* European stocks little changed
* Italy lags as bank stocks fall
* Hiscox tumbles after results
Nov 5 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net
NINE EUROPEAN PICKS TO PLAY A REBOUND IN CHINA SENTIMENT (1539 GMT)
China-exposed stocks in Europe have been hit hard by worries over slowing growth in the world's second biggest economy but may have created buying opportunities.
Morgan Stanley (NYSE:MS) is among those taking an upbeat view.
Analysts at the U.S. investment house say easing measures announced by Beijing and the stabilisation of trade war newsflow could be a positive catalyst for stocks that have derated over the past few months but are seeing positive earnings revisions.
They highlight nine names: Kering PRTP.PA , HSBC HSBA.L , Glencore GLEN.L , Hexagon HEXAb.ST , Volkswagen VOWG_p.DE , BHP BLT.L , Rio Tinto RIO.L , JC Decaux JCDX.PA and Pernod Ricard PERP.PA .
Overall, MS's China exposure basket has reached the most oversold level since the devaluation of the Renminbi in 2015 and its relative P/E ratio remains close to the lowest level since the global financial crisis.
(Danilo Masoni)
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STRESS TESTS: TELL ME SOMETHING I DON'T KNOW (1429 GMT)
A lack of drama was to be expected given there were no 'make or break' thresholds in the latest EU stress test edition but surely, this is as anticlimactic as it gets.
The European banking index is currently up 0.04 percent and it would be impossible to distinguish the surprise laggards, Britain's Barclays (LON:BARC) (+0.1%) and Lloyds (LON:LLOY) (-0.8%) as well as France's SocGen (+0.5%), by having a glance at their share price.
Sure, there were some more impressive falls this morning for Italian banks but that was due to a Goldman Sachs (NYSE:GS) downgrade on Intesa SanPaolo ISP.MI outweighing its strong performance in European regulatory tests. test is largely priced in and for Italian banks the development of sovereign spreads remain the key variable," say Citi analysts.
UBS analysts see the absence of a need for rights issues as "a small positive for a poor performing sector trading at a significant discount", but clearly not a game changer.
Jefferies also tells its clients not to hold their breath given that "the results provide no surprise and we expect little market reaction."
In other words, what the market is saying to a sector which is down about 20 percent year-to-date is 'tell me something I don't know'.
"It is likely that for a number of banks the near-term price action will be determined by factors besides the stress test result," Exane analysts wrote before the open, noting that "the market has been much less focussed on this stress test than for previous exercises".
(Julien Ponthus)
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RISING COSTS AND CHINA FEARS CLOUD EUROPEAN EARNINGS (1338 GMT)
While global growth has supported revenues overall, signs of strain are coming out of European earnings and keeping sentiment muted.
"Profit margins are at cycle highs across a number of sectors and rising costs are likely to be problematic for those companies which lack pricing power," writes Nigel Bolton, head of the Blackrock (NYSE:BLK) European equity team, adding this pressure is particularly apparent in the retail and autos sectors.
The other big risk? China.
Ultimately Blackrock's Bolton believes policy will likely provide support (although with a lag) to Chinese growth.
However, he adds, "In the near-term we have reduced holdings in luxury goods companies, cognisant of slowing sales momentum, and positions exposed to the semi-conductor cycle where near-term earnings are under pressure."
Blackrock's graphic below clearly illustrates how much of a laggard Europe is globally - the only region with a net outflow.
(Helen Reid)
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ACTIVE MANAGERS STILL PREFER TECH AND AVOID OIL (1213 GMT)
UBS has crunched the numbers on active managers' positioning across the globe to find the most and least favoured stocks in portfolios.
In Europe it's clear that tech is still favoured.
Swedish industrial technology firm Hexagon HEXAb.ST is the top overweight. It reported results last Thursday and said it sees no slowdown yet in China. up the rest of the podium are Spanish travel booking tech firm Amadeus AMA.MC , and Dutch chipmaker ASML ASML.AS .
Interestingly, among those most underweighted are Royal Dutch Shell RDSa.L and BP BP.L - indicating investors still remain sceptical of oil majors and aren't taking the bait even though the oil & gas sector .SXEP is the top-performing this year.
On the least favoured list are also banks HSBC, Santander (MC:SAN), and Nordea - as well as consumer giants Nestle and AB InBev.
Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and salesforce.com are unsurprisingly in the top overweights for U.S. large-caps, along with Visa (NYSE:V) and Mastercard (NYSE:MA).
