LIVE MARKETS-When the chips are down...

* European equities bounce back, up 1.2%

* Travel and Leisure stocks led gains up 4.2%

* Shares in Next up 8.7% after profit view upgrade
Welcome to the home for real-time coverage of markets brought to
you by Reuters stocks reporters.

WHEN THE CHIPS ARE DOWN... (0818 GMT)

Supply issues don't just spell inflation. They can also
produce vastly differing fortunes for companies depending on
which end of the supply chain they sit, as the start of earnings
season is showing.

A global chip shortage has seen ASML - one of the biggest
suppliers of production equipment to semiconductor companies
worldwide - report a Q2 net profit jump of 38%.

On the other end of the spectrum, Mercedes-Benz maker
Daimler warned the same shortage will dent sales of its cars in
the second half of the year.

But how does a manufacturer of luxury automobiles get to
blame a global semiconductor shortage for poor sales?

Cars have been using onboard computers well before the likes
of Tesla and driverless cars came along. Only now, it appears
they use them more than ever.

One indicator of this is the proportion electronic systems
comprise a car's cost over time. A 2020 report from Deloitte
estimates that by 2010, they comprised 35% of the cost of a car
- a 30% increase from 5% in 1970.

By 2050, Deloitte forecasts that number to be 50%.

(Ritvik Carvalho)

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A ROCKY ROAD (0753 GMT)

As European stock markets try to find their feet after this
week's bruising selloff amid an earnings frenzy, traders' focus
is turning to Thursday's ECB meeting and its potential impact on
the bond rally.

Expected until recently to be a quiet summer gathering, it's
shaping up to be a key event after the release of the ECB
strategy review earlier this month put the prospect of more
stimulus back on the agenda.

Truth be said, this week has seen little data but lots of
action driven by the "peak growth" and "peak inflation"
narratives.

A bright spot on Wednesday on that front was Japanese data
showing solid exports to the United States and China.

It's supporting hopes of an export-led recovery in the
world's third-largest economy and allowed Japanese shares to
snap a five-day losing streak with a 0.6% gain.

The bounceback is complicated by more virus outbreaks from
Singapore to Sydney, reminding markets that the road to full
post-pandemic recovery will be rocky.

That's keeping oil prices close to Tuesday's troughs, hit
after a 7% tumble, while safe-haven assets such as the dollar,
Treasuries and yen are holding firm.

U.S. borrowing costs have risen to 1.2%, off Tuesday's
five-month lows.

(Karin Strohecker)

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LOOKING MORE LIKE A REBOUND NOW! (0738 GMT)

This time it looks like we do have a rebound!

While yesterday's session wasn't really conclusive as to
whether markets would bounce back from Monday's selloff, it sure
looks better this morning.

The STOXX 600 is up 0.9% and the travel and leisure index, a
kind of a gauge for COVID-19 angst, jumped over 3%.

Daimler, down 2%, is a drag on the auto sector -- the main
laggard with a 0.2% dip.

Talking about results and the Q2 earnings season, the
uncontested star of the session is British fashion retailer
Next, which smashed its sales forecast and rose its profit
guidance.

The UK group saw its shares surge 9.6%, the best performance
of the pan-European STOXX 600.

A lot of action taking place in London with private equity
group Bridgepoint having a great time with its market debut and
trading at 438 pence, well above its IPO price of 350 pence.

In the Netherlands, Corbion fell 5% after Barclays cut its
rating on the stock.

Another bid loser is Telia, down 4.5% with investors visibly
disappointed with the Nordic telecom operator's results.

(Julien Ponthus)

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NOT EXACTLY RISK-ON... (0612 GMT)

European futures are just slightly positive an hour ahead of
the bell but the mood still seems quite cautious out there with
shares in Asia slipping a tad in late trading.

The Delta variant surging across the globe is a major
concern for investors, the recent bond rally shows no sign of
going away, and Monday's sell-off is on everybody's mind.

There is, however, plenty of corporate news to trade on this
morning with the earnings season now in full swing.

Notably, ASML, one of the biggest suppliers to semiconductor
companies worldwide reported a Q2 net profit jump of 38% on
strong demand for computer chips.

Ironically enough, on the other side of the supply chain,
Mercedes-Benz maker Daimler said a global shortage of
semiconductor chips will dent car sales in the second half of
2021.

Other big names reporting this morning include SAP,
Novartis, Akzo Nobel and Julius Baer.

See:

Daimler says chip shortage could dent 2021 sales

ASML Q2 net profit jumps 38% on strong demand for computer
chips

(Julien Ponthus)

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