LIVE MARKETS-What happens to PEPP? Wait until September

* STOXX 600 flat

* COVID-19 worries loom

* S&P, Dow futures down

* Oil prices under pressure

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WHAT HAPPENS TO PEPP? WAIT UNTIL SEPTEMBER (1128 GMT)

Investors will probably stay on their toes at least until
the end of the summer as the European Central Bank is not
expected to take any decision about its PEPP (Pandemic Emergency
Purchase Programme) policy at its July 22 meeting.

“We expect the ECB to maintain a 'wait and see' stance over
the summer before undertaking a fresh assessment on September 9,
based on new macro forecasts," UBS analysts say.

In September, the economic impact of the Delta variant,
which is now keeping risk sentiment across financial markets
subdued, should be more clear.

UBS expects "the ECB to announce in December that the ‘old’
QE programme (APP) will be beefed up."

But if the Delta variant triggers new mobility restrictions,
"the ECB might be forced to extend the PEPP by 3-6 months."

"Within the next six months, the ECB will move towards
tapering the PEPP while talking up forward guidance and making
some adjustments to the APP,” Unicredit chief economist Erik
Nielsen says.

But unless ECB president "Christine Lagarde accepts a major
(public) dispute with the hawks, the net effect will be a
monetary tightening even though the inflation target remains out
of reach in the forecast," he adds.

(Stefano Rebaudo)

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GROWTH: HEY VALUE, NICE TO MEET YOU! (1013 GMT)

With rising Delta variant cases, we're kinda back to square
one in equity markets.

Below is a quick chart on the state of play in equity
markets. Value names have heavily underperformed against growth
in the last one month - the more familiar theme we're used to.

The chart also shows on a one-year basis both styles have a
similar performance, growth making big strides in recent weeks
to meet value at top, thanks to a sudden plunge in bond yields.

(Thyagaraju Adinarayan)

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FRAGILE GAINS AT THE OPEN (0721 GMT)

European stocks are edging 0.2% higher at the open, partly
fuelled by defensive sectors, as rising Delta variant cases
across the world curbs investors' risk appetite.

Utilities are the top sectoral gainers, while banks and
mining stocks take a hit as reflation trade takes the backseat.

Among single stocks, motor insurer Admiral Group
topped the chart, rising 5% to record high at open after it
forecast higher-than-expected profits for the first-half.

French IT consulting group Atos was the top loser
on STOXX 600, slumping 15% after it slashed full-year
outlook.

Travel stocks Wizz Air, Dufry, BA-owner
IAG were also among the laggards.

Here's the snapshot of top movers:

(Thyagaraju Adinarayan)

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REAL WORLD DATA BITES (0659 GMT)

Last week's bond rally took many investors by surprise as
there was little in the data to trigger the narrative to shift
so quickly from inflation worries to growth scare.

While U.S. 10-year Treasury yields have bounced back 10
basis points from the 1.25% floor hit last week, there's still a
lot of uncertainty on the direction of travel.

The pandemic is obviously the biggest unknown moving forward
with the Delta variant causing a surge in cases around the
world.

From Sydney, which reported another record daily rise in
COVID-19 cases, to London where the British government's plans
to lift restrictions comes just as a new wave of infections
hits, it's clearly not what markets had in minds.

In that light, China cutting the amount of cash that banks
must hold as reserves to boost liquidity and back its economic
recovery is a sign that the global economy is not out of the
wood yet.

The move has at least temporarily lifted spirits in Asia
with MSCI's broadest index of Asia-Pacific shares outside Japan
gained 0.7% after shedding 2.3% last week.

Shanghai copper prices also rose, while a steady dollar
ahead of U.S. inflation data on Tuesday kept London prices under
pressure.

Crude futures are also under pressure despite talks among
key producers to raise output in coming months stalling.

In Europe and on Wall Street, stocks futures are mixed ahead
of an earnings season that is about to kick off with record
expectations.

While profits for Europe Inc are expected to have soared
over 100% in the second quarter, any setback could bite hard
with markets already pricing stellar earnings.

Key developments that should provide more direction to
markets on Monday:

- ECB to change policy guidance at next meeting, Lagarde
says

- Credit Suisse's Swiss compliance officer Scarlato leaving

- Euro zone ministers meet

- Auctions of U.S. 6-mth, US 10 year, 3 year notes

- ECB Vice-president Luis de Guindos speaks

- New York Fed President John Williams speaks on inflation

(Julien Ponthus)

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WEMBLEY BLUES? (0623 GMT)

There's one clear trend carrying over from Wembley stadium
to stock markets this morning: UK's FTSE futures are the only
one in red, while Italian stock futures point to a slight gain.
The benchmark STOXX futures is flat, FTSE is seen opening 0.2%
down, while other bourses are seen edging higher.

Rising Delta variant cases in Europe have been weighing on
European stock markets that are trading just below record highs
for days now. U.S. 10 year Treasury yields, meanwhile, are
sitting near 1.35% after last week's rapid fall to 1.25% that
caused ructions in financial markets.

This week also marks the start of the second quarter
earnings season, with the big U.S. banks poised to report
numbers from Tuesday. Constituents of the S&P 500 are seen
reporting a 66% jump in earnings, but firms in the STOXX 600 are
expected to top that with gains of 109%.

(Thyagaraju Adinarayan)

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MORNING CALL: NO JOY AHEAD (0530 GMT)

It's been quite a positive session in Asia but looking at
the futures in Europe, it doesn't look like much of the optimism
will travel very far.

European bourses look set to open slightly in the red with
growth and pandemic worries on top of the agenda.

Exposing the weak sentiment, crude futures are ticking down
despite the prospect of tightening supply after talks among key
producers to raise output in coming months stalled.

(Julien Ponthus)

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