International Airlines Share News (IAG)

* European shares fall after positive start, volatility picks up
* STOXX 600 down 1% as Brexit, trade worries deepen; FTSE down 0.8%
* London midcaps hit lowest in more than 2 months as sterling falls
* German industrial output rises unexpectedly in August
* LSE drops after HKEX ditches takeover bid
* Wall Street falls as mood sours ahead of China-U.S. trade talks

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your
thoughts on market moves: rm://josephine.mason.thomsonreuters.com@reuters.net


CLOSING SNAPSHOT: BREXIT, TRADE WAR, WHAT'S NOT TO LIKE? (1547 GMT)
European stocks markets are quite a gloomy sight at the close with red splashed across the
continent's bourses and sectors.
Pessimism on the U.S./China trade war and on the Brexit front are killing risk appetite and
weighing heavily on sentiment.
On the bright side, the rhetoric between the UK and the EU on a possible collapse in
negotiations has somewhat helped the FTSE (-0.8) somewhat with a falling pound providing its
usual hedge.
Here's your closing snapshot:


(Julien Ponthus)
*****






WHAT'S UP WITH EASYJET'S DROP? (1443 GMT)
One of the big surprises today (aside from Trump's flurry of tweets) has been the big drop
in easyJet shares.
Dealers were almost unanimous in calling the budget carrier shares up before the opening
bell after it forecast full-year profit would come in towards the top end of expectations, a
rare piece of good news in the airline sector as it struggles with competition over fares and
overcapacity in Europe.
Yet the stock marched lower and is now down 7.9% in late afternoon trade, set of its worst
day in more than six months and the second biggest faller on the pan European STOXX 600.
Cue some headscratching among some brokers.
To be sure, some of the drop was due to profit taking after the shares hit five-month highs
yesterday and some said they were disappointed by an absence of more positivity in the update.
But did it justify such a big drop?
It's pretty rare for market expectations and reality to diverge quite so widely, but the
unexpected drop highlights the difficulty of predicting market moves in a post-MiIFD world in
which regulators have cracked down on the sharing and exchange of information between dealers,
investors and market participants.
One broker bemoaned that early indications may now be a little less reliable than "the good
old days" when traders would readily share tips and research notes which provided a deep trove
of information on which to decide how to trade.

(Josephine Mason, Thyagaraju Adinarayan, Danilo Masoni)
*****


WHAT A DIFFERENCE A YEAR MAKES! (1314 GMT)
It's easy to forget how quickly the macro environment changes and with it, our assumption
about what's going to drive stock markets.
Taking a look at this slide from the JP Morgan AM International Media Summit in London this
afternoon, it's quite striking to see how few people in 2018 could imagine the Fed not
tightening rates, let alone cut them!
Here's the slide in question:



(Julien Ponthus and Thyagaraju Adinarayan)
*****

EUROPE HITS REVERSE: NO BREXIT OR TRADE BREAKTHROUGHS IN SIGHT (1139 GMT)
The Brexit angst may be supporting the FTSE thanks to its depressing effect on the
pound but the picture elsewhere in Europe isn't looking good and major indexes have now gone
unequivocally into reverse to trade down sharply near session lows.
Downbeat noise from the Sino-U.S. trade talks is another dampener.
No surprise then that the export-driven DAX is being hit hard, down 1.3% at one
point, and the slump coming despite industrial production in Europe's No.1 economy unexpectedly
rose in August, providing a rare positive economic surprise.
"The dynamic is worsening, as China has become more assertive and declared some areas of
limit in terms of trade talks. We continue to believe that this week's trade talks in Washington
are unlikely to yield any breakthroughs," say analysts at Brown Brothers Harriman.
Their expectations on Brexit are likewise very low.
"On the Brexit front... UK Prime Minister Johnson told Chancellor Merkel that a deal is
'essentially impossible' if the EU insists Northern Ireland stays in the customs unions. Nothing
has changed here and nobody is expecting a breakthrough this week," they say.
This chart shows how initial gains in the Euro STOXX 50 futures that followed the positive
German macro surprise progressively fizzled out.

(Danilo Masoni)
*****


THUMBS DOWN FOR EUROPEAN BANKS (1120 GMT)
It's a big thumbs down for European banks among attendees at an investor conference today.
Almost 40% of delegates at Bloomberg's investor conference in London polled on Tuesday
reckon the worst is still to come for the battered sector, while 45% of those surveyed (about
200 in the room) says the toxic combination of Brexit and the economic slowdown in Germany,
Europe's top economy, spells more trouble for the industry.
Only 16% say the sector is undervalued. Guess how many went for the option 'I have
confidence in their business model'? Zero.
Ouch!

