Last checked at 
* EZ business recovery stutters in August- PMI
* UK firms see sharp August upturn - PMI
* Stronger pound weighs on exporter-heavy FTSE 100
* Robust retail sales in the UK in July
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters. You can share your thoughts with Joice Alves (joice.alves@thomsonreuters.com)
and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
EAT OUT TO HELP OUT: HAPPY HOUR! (1352 GMT)
Nope, the UK government's "Eat Out to Help Out" scheme, which subsidises dinners to lure
consumers back into the pubs, does not include booze.
So why the headline?
Well that's because there's arguably some kind of a happy hour on the London stock market
where shares in listed pub chains are arguably being sold at a discount.
HSBC analysts argue that pubs are shaking themselves out of their lockdown hangover better
than expected with no "obvious sign of financial distress" and yet "the recovery has not been
reflected in share prices".
And that's despite the fact that the outlook for the sector is somewhat promising for public
houses.
"Those that make it through the COVID-19 disruption should emerge in a better position:
Capacity is exiting the market, and this could herald an end to years of aggressive price
competition which has held back profits as costs have continued to rise," the analysts wrote.
They have a target price of 1290p for Wetherspoon and 255p for Mitchells & Butlers which are
currently trading at 952p and 163p.
One warning however: another lockdown is always possible and "the current recovery could
simply be the result of warm weather and government-funded discounts, with more demanding
trading conditions come Christmas".
Anyhow, here are how the main chains have been severely underperforming the mid-cap FTSE 250
year-to-date:
(Julien Ponthus)
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VALUE SIRENS SINGING THE BLUES (1104 GMT)
Legend has it that sirens used to lure sailors into the rocks by singing irresistible songs.
Well if value investing was some kind of mermaid, it sure would be singing out of tune or
the kind of blues that would scare off investors rather than lure them into a trap.
Not one day goes by without sell-side or buy-side analysts noticing that all the conditions
are set for a new dawn for cheap stocks, and yet no one seems to be rushing into a segment that
keeps on underperforming.
BOFA's flow show indicated that $1.5 billion exited U.S. value last week despite the bank's
analysts noting a "bigger picture more positive for value".
Vincent Deluard at StoneX argued that while European value stocks "have been one of the
worst investments in the past decade" they are now "the best trade to bet on a vaccine-driven
recovery", noting all the macro stars (undervalued Euro, cheap commodities, falling USD, and
political momentum) are lining up for the old continent".
It's quite a mainstream call at the moment and for instance UBS keeps the view that "value
stocks that have the potential to catch up to the recent rally".
At Barclays, the strategy team noted that the new bull market brings in "conflicting
messages" with "the leadership on the way up remains highly concentrated in a few large
quality/growth stocks, while the value space keeps lagging".
And yes, looking at their recent performance, value stocks are singing the blues and few
investors seem ready to sing along.
Here's a BOFA chart showing Value versus growth since Jan 2019:
(Julien Ponthus)
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EUROPEAN SHARES SHRUG OFF PMIS (0918 GMT)
Euro zone PMIs came in weaker than last month as the economic recovery from its deepest
downturn on record has stuttered, particularly in services. The STOXX 600 is nevertheless
cruising on 0.4% higher.
IHS Markit's flash Composite Purchasing Managers' Index, seen as a good gauge of economic
health, sank to 51.6 from July's final reading of 54.9.
The pent-up demand unleashed last month by the easing of coronavirus lockdowns dwindled in
August.
"Positive effects from reopening economies are fading out in the service sector, confirming
that the recovery will not be V-shaped," says Bert Colijn, economist at ING.
Yet, "European stocks shrug off faltering flash PMIs," "writes Michael Hewson, chief market
analyst at CMC Markets UK, in line with the lack of reaction in the Nasdaq to other negative
U.S. headlines this week.
Meantime, the recovery among British businesses from the shock of the pandemic quickened
again in August, the UK PMI survey showed.
(Joice Alves)
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OPENING SNAPSHOT: THE STRUGGLE TO FIND A TREND (0725 GMT)
European bourses are struggling to find its direction this morning as investors await for
PMI data.
The pan European index was positive at the start of the session (+0.4%), than
negative, now it is up 0.2% and all of this in the first 25 minutes of trading.
Travel stocks led gains, up 1.2%.
In terms of single companies, Irish building and insulation materials firm Kingspan
jumped 7% to the top of the index after its CEO said the company saw significant pent up demand
post-lockdown.
But Swiss drugmaker Novartis gave the biggest boost to the STOXX 600 after it won
U.S. health regulator's approval to repurpose an 11-year-old blood cancer drug against multiple
sclerosis.
In the UK, blue-chips started the day with slim gains as strong retail sales data
alleviated some concerns over an extended economic slowdown, but a stronger sterling dragged on
exporter stocks. At 0725 GMT the FTSE is down 0.3%.
UK retailers led gains in early trade, with Marks & Spencer and
sportswear retailer Frasers rising 2% and 4%.
(Joice Alves)
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ON THE RADAR: CARS, RETAILERS AND DRUGMAKERS (0639 GMT)
European bourses are seen opening higher with eurozone and UK purchasing managers' index
surveys due this morning. Steady, slightly positive, readings are expected, for the next broad
gauge of the recovery's progress.
Meantime, data just showed that British retail sales surged past their pre-coronavirus level
in July, the first full month that shops selling non-essential goods were open since the country
went into lockdown in March.
In terms of corporate news, the morning looks super quiet but investors still have a few
headlines from last evening to digest.
For instance, German automaker Volkswagen has begun production of the ID.4
compact SUV, the second model in a planned family of electric vehicles that will be built and
sold around the world.
In the health care space, Novartis won FDA approval to repurpose an 11-year-old
blood cancer drug against multiple sclerosis as the Swiss drugmaker takes on rival Roche's ROG.S
big-selling Ocrevus for the autoimmune disorder. While Bayer said on Thursday it will
pay around $1.6 billion to settle the majority of U.S. claims involving its Essure birth-control
device.
Activist fund Amber Capital on Thursday called on French publishing and media group
Lagardere to hold a shareholder meeting in the coming weeks, at which it wants to
submit board changes.
(Joice Alves)
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MORNING CALL: EUROPEAN BOURSES SEEN HIGHER AHEAD OF PMI DATA (0535 GMT GMT)
In a data-heavy morning, with eurozone and UK purchasing managers' index surveys due,
European bourses are seen opening higher.
Investors are looking ahead to PMI data across Europe, Britain and the United States.
Steady, slightly positive, readings are expected, for the next broad gauge of the recovery's
progress.
Financial spreadbetters expect London's FTSE to open 9 points higher at 6,023, Frankfurt's
DAX to open 73 points higher at 12,903 and Paris' CAC to open 25 points higher at 4,937.
(Joice Alves)
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