Last checked at 
* European shares down 0.6% but off opening lows
* Tech giant SAP dumps targets, shares tank
* Upbeat vaccine development lifts AstraZeneca
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TOWER POWER (1001 GMT)
Equities in Europe have recovered from early lows and while
that may be due to underlying hopes the virus won't derail the
recovery, an outperformance of telco stocks is also
playing a part.
The sector is buoyed after Cellnex announced its
latest M&A move on Friday in a deal that highlights not only the
tower operator's successful acquisition strategy but also the
opportunity for traditional telecoms to monetise on their tower
assets.
Barclays estimates that 60% of towers in Western Europe are
still owned by operators and notes increasing commentary from
larger operators around exploring options for infrastructure.
"We continue to argue it makes sense to sell towers and
reallocate capital to other areas... Retaining minority stakes,
such as in the potential Play-Cellnex deal, allows operators to
participate in future upside that they are unlikely to realise
standalone," Barclays says.
On Friday Cellnex agreed to buy a 60% stake in the cellphone
tower unit of Play.
Telecoms were last leading sectoral gainers in
Europe, up 0.3%, with Cellnex leading the way, up 2.6%.
(Danilo Masoni)
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ANALYSTS’ MIXED VIEWS AFTER S&P MOVE ON ITALY (0909 GMT)
Probably many investors are wondering if S&P upgrading
Italy’s outlook is a "once and in a lifetime" move or a vote of
confidence on an enhanced European integration, which is getting
traction following ECB measures and the proposal of a EU
recovery fund.
Analysts’ views are mixed on the matter, but there’s no
doubt the rating agency action took investors by surprise as
10-year Btp yields are down 8 basis points this morning.
S&P said Italy's outlook balances the negative consequences
of the coronavirus pandemic on public finances against the
extraordinary policy response by the European Central Bank.
S&P move “confirms how creditworthiness really depends on
funding costs more than anything else,” a Citi research note
says.
But more headwinds might emerge “with poor absorption rate
of the EU funds and/or the crystallization of the Covid
government guarantees,” it adds.
Besides, some sort of debt consolidation might be necessary
in the future not to mention the political risk as “right-wing
parties championing a less-Europe ticket still gather nearly 40%
of voting intention.”
Unicredit analysts sound more optimistic.
The next ratings action for Italy will be from Moody’s on
November 6. “I’m pretty sure they won’t change anything on that
occasion, but S&P has now taken the lead on how the rating
agencies will – read: should - look at Europe,” its chief
economist Erik F. Nielsen says in a research note.
“The SURE bond issue sends two very clear messages: there is
a huge demand for a euro-denominated safe asset and there is
strong confidence in the new and enhanced European project,”
according to co-head of the research team Luca Cazzulani.
(Stefano Rebaudo)
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EUROPE OPENS IN THE DARK, BUT THERE'S SOME LIGHT (0841 GMT)
Losses are almost everywhere at the start of trading in
Europe with SAP leading the way, down 19% and set for
its worst day in 24 years, after the region's biggest tech
company dumped its targets, underscoring the big risks that the
second COVID-19 wave poses to the economic and corporate
recovery.
All country benchmarks are showing heavy declines in early
deals as worries over surging Covid cases dominate, and only
healthcare is managing to post a small gain with AstraZeneca
up marginally after an upbeat Financial Times report
about the vaccine developed by the UK drugmaker and the
University of Oxford.
The newspaper said their vaccine produced a robust immune
response in elderly people, the group at highest risk. Even
though that's not the kind of vaccine breakthrough investors are
looking for, it's still an encouraging development that can
keeps markets afloat despite the fresh lockdown risks.
Here's your snapshot:
(Danilo Masoni)
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ON OUR RADAR: SAP NEEDS A VACCINE TOO (0727 GMT)
Downbeat virus developments and no progress in U.S. stimulus
talks are surely a downer this morning but corporate newsflow
isn't helping either.
Shares in German software maker SAP are down 13%
in premarket trade after Europe's largest IT group by market
capitalisation cut its guidance for the year and abandoned its
forecast that profitability would expand steadily over the
medium term, saying coronavirus lockdowns would hit demand well
into 2021.
There's virus pain also for French car rental company
Europcar, which dropped its 2020 financial outlook as
it posted a slump in its Q3 results, hit by the impact of the
COVID-19 crisis.
Meantime, Lufthansa shares are down 2.3% in
premarket after the German airline said it would ground more
planes during winter.
In dealmaking news, U.S. buyout group Carlyle Group
is nearing an agreement to acquire Siemens mechanical
drive arm Flender, for about for about 2 billion euros,
Bloomberg News reported citing sources.
Frozen bread maker Aryzta said on Saturday it had
concluded discussions with Elliott Advisors without a binding
takeover offer and that it would now look at other options.
Eyes also on UK banks after the Times newspaper reported
that local regulators are considering plans to allow lenders to
start paying dividends again next year.
On the Covid treatment front however there's some good
looking newsflow. The FT reported that early results from tests
for the vaccine being developed by the University of Oxford and
AstraZeneca, show it produces a robust immune response
in elderly people.
(Danilo Masoni)
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MORNING CALL: COVID RISK-OFF (0637 GMT)
European shares were set to start the week in a clear
risk-off mood as Covid infections are surging rapidly across the
region, prompting new social restrictions that could hurt the
economic recovery.
Over the weekend Spain imposed local nighttime curfews and
banning travel between regions in some cases, while Italy
ordered bars and restaurants to close early and shut public
gyms, cinemas and swimming pools.
France registered a record 52,010 new confirmed coronavirus
infections over the past 24 hours.
Meantime in the United States, which saw its highest ever
number of new COVID-19 cases in the past two days,
there was no clear progress on a stimulus package.
Euro STOXX 50 futures were last down 1%, DAX futures down
1.3% and FTSE futures down 0.6%.
(Danilo Masoni)
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