deutsche Bank gambles German
goodwill with bonus bonanza (Tom Pfeiffer and Danilo Masoni) ***** FUTURES POINT TO
SHARP SELL-OFF IN EUROPEAN STOCKS AS YIELDS RISE (0721 GMT) Futures have
opened sharply lower across the main benchmarks, with drops of 0.7 to 1.1 percent.
Meanwhile Germany's 10-year government bond yield has risen to its highest level since
September 2015 - so the yield pressure looks like it's here to stay today as well. (Helen
Reid) ***** EURO AREA PMIS COULD PUSH YIELDS HIGHER (0653 GMT) Euro area
PMIs today at 0900 GMT will provide a read on growth in the region, but economists at
Societe Generale reckon stocks may not take the data well even if it points to strong activity.
"These have the potential to maintain upward pressure on yields if they suggest strong
underlying growth momentum. Strong growth will provide little solace for equities or
commodities if it pushes bond yields higher," write SocGen analysts. They add that the selloff
in bonds has been more aggressive than they had anticipated. The past week was "a
tough one for asset markets" and this one could be more of the same. (Helen Reid) *****
"EXTREMELY WELCOME NEWS FOR ACTIVE" (0638 GMT) Bernstein's global
quantitative analysis team finds a pick-up in performance for active managers and signs
they could continue to do well this year, a godsend after years of disappointing returns for
the industry. European portfolio managers and global quantitative managers beat
benchmarks by 3.3% and 1.9% on average in 2017, Bernstein finds, and this strong
performance has continued into 2018. Stock and factor correlations at multiyear lows create
optimal conditions for active management and stock picking. "Even if are unlikely to go
lower from here, the current levels suggest a rich opportunity set for stock pickers for the
next 12 months," write Alla Harmsworth and team. Intra-sector correlations are at 20-year
lows on both sides of the Atlantic, and valuation spreads are wider than usual across the
whole market and within sectors, they note. "This suggests a heightened potential ability to
identify idiosyncratic 'winners' even amongst peers within narrow market segments," says
Harmsworth. It'll be interesting to see whether this low correlation environment continues
even if the stocks rally starts to peter out. (Helen Reid) ***** MORNING CALL: SELL-OFF