Glaxosmithkline Share News (GSK)

* European shares up, extend gains after strong U.S. factory data
* Ingenico rallies on Worldline takeover offer, top gainer in Europe
* UK manufacturing ends longest decline since financial crisis
* EU and Britain clash over a post-Brexit trade deal

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your
thoughts on market moves: joice.alves.thomsonreuters.com@reuters.net

EARNINGS SO FAR: "MOVING IN THE RIGHT DIRECTION" (1519 GMT)
It's still early days (only 11% of EU companies has reported) but initial findings from BofA
Global Research on how Europe's Q4 earnings season is progressing are reassuring.
The U.S. bank says the start is mixed with 47% beating on EPS and 50% on topline but the
outlook is improving.
"Bottom line: earnings are moving in the right direction, but level of growth supports
active stock-pickers," it says.
Its data-driven model tracks EPS growth at +4% on a 12-month forward growth basis, against
-4% six months ago.
Profit-warnings at their lowest in 11 quarters is another point worth noting while on
coronavirus BofA says it's still too early for companies to comment.
(Danilo Masoni)
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NOT WORTH CHASING THE MARKET HIGHER (1249 GMT)
Remember when was the last time the STOXX 600 hit a record high?
Just six sessions ago! It was then getting tougher and tougher for analysts to justify
overweight equities ratings and many were probably secretly hoping that a healthy correction,
would bring down multiples to levels more in sync with their models.
We're now 3.3% down from the 425.36 points peak achieved on January 24 and it seems quite
clear that there is still less appetite in chasing tentative rebounds than to waiting for
further pull backs to finally buy-the-dip.
"We were not willing to chase equities higher from all-time records", BNP Paribas AM writes
in its Asset allocation Monthly note, warning of the "risk of a pullback in the short run".
"Instead, having moved to a neutral equity view in December, we are watching for dips to
take long positions", they explain, adding that "the forecast equity returns in our base case
are in the low single digits, and not worth chasing aggressively".
Given that most of the recent rise in the equity space is due to PE multiples rather than
actual profits booming, "the latest earnings reports will be key", as a signal moving forwards
BNP Paribas AM also argues.
Below is how BNP Paribas AM played its buy-the-dip strategy last year.
"This nimble approach worked well last year, although admittedly, with the benefit of
hindsight, we neutralised our overweight too early in December", they commented.
(Julien Ponthus)
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EURO ZONE FACTORY ACTIVITY: WORST IS BEHIND US, BUT... (1155 GMT)
Today's final reading of the Jan euro zone manufacturing activity had the potential to bring
some fresh hope among investors that the long slump in the sector was bottoming out, but the
fast-spreading coronavirus is outweighing those hopes.
PMI figures in the bloc rose to a 9 month high of 47.9, according to IHS Markit's final
manufacturing Purchasing Managers Index. Though there is still no growth as the numbers haven't
crossed the benchmark 50 points, it is still good news considering things are finally turning
the corner.
"This is positive news, consistent with our view of gradual industrial stabilisation in the
eurozone," say analysts at Oxford Economics.
If you consider the three single largest economies in EZ, numbers were all better than in
the previous month:
- In Germany, the EU's largest economy, the manufacturing sector shrank at the slowest pace
in 11 months.
- In France, the sector picked up with PMI moving slightly further above the 50-mark.
- Finally, Italy's manufacturing activity declined for a 16th month running in Jan but at
the slowest rate in 8 months.
Looking ahead, the outlook isn't that great with many businesses temporarily shutting down
in China -- Germany's largest trade partner -- as the number of coronavirus deaths rise
exponentially.
German manufacturers felt they would have some relief from the U.S.-China 'Phase One' trade
deal, but those hopes are getting crushed as they expect to have their exports weaken in the
coming months due to the coronavirus outbreak, says Phil Smith, economist at IHS Markit.
"Potential disruption to supply chains due to the Wuhan coronavirus outbreak poses an
additional and new downside risk to manufacturing," Oxford Economics adds.
What about the UK? Britain's manufacturing sector emerged from its longest decline since the
financial crisis last month to the no-change level of 50, thanks to PM Johnson's decisive
victory in the December election.
"The encouraging economic data should help keeping the bears away," writes Ipek
Ozkardeskaya, senior analyst at Swissquote Bank.
But services PMI due Wednesday matters more for the UK where services stand for more than
80% of the economy.


(Joice Alves)
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WATCH THE VIRUS' REPRODUCTION RATE (1124 GMT)
A key indicator for stocks owners is the pace by which the coronavirus spreads, Jefferies
analysts wrote in equity strategy note this morning.
Any indication that the reproduction rate is accelerating or decelerating versus a roughly
50% growth rate per day is something worth considering, they argue.
"Presumably, if the rate rises above the line the markets should be more concerned and
vice-versa", they write.
Here's their chart:
(Julien Ponthus)
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WHY UTILITIES ARE SO HOT (1037 GMT)
With a nearly 10% relative outperformance so far in 2020 utilities are becoming a
hot spot for investors.
It may be for their defensive qualities and bond-like features that utilities are getting
attention, as virus fears slow economic growth expectations, but it also looks like the
transition to a greener world is going to inject new life into this investment space.
For Barclays, utilities are now a growth sector.
"We believe the EU's and UK's ambitious targets to achieve 'Net Zero' emissions by 2050 are
achievable, placing utilities at the forefront of a 3.7 trillion euro investment boom, and
making the sector a key beneficiary of the coming industrial revolution," the UK bank writes.
Yet the transition is not going to be pain-free and while Barclays sees winners, there will
be losers too.
Among the latter it sees gas distribution infrastructure and power transmission solar
networks, while among the former are renewable generation, power infrastructure, gas
transmission infrastructure and hydrogen.
For more on utilities:
Utilities: flying like a FANG
Davos: Watch those utilities