(Joice Alves and Josephine Mason)
*****


FTSE: BREXIT ANGST TO THE RESCUE (1043 GMT)
Well one thing is for sure, the reason's behind the FTSE's outperformance versus its
European peers this morning can't be pinged on Hong Kong's bourse dropped $39 billion approach
for the LSE.
Rather, in a familiar trade since the 2016 referendum, Brexit angst is putting pressure on
the pound and through that, propping up British blue chips with strong exposure to foreign
currencies.
With a limited 0.2% retreat, the FTSE is comfortably doing better than its smaller UK peer
FTSE MID 250, itself down 0.8%, or the Eurozone's benchmark STOXXE falling about 1%.
There's a double whammy going on. First, "the UK index has been supported by losses in the
British pound following a warning from the Institute for Fiscal Studies (IFS) that a No-Deal
Brexit would push UK debt to its highest level since the 1960s", noted Jasper Lawler, Head of
Research LCG.
Then there's clearly a feeling that negotiations could fall apart quite quickly.
"The language from Downing Street is getting more hostile towards Europe," wrote Fiona
Cincotta from Cityindex.
Granted, our own headlines don't seem to convey much optimism from the UK government:
UPDATE 2-Brexit deal is essentially impossible ever - Downing Street source
(Julien Ponthus)
*****


HK PROTESTS A "POWERFUL DRAG" ON EUROPEAN LUXURY (1035 GMT)
Europe's luxury goods sector has had a tough summer with protests in Hong Kong hurting Asia
sales and Bank of America Merrill Lynch analysts believe that'd be a "powerful" drag on their
third quarter and potentially fourth-qaurter results as the political demonstrations continue.
BAML analysts say Asia ex-Japan sales of luxury goods point to a 5.8% drop in August -- the
sharpest on record. While, U.S. and European demand remains stable, the drop in the luxury
sector's key Asian market is a worrying sign and this could be the key commentary to watch out
for when they report results in the next few weeks.
"Uncertainty around Q4 remains very high, in our view, although sector 2019 EPS are already
down 2% since the beginning of the protests - at least partly reflecting downside risk," BAML
anlaysts say.
The share price drop in luxury names, notably, Moncler, Richemont,
Gucci-owner Kering and Swatch shows the overhang from the ongoing protests in
HK.


(Thyagaraju Adinarayan)
*****


EUROPEAN EQUITIES: HUMANS JUST DON'T GET IT (0955 GMT)
Sometimes a simple quote tells everything you need to know about a story, so here you go:


The quote comes from S&P's Indices Versus Active Funds Europe Scorecard and it's pretty self
explanatory.
It just seems that when it comes to stock picking, humans just don't get it and European
equities area particularly good illustration of that.
A silver lining might be that passive funds are cheaper and get better results.
For investors, it amounts to the difference between making or losing money.
"As markets improved in the first half of 2019, active managers were generally not able to
make up for lost ground", the reports goes.
"Among the 23 categories of active funds domiciled in Europe, all but three underperformed
over the one-year period ending June 30, 2019", it added.

(Julien Ponthus)
*****


AUTOS: "NO MORE PROFIT WARNINGS, AN UNUSUAL FEELING" (0851 GMT)
The UBS Q3 preview for the auto industry is somewhat comforting.
The headline "No more profit warnings, an unusual feeling" provides a clear sense that
investors in the trade-hit sector won't have to go through another rocky season.
"Global sales & production expectations have settled in the minus 4-5% range y/y for 2019
and currently we see no reason for further downward revisions," analysts at the Swiss bank say.
"We expect companies to deliver an in-line quarter and to confirm their FY guidance. This is
probably not enough to fuel outperformance of the sector, but at least earnings momentum should
be stable near term," they add.
Autos are the fifth-worst performing sector in Europe so far in 2019, up 3.6%.

(Danilo Masoni)
*****


OPENING SNAPSHOT: FADING OPTIMISM (0737 GMT)
That optimism around U.S.-China trade overnight? It seems to be fading a little in Europe.
Major bourses are now edging lower after a slightly positive start, which given the mixed
messages from Washington overnight is not really surprising - the United States has blacklisted
eight Chinese tech companies and U.S. President Trump suggested a deal to end the trade dispute
may not be quite yet in the offing.
The pan European STOXX 600 is down 0.1%, but it's been and out of negative
territory in the first 20 minutes of trade as the index struggles for direction. Germany's
trade-sensitive DAX is underperforming, down 0.3%.
In individual moves, LSE shares are the 2nd biggest faller on the STOXX 600, hitting
their lowest since Sept. 11 after Hong Kong pulled out of its takeover bid for the exchange,
while Germany biotech Qiagen has plunged 16.5% to three-year lows after its sales
warning.
UK recruiters are falling after Robert Walters and Page Group cautioned
that Brexit and Hong Kong protests are hurting business. Hays is down 6%, Pagegroup is
at its weakest since December 2016 and Robert Walters is at July 2017 lows.
Tech stocks are leading the sectoral gains, with Ericsson and Nokia
benefiting from an FT report that Washington has suggested offering credit to the Nordic telecom
companies to help them compete with China's Huawei.


