March 5 (Reuters) - Welcome to the home for real-time coverage of European equity marketsbrought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him onMessenger to share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net IRISH STOCKS TAKE A BEATING (1156 GMT) Irish stocks are among the biggest STOXX fallers, with the benchmark ISEQ down morethan
Italy's main index.
Dublin seems to be catching up with falls in European markets at theend of last week -- the Irish Exchange was closed for half of Thursday and all of Friday becauseof the bad weather. Shares in AIB Group, Kerry Group and Bank of
Ireland are all downbetween 1.2 to 4.1 percent. The benchmark index is down 1.1 percent, having hit a one-year lowearlier in the session. David McNamara, an economist at Davy, says the volatility may also be down to the broadermarket uncertainty caused by the Italian election. Furthermore, traders may be sifting through the implications of
UK PM Theresa May's Brexitspeech on Friday. "I think there was quite a bit of digestion over the weekend and arguing about
Ireland'sposturing on the Brexit talks and negotiations," said Mike van Dulken, head of research atAccendo Markets. The latest Irish macroeconomic data won't be helping. A PMI survey showed Irish services growth slowed to a three-month low in February, while inanother survey, Irish consumer sentiment fell back from a 17-year high. Here's a chart showing the one-year low the ISEQ hit earlier on: (Kit Rees) ***** MOST AND LEAST CROWDED STOCKS IN
EUROPE (1114 GMT) UBS has crunched the numbers to find global active managers' most and least preferred stocksacross
Europe. No surprises - tech stocks feature prominently among the most crowded trades,while some European banks and consumer goods companies are getting the cold shoulder frominvestors. The top five biggest underweights in
Europe include HSBC, Santander,Nestle, and AB InBev. Shell is also up there and BP is in thetop ten, suggesting investors remain uncertain about oil majors. Interestingly tobacco stocks BAT and Imperial feature in the top fivebiggest overweights, despite efforts to regulate tobacco. Of course tech stocks are up theretoo: semiconductor machine maker ASML and IT sensors and software maker Hexagon are crowded overweights, with online travel booking system Amadeus also inthe top ten. Looking at the global stocks universe, the most popular are, perhaps unsurprisingly,tech-dominated: Alibaba, Microsoft, UnitedHealth Group, Visa,and Alphabet. Top five underweights globally are Apple, Exxon Mobil, Berkshire Hathaway, Johnson & Johnson, and Toyota. (Helen Reid) ***** ITALIAN ELECTION RESULT: A BIG THREAT FOR
EUROPE? (1043 GMT) It looks like jitters over a political gridlock in
Italy are confined to Italian stocks,whereas Italian bonds look much more resilient and European shares are now comfortably moving inpositive territory. Does this mean investors see the election's results as something moreharmful for the domestic market than for the whole European economy and political integration? Some fund managers and analysts appear to support this idea, especially after
Germany'sSocial Democrats backed a deal to form a coalition government with Merkel's conservatives, asthey remain confident in the region's economic recovery. JCI Capital: "The result is certainly among the worst that the market could have expected,even though the Brexit and Trump votes have taught us that political happenings can lead tounexpected market reactions. European integration and the euro have not been a central part ofthe election campaign and the eurosceptic tones have not been stressed a lot by parties such asthe 5-Star and the League, which in the past have insisted on the issues with much moreconviction... it is difficult to imagine that any of the results could have a systemic impact." Amundi: "With this outcome it is likely that the government will not be of help in theprocess of strengthening the European project. On the other hand, in
Germany, the SPD justagreed to enter the new grand coalition government. So overall, we don't see a material increaseof political risk in
Europe." "In the short term, we expect some volatility in the markets, at least until the newgovernment will be formed and it will announce its economic and fiscal program. However, thistime, we believe, the economic recovery in
Europe and worldwide is much more resilient than inthe past and the balance sheets of the companies are much stronger after many years ofrestructuring programs," Amundi adds. UniCredit: "The League has pledged to fight for more sovereignty and is opposed to amore-integrated
Europe. This would likely complicate Italy’s stance towards the EU and euro.However, given the involvement of Forza Italia, it is currently very difficult to anticipate atwhat level this is likely to happen. Surely, the good news out of
Germany yesterday – the SPD'sapproval of the coalition treaty – will certainly help boost European integration." (Danilo Masoni) ***** FRENCH BANKS GET A FOUR OF A KIND (1021 GMT) Acknowledging "a wave of optimism post Q4 results", Jefferies now has a "buy" rating on
France's four listed banks, as the broker believes they are cheap and offer good growthprospects. "We now have a 'Buy' rating on all French banks, as we believe the economies of
France (2%GDP in 2017) and the South of
Europe, mainly
Italy, will continue to rebound along with a markedincrease in corporate loan demand at year-end and rebound in market activities," Jefferiesanalysts wrote in a note today. Here is how they rank them: (Julien Ponthus) ***** TRADE WAR = FED HIKES (0946 GMT) That's the point Paul Krugman makes in his NYT column. With the
U.S. being close to fullemployment, the country can't just painlessly make up for the imports deterred by new tariffs,and a spike in inflation is to be expected. "What would happen instead is that the Fed would raise rates sharply to head offinflationary pressures (especially because a 20 percent tariff would directly raise prices bysomething like 3 percent)," the Nobel prize economist writes. Two big side effects would be expected from this: stress on leveraged sectors and a risingdollar. Here's a link to his column: http://bit.ly/1HKJJ8M (Julien Ponthus) ***** OPENING SNAPSHOT: ITALIAN STOCKS HIT 6-MONTH LOW (0812 GMT) Italian shares are this morning's big losers, against a broadly positive European backdrop.
