* STOXX 600 edges higher
* DAX hits new record at 14,505 points
* ITV (LON:ITV) shares down after presenter Morgan leaves
* Quilter shares surge as company announces dividend
March 10 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
AN (ESG) ALCOHOL PROBLEM? (1227 GMT)
ESG-related concerns have hit valuations of tobacco companies quite strongly over the past few years.
In the meantime, the alcoholic beverages industry, is holding up, with ESG issues not being a concern quite yet, Jefferies analysts say.
But it is worth keeping eyes on how things could develop as ESG is "the single biggest risk for alcoholic beverages companies' share prices".
If investments in alcohol mirror what happened in the tobacco space, declining earnings and de-rating could push share prices down 75% in Jefferies' worst case scenario.
Here is how tobacco valuations have faired as ESG asset under management increased.
But how big are the chance of alcohol stocks taking such dramatic hit?
According to Jefferies, the ESG risk is low at the moment as regulators have quite a different view on how harmful cigarettes and drinks are.
The World Health Organisation advocates "there is no safe level of exposure to tobacco. For alcohol, the aim is to reduce the harmful use... as opposed to eradicating it altogether".
Also backing the alcohol industry, there is COVID. And no, not because people confined at home needed more booze! Actually global alcohol declined 8% last year.
It's because the industry's reputation increased during the pandemic as it offered, notably, to produce hand sanitizer, Jefferies adds.
(Joice Alves)
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ECB: DIVIDED GOVERNING COUNCIL OR JUST POLICY? (1128 GMT)
Why has the ECB's approach to rising yield been neutral recently? Disagreement inside the council or just policy?
These are some of the questions analysts are asking themselves after the central bank failed to increase the pace of the PEPP recently despite rising borrowing costs.
PEPP data doesn't show "a willingness to send a strong message to the market that the ECB will defend a specific yield level," ING analysts say.
This is "a sign the ECB is only willing to lean against too sharp an adjustment higher in rates," a view which "chimes in with mixed messaging received from governing council members."
If this is the case, the 10-year Bund yield would rise to -0.15% mid-year and to 0% at year end, they add.
It's also true that if we look at real yields, they have fallen since Lagarde's speech about monitoring nominal yields on February 22. See the chart below (vertical line on Feb 22) for the German 10-year inflation-linked benchmark.
In December 2020 the ECB increased its PEPP envelope and operated a shift in policy that Citi analysts interpreted as a step towards a form of yield curve control.
“Since then, however, the ECB has seemed unable, or unwilling, to follow through on its December decisions,” they say in a research note.
“Recent speeches by members of the Executive Board evidence what we see as very profound disagreements on what the policy is, or should be,” they add.
(Stefano Rebaudo)
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EUROPE HOLDS ITS GROUND AT THE OPEN (0826 GMT)
European stocks were expected to pull back at the open after two stellar sessions this week but there's no sign of a tactical retreat.
Looking at the DAX, Germany's benchmark is up about 0.1% and in striking range of another record high.
France's CAC 40 is also rising 0.2% and it's really London which is pulling the STOXX 600 (-0.1%) just below the floatation mark.
The FTSE 100 and 250 are losing about 0.5% at the moment with the big miners taking big hits at the open.
Rio Tinto (LON:RIO) is down 3.5%, and Fresnillo (LON:FRES) and BHP Group -2.5% each.
Britain's ITV is losing 4.1% but it's not clear at this point whether it's due to presenter Piers Morgan leaving his high-profile breakfast slot with the broadcaster after his criticism of Prince Harry's wife Meghan.
(Julien Ponthus)
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DREAMING OF A GOLDILOCKS (0804 GMT)
Yesterday's rally on Wall Street might have felt like vindication for any strategists arguing that rising Treasury yields are no threat to stock markets, as long as the upward trajectory is orderly and in line with economic recovery.
Not too hot, not too cold, such a Goldilocks recovery would help corporate earnings back to pre-COVID 19 levels while keeping inflation in check.
Focus then is on bond yields; 10-year U.S. borrowing costs US10YT=RR, up more than 60 basis points this year, slipped to 1.537% after Tuesday's sale of 3-year notes went off well.
All eyes now on Wednesday's 10-debt sale -- it was a weak 7-year auction on Feb 25 that sent yields 20 bps higher, with spillover into equity markets (Full Story).
Inflation fears are creeping up in the background too with growth forecast upgrades and the passage of the $1.9 trillion U.S. stimulus package. So U.S. CPI data due 1330 GMT is another data point to watch.
And data today showed China's factory gate prices rising at their fastest pace since November 2018 in February, raising expectations for robust growth. (Full Story)
On the Goldilocks front, it certainly felt that way in Europe the past couple of days; cyclical shares benefited from the reflation trade while tech was turbocharged on Tuesday by the Nasdaq's 4% rebound. Futures indicate a bit of pullback today however, in Europe as well as New York.
Finally, the dollar continues to make headway against other currencies while bitcoin BTC=BTSP turned lower after earlier topping $55,000 for the first time since Feb. 22. Key developments that should provide more direction to markets on Wednesday: Kazakhstan central bank meets 0900 GMT Bank of Canada meeting 1500 GMT Croatia central bank meets German 10-yr Bund auction US Treasury 10-year auction US Feb CPI US corps: Tupperware, Campbell soups Europe corps: Adidas (DE:ADSGN) expects strong rebound, Inditex (MC:ITX)'s 2020 net profit falls 70%
(Julien Ponthus)
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MORNING CALL: LIMITED PULL BACK IN SIGHT (0621 GMT)
A limited pull back is in sight this morning for European bourses after yesterday's session which generated a record high for Frankfurt's DAX and sent the STOXX 600 in kissing distance of its pre-COVID 19 highs.
Futures for the German benchmark index and the EuroSTOXX50 are trading down 0.4% while FTSE futures were down close to -0.8%.
The same downward trend could be seen for Wall Street derivatives after a stellar session during which the Nasdaq surged about 4% as treasury yields eased.
MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.2% with Asian stocks bouncing back from a two-month low.
(Julien Ponthus)
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