(Josephine Mason)
*****


AHEAD OF THE OPEN: LSE, EASYJET AND HONG KONG PROTESTS (0657 GMT)
European stocks are expected to open higher this morning, drawing strength from gains
overnight in Asia even as investors remain nervous about U.S.-China trade talks later this week.
The major stock futures are up between 0.2% and 0.6% at one-week highs, with Spain leading
the charge. An unexpected jump in German industrial output in August will also help the mood.
On the corporate front, the major news overnight is Hong Kong Exchange's decision to ditch
its unsolicited takeover bid for LSE.
Shares in one of the world's oldest and largest stock exchanges could fall as much as 8% on
the news as the company turns its attention to its deal with Refinitiv.
One trader reckons the stocks could return to around 6,800 pence, where it was trading
before Hong Kong's surprise offer, which would mark a 10% drop from last night's closing price.
Plenty of earnings news to digest.
British budget airline easyJet says full-year profit will come in at the upper end
of expectations, with revenues boosted by pilot strikes at rivals British Airways and
Ryanair.
Its shares are seen higher, while Air France is expected to get a boost from its
September traffic numbers.
It's a mixed bag in corporate Germany - Wirecard is up 2% in premarket trading
after the German payments firm raised its 2025 targets, while Qiagen shares are down as
much as 13% after warning on its Q3 sales and losing its CEO.
In M&A, Uniper shares are down more than 3% after Finnish utility Fortum
said it will buy a majority stake in the German company.
Major shareholder in Nordex Acciona has raised its stake above 30%, raising the
chance that it will make a takeover offer for the German wind turbine maker. Nordex's shares are
up 7%.
A report that the U.S. government has suggested issuing credit to Nokia and Ericsson to help
them compete with China's Huawei may give the Nordic telecoms companies a boost.
In the latest sign that the Hong Kong protests are hurting business, British recruiters
Pagegroup and Robert Walters warned about damage from Brexit and the protests
in the former British colony. Their shares are seen falling sharply on
the gloomy outlook.
Elliott Capital has disclosed a 14.3% stake in FTSE midcap-listed retail savings bank
OneSavings, the latest sign the activist investor continues to expand its footprint in
Europe.


(Josephine Mason and Joice Alves)
*****

ON OUR RADAR: LSE, WIRECARD AND CHIPS (0557 GMT)
Dealmaking and earnings are catching the headlines this morning.
Hong Kong's bourse has scrapped its unsolicited $39 billion approach for the London Stock
Exchange after failing to convince LSE management to back a move that could have
transformed both global financial services giants.
German payments firm Wirecard has increased its 2025 targets for transaction
volume, revenue and EBITDA due to organic growth drivers and partnerships, boosting its shares
by 2.2% in premarket trade at Lang & Schwarz.
Some good news for chipmakers from Samsung Electronics which flagged slightly
better-than-expected Q3 profit, helped by strong sales of its new Galaxy Note 10 smartphone
series even as a slump in its memory chip business continued to weigh on earnings.
In Germany, Qiagen has lost its CEO and warned Q3 preliminary sales will fall
short of expectations.

Here are some early headlines:
Air France KLM's September passenger traffic rises from year ago
Wirecard raises EBITDA, revenue and transaction targets for 2025
Game over: Hong Kong bourse pulls $39 bln play for London Stock Exchange
Airbus sold 41 jets in September, targets record 4th-quarter deliveries
Thyssenkrupp to cut admin jobs as part of restructuring - sources
Germany's Aareal conducts strategic review following calls from investor
Liqui-Box sells bag-in-box business to get green light for DS Smith deal
Haulier Eddie Stobart's shareholder DBAY gets more time to make bid
Martin Sorrell's S4 Capital to raise 100 mln pound for next wave of takeovers - Sky news

Qiagen ceo leaves, warns on Q3 sales

(Josephine Mason)
*****

UNEXPLAINED OPTIMISM IN EUROPE (0520 GMT)
Stock markets are displaying remarkable optimism in Asia this morning, with China trading
higher after its week-long holiday, even after a soggy Wall Street close and even though the
commentary around the U.S.-China trade talks isn't exactly overwhelmingly positive.
Overnight Washington blacklisted eight Chinese tech companies, expanding its target list to
include some of China's top artificial intelligence startups, punishing Beijing for its
treatment of Muslim minorities and ratcheting up tensions ahead of high-level trade talks in the
U.S. capitol this week.
U.S. President Trump also said he hoped China found a humane and peaceful resolution to the
ongoing political protests in Hong Kong, and warned the situation had the potential to hurt
trade talks taking place later this week aimed at ending the protracted trade spat between the
world's two largest economies.
The bilateral talks are getting underway ahead of a scheduled increase in U.S. tariffs on
$250 billion worth of Chinese goods, to 30% from 25% on Oct. 15.
IG spreadbetters expect London's FTSE to open 17 points higher at 7,214, Frankfurt's DAX to
open 26 points higher at 12,123, and Paris' CAC to open 9 points higher at 5,531.

(Josephine Mason)
*****



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