Italy's benchmark index has hit a six-month low after weekend elections boosted the influence ofanti-establishment parties and further clouded prospects for structural reform. Irish stocks are down, with the benchmark index falling 2.4 percent, after a stringof negative economic data. Elsewhere European autos are feeling the pressure from Trump's proposed tariffs,while a fall in Axa's shares is weighing on insurers after the company announced a
$15billion acquisition of reinsurer XL. More broadly, gains for energy stocks and tech are buoying the market. Here's your opening snapshot: (Kit Rees) ***** COMPANY NEWS HEADLINES: MORNING ROUND-UP (0741 GMT)Insurer AXA agrees to buy XL Group for around
$15 blnSiemens Healthineers' IPO smaller than expectedAmazon has French grocery market in its sights, French boss tells paperBASF in talks to buy Bayer's vegetable seeds business - sourcesVW to pursue IPO plan for trucks division -HandelsblattTrump threatens to tax European auto importsAirbus plans to move or cut 3,600 jobs - magazineBritish energy regulator to limit back billing to 12 months
UK PM May calls on housebuilders to "do their duty", demanding more homesAkzo Nobel nominates former Maersk CEO Andersen as chairmanRyanair and Aer Lingus sign flight-connection deal -Sunday TimesSwiss bank Raiffeisen CEO says will not quit over predecessor probeCar service Addison Lee sees profit ahead as expansion continuesDialog expects to supply chips to Apple through 2020 - CEO in paperTesco completes
$5.5 bln takeover of Booker?BRIEF-Trinity Mirror Says FY Revenue Fell 12.6 Pct TMEDIA-Iberdrola puts five engineering companies on sale - El ConfidencialBRIEF-Spectris Says Commencing Share Buyback(Tom Pfeiffer) ***** STOCK FUTURES TURN NEGATIVE (0728 GMT) It looks like sentiment has taken a bit of a knock in
Europe as stock futures fall intonegative territory. A combination of concerns over trade wars as well as a rise in support foranti-establishment and far-right groups in
Italy are likely to weigh on European share tradingthis morning. Here's your snapshot: (Kit Rees) *****
ITALY? "WE EXPECT INCREASED VOLATILITY" (0649 GMT)
Europe may open slightly up today as it recovers from a bad week but the Italian vote willlikely keep the
Milan bourse under pressure with IG analyst Vincenzo Longo calling the FTSE MIB index down more than 1 percent at the open today. The vote is set to result in a hung Parliament with very uncertain government prospects, asanti establishment parties M5S and Lega delivered a stronger than expected results. Chief Investment Officer UBS WM Italy Matteo Ramenghi believes an alliance between M5S andLega looked unlikely, although warns of a volatile period ahead for Italian assets. "We expect lengthy negotiations after these elections, which may lead to increasedvolatility of Italian assets," he says. "A broad grand coalition would be well received by markets as it could result in politicalstability and fiscal discipline. Repeat elections could prolong uncertainty and weigh on Italianassets. The Italian equity market has not priced in electoral uncertainty, but current yields ongovernment bonds suggest they have incorporate some political risk," he adds. "An anti-establishment alliance of M5S and Lega, the worst case scenario for markets, looksunlikely due to different programs," he also says. (Danilo Masoni) ***** Morning call:
Europe set to recover despite
Italy uncertainty (0624 GMT) Good morning. European shares are expected to open higher today, as markets recover from asell-off last week when investors were spooked by worries over a global trade war. Italian voters delivered a hung parliament on Sunday, flocking to anti-establishment andfar-right parties in record numbers and casting the euro zone's third-largest economy into apolitical gridlock that could take months to clear. That put the euro in choppy waters in Asian trading. The single currency however foundsupport after
Germany's Social Democrat party decisively backed the renewal of an alliance withChancellor Angela Merkel's conservatives, allowing her to form a new government more than fivemonths since the country's inconclusive election. Here your morning calls, courtesy of CMC. FTSE100 is expected to open 33 points higher at 7,103 DAX is expected to open 37 points higher at 11,950 CAC40 is expected to open 16 points higher at 5,152 (Danilo Masoni) ***** (Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)
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