(Danilo Masoni)
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THE CURSED AUTO SECTOR: CORONAVIRUS DENTS PRODUCTION (1015 GMT)
A total of 362 people have succumbed to the deadly virus, leaving the SARS comparison far
behind and businesses worried about supply chain disruptions and falling demand.
Autos, which had a rough 2019, are no exception.
With Wuhan completely shut and the rest of China in extended Lunar New Year holidays, Citi
analysts expect automakerts to take hit with VW being most exposed in terms of production.
Citi sees 40,000 per day reduction in vehicle production in China -- "assuming two weeks of
meaningful impact, this could imply c.1.5-2% drag on annual production and retail sales".
Car parts supplier Valeo and OEMs Daimler and Renault are
seen taking a bigger hit from the output declines. The bank has a "sell" rating on all three of
them.
This chart clearly shows how autos have been dented the most by virus fears:

Autos are clearly becoming the stock market scapegoat of the coronavirus scare here in
Europe. UBS analysts say among the two big underperformers with the biggest exposure to the
epidemic in China, autos are a much bigger concern than luxury stocks.
"On a multi-month view, our Luxury analysts are much more bullish than are our Auto
analysts", UBS writes.
On the big scheme of things, European industrials are holding up, they note.

Another interesting thing is that they are not ready to give up their structurally long
stance on Chine equities.
They do acknowledge however that given the gravity of the situation, they are looking for
"the right hedges".

(Thyagaraju Adinarayan and Julien Ponthus)
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THE HARDER THE FALL, THE BIGGER THE BOUNCE (0928 GMT)
It may sound simplistic but in essence that's how many see the opportunity created by the
coronavirus outbreak in China.
Among these is JPMorgan, who believes stocks will make further all-time highs before the
next U.S. recession strikes.
"The Coronavirus outbreak is likely to keep markets under pressure near term. That said, the
more the markets fall in the short term, the more they are likely to rebound once the number of
cases appears to be peaking," strategists at the U.S. bank led by Mislav Matejka say.
"Fundamental backdrop is supportive, in our view, and the fallout from the outbreak is
unlikely to hurt activity prints over the medium term," they add.

(Danilo Masoni)
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OPENING SNAPSHOT: INGENICO UP, WORLDLINE DOWN (0834 GMT)
European bourses opened in positive territory with Ingenico as expected topping the Stoxx
600 index after Worldline agreed to buy the French payments company in a deal
which would create a new European champion in the sector.
It is also worth noting that Ingenico shares are trading well below Worldline's 123.1 euro
per share offer price. Worldline shares meanwhile are sliding 5%.
Other top movers in Europe are Siemens Healthineers down 4% and Julius Baer
off 4%, both reported lower profits.
Ryanair shares are jumping 3.6% after company third quarter revenues beat estimates.

(Joice Alves)
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ON OUR RADAR: UK, DRUGMAKERS, RYANAIR, WORLDLINE (0755 GMT)
Futures point to a higher open in Europe after Brexit and reports on Saturday that Boris
Johnson would consider a looser trade agreement with the European Union, similar to the bloc's
ties with Australia, rather than follow EU rules to reach a closer deal.
Johnson is expected to give a speech on trade today. Traders are also expecting some
eurozone and UK PMI numbers, which will be released this morning.
In terms of single stocks, Siemens Healthineers shares are down 6.5% in early
Frankfurt trade after it said Q1 profit fell on higher diagnostic gear costs
Meantime, UK drugmaker GlaxoSmithKline is also on the radar after it said it is
collaborating with the Coalition for Epidemic Preparedness Innovations to develop a vaccine for
the coronavirus outbreak.
In terms of M&A, traders see payments company Ingenico shares rallying 17% after
Worldline agreed to buy its French peer in a deal which would create a new European
champion in the sector.
Ryanair shares are seen 1-2% higher after 3Q revenues beat estimates but the company
said it may have to push back its long-term target of flying 200 million passengers per year by
as much as two years due to delays in the delivery of Boeing's <BA.N 737> MAX jet.
Some other earning results could move stocks: Swedish telecoms operator Tele2 Q4
earnings beat forecast company launched a new restructuring programme.
Julius Baer is seen 2% lower as it said it will cut 300 jobs after 2019 profit
drop.

Other corporate headlines:
Sri Lanka to probe graft accusations over Airbus deal
Imperial Brands names Stefan Bomhard CEO
(Joice Alves)
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EUROPEAN STOCKS SEEN HIGHER (0650 GMT)
European bourses are expected to open higher this morning as investors get some relief from
the fact that the UK left the euro zone ending years of uncertainty around the Brexit outcome.
Fears from Asia will likely put a brake on the enthusiasm. As traders in Asia returned from
a week-long Lunar Year break, shares across the region and global commodity prices stumbled on
concerns that the coronavirus epidemic will hit demand in the world's second-largest economy.
Investors will also have their eyes on PMI data from the euro zone, Germany, France, Italy,
Netherlands and Spain that will be released this morning.
Back in the UK, today's PMI data will likely see little market reaction as services PMI due
Wednesday matters more for the economy.
Financial spreadbetters at IG expect London's FTSE to open 15 points higher at 7,286,
Frankfurt's DAX to open 21 points up at 12,981 and Paris' CAC to open 12 points higher at
5,806.

(Joice Alves)
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(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)