Next Share News (NXT)

* European stocks rise 0.4%, banks outperform
* Fed's hawkish cut, value rotation boosts banks
* BoE rate decision at 1100 GMT
* Next slumps 5% on weak Q3 outlook
* European steel stocks fall on US Steel warning

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share
your thoughts on market moves: rm://thyagaraju.adinarayan.thomsonreuters.com@reuters.net

NEED FOR M&A: EURO-ZONE HAS 5 TIMES MORE BANKS THAN CHINA (0922 GMT)
Euro-zone has more banks than the world's most populous country China, but still there are
no signs of consolidation in the sector due to complications in cross border M&A in Europe.
Astounding numbers from JPMorgan: Euro-zone has 4,500 banks, one per 75,000 people, while
China has 4,100 banks, one per 341,000 people. That's 5 times more banks than China on
population basis.
There's been a lot of buzz around M&As, but no real action: Deutsche Bank-Commerzbank,
UniCredit-Commerzbank and ING-Commerzbank were the latest pairs to have failed to wed each
other.
While cross border M&A seems less likely, JPMorgan says there is a possibility amongst small
cap Italian banks, given the degree of fragmentation – "but political uncertainty means that
this is unlikely to materialise in the near-term".
Drawing comparison to Japan again, JPM says the absence of large cross-border mergers in
Europe post-crisis closely resembles Japan – where consolidation amongst City Banks took 10+
years to materialize.
But, will consolidation solve the problems faced by banks? Not quite.
"Combining two banks with some difficult problems doesn't solve the problems, you just have
doubled the problems," State Street multi-asset strategists say. Negative interest rates are a
common problem for all of them in the euro area.
There's been a dearth of M&A deals in the sector in the last 12 years:


Number of credit institutions by countries:


(Thyagaraju Adinarayan)
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OPENING SNAPSHOT: STEEL SLIPS, BANKS RISE; NEXT BRUISED (0731 GMT)
Slightly higher open for Europe as strong gains in banking stocks offset weakness in steel
makers. Mining sector is the worst performer across Europe as falling iron ore prices and a
warning from U.S. Steel on weakening demand dent shares.
As expected, European steel stocks ArcelorMittal, Salzgitter, Voestalpine
, SSAB, Outokumpu slide 1%-2%, while London miners are down 1%.
The gains in banks may be partly due to the continued rotation into underperformers
but also some relief about the Fed's cloudy outlook for future rate cuts after cutting borrowing
rates as expected overnight.
UK's FTSE 100 is lagging the broader market weighed down by a sell-off in mining
stocks and Next.
Next shares are on track for their worst day in more than a year after the British clothing
retailer said the first few weeks of the Autumn season have been disappointing.
Another bad day for airlines as Morgan Stanley restarts coverage on European airlines with a
cautious view: "underweight" on Lufthansa and Ryanair, "overweight" on British
Airways owner IAG.




(Thyagaraju Adinarayan)
*****

ON OUR RADAR: STEEL, UK RETAIL, SWISS WATCHES (0652 GMT)
Stock futures are pointing to a weak open for Europe as the Fed's commentary overnight
signalled further cuts are unlikely after two back-to-back quarter point cuts. Investors are now
looking forward to the Bank of England's statement later today to see if some easing is on the
horizon amid the ongoing Brexit saga.
FTSE 100 stock futures (-0.3%) are under pressure ahead of BoE at 1100 GMT and as
mining stocks could take a hit on falling iron ore prices.
European steel and industrial stocks ArcelorMittal, Salzgitter,
Voestalpine, SSAB, Outokumpu and ThyssenKrupp in focus
after US Steel's warning about weakening demand overnight, which sent the company's shares
down 7%. U.S. Steel said market conditions in Europe have continued to deteriorate with
significant margin compression.
No end to Brexit woes for UK corporates? Over-50s tourism and insurance firm Saga
reported a 52% drop in H1 profits and said the uncertainty around the timing of Britain's exit
from the EU is hurting consumer willingness to commit to 2020/21 holidays.
Next shares are expected to slide 1%-2% after traders say the British clothing chain
said the few weeks of the Autumn season have been disappointing due to the warmer weather.
Spectris shares are seen rising 2% after its plan to sell unit BTG.
Swiss watchmakers Swatch and Richemont are seen up 1% on strong Swiss watch
export data. German construction and machinery manufacturing company Bauer is seen
falling 10% after it warns of FY profits citing project delays, according to traders. Bauer's
warning is the latest evidence of a slowdown in Europe No.1 economy.

Other key headlines:
Clariant fined by Swiss exchange for breaking publication rules
Airbus revises up jet demand, warns of 'lose-lose' tariff war
GSK's over-the-counter nicotine oral spray gets FDA panel backing
Deutsche Bank has discussed adding assets to bad bank if sales go well-sources
UK's Next profit up 2.7% on strong online growth
Swiss raid stomach ache drug ingredient makers in competition probe
BUZZ-United States Steel falls after gloomy outlook
Brazil's Oi in talks to sell mobile unit to Telecom Italia, Telefonica -sources
Britain's Saga posts first-half profit slump
German prosecutors probe Airbus for potential misuse of client documents
Diageo sets full-year organic sales forecast, says not immune to trade changes





(Thyagaraju Adinarayan)
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FED'S DELIVERED, NOW FOCUS SHIFTS TO BOE (0537 GMT)
European stocks are expected to open flat to slightly lower after the Fed cut interest rates
by a quarter point and signalled further cuts are unlikely as the labour market remains strong.
With Fed out of the way, focus shifts to Bank of England which is expected to come out with
a monetary policy statement at 1100 GMT.
"Bank of England rate decision is likely to be a more mundane affair given the proximity of
the Brexit deadline at the end of October. No changes are expected to monetary policy with the
main focus expected to be on how it sees the UK economy evolving over the next few months,"
Michael Hewson at CMC Markets UK says.
Financial spreadbetters IG expect London's FTSE to open 14 points lower at 7,300,
Frankfurt's DAX to open 8 points lower at 12,382, and Paris' CAC to open flat at 5,621.
While the U.S. stock markets hardly reacted to Fed's action, the U.S. President expressed
his disappointment on Twitter:



(Thyagaraju Adinarayan)
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(Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)