The one outlier to the long-tech trend is Apple (NASDAQ:AAPL), the biggest underweight - followed by Exxon Mobil (NYSE:XOM) and Berkshire Hathaway (NYSE:BRKa).
(Helen Reid)
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DONXI PUT: HOW I LEARNED TO STOP WORRYING AND LOVE THE TRADE WAR (1110 GMT)
It's November 2018 and time for a fresh market neologism: please give a warm welcome to the 'DonXi put'!
The expression suggests the leaders of China and the United States would act to prevent a global sell-off, in the same way that investors believed Greenspan would lower interest rates and save the day when the stock market lost more than 20% of its value.
"The global economy and financial markets need a new 'put'," Citi analysts believe, arguing that "responsibility for guiding the global economy (...) is being transferred from central bankers to (...) those who control the public purses, ie governments."
Both Donald Trump and Xi Jinping "need to present strength domestically and manage an extending economic cycle", Citi analysts add, concluding they "see mutual benefit in what we call the 'DonXi Put'".
Funny to notice that a lot of strategists are currently also wondering whether it would be reasonable to expect a 'Powell put' from the chairman of the Federal Reserve.
Here's a photo of late director Stanley Kubrick who gave the world the film "Dr. Strangelove or How I Learned to Stop Worrying and Love the Bomb".
(Julien Ponthus)
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EUROPEAN EARNINGS LOADING... 58% (1055 GMT)
We're just over halfway through the reporting season here in Europe and it's not as bad as it initially looked, UBS finds, as markets seek a floor following last month's ugly sell-off.
Beats outnumbered misses by 4 percent at the company count level while only ten days ago misses were the majority. Weighed by market cap, net beats are even higher - 18 percent which is in line with the long-run average of 18.6 percent.
"Given the price action in October and some of the negative commentary around the reporting season, this is a reasonable result. Revenue beats have been modest," strategists at the Swiss bank write in a note.
Here some other takeaways:
* Stocks that have missed have been punished with share prices down 2.6% relative on the day (the worst in 4 quarters). Companies that beat have only outperformed by 1.0%.
* In the previous reporting season the gap between revenue beats and EPS beats was close to an 8-year high, pointing to pressure on margins. But so far in Q3 this has fallen back to close to in line, suggesting it's too early to call an end to margin expansion.
So far 58 percent of European companies have already reported and by the end of next week we'll be past 90 percent.
(Danilo Masoni)
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DETERIORATING QUITE RAPIDLY (0915 GMT):
European indices started out on a relatively stable footing, but after more than an hour it's deteriorating quite rapidly with the major indices now in the red. A mixture of broker moves and earnings are driving top movers, with investors increasingly nervous about fast rising U.S. interest rates and the Trump administration's trade dispute with China.
While the European banking sector largely shrugged off the results of the ECB's latest stress test, Italian banks - Intesa Sanpaulo and BPER Banca - were hit by a Goldman downgrade to sell, dragging the country's market lower. Telenet Group was among the biggest fallers on the STOXX 600 after BAML double downgrades to "underperform", warning of increasing headwinds into 2019. In turn an upgrade of Elisa by the bank boosted its shares.
Among earnings, Hiscox shares slumped to the bottom of the STOXX 600 stack, after warning of moderating growth in the last quarter of the year. The shares are down 7.6 percent at a three-month lower and at this rate, they'll have their worst day since July 2016. Vopak has jumped 5 percent after its Q3 earnings beat.
Here's a index and share snapshot:
(Josephine Mason)
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ON THE RADAR: SAME OLD STRESS AND STRESS TESTS (0747 GMT)
Contradictory signals from spreadbetters this morning with some expecting a positive start to the week, which just doesn't seem to be materialising.
Asian markets closed with the same old themes weighing: the trade war and fast rising U.S. rates. The U.S. Midterms are expected to add some tension to the markets and so are the Brexit negotiations with so many pundits now expecting breakthrough.
The latest banking stress tests don't seem to be changing how analysts see the sector and no rights issue is expected to be organised as a result.
"The results provide no surprise and we expect little market reaction,” wrote Jefferies analysts, adding the while “the UK banks fared the worst in the test due to macro risks associated with Brexit", "the results do not inform their capital requirements with the BoE publishing its stress test results on 5 Dec."
Among the few banks which have clearly not impressed with their results is France's SocGen for example, which is selling its Polish unit.
The earnings season has also provided a fresh batch of earnings with Micro Focus whose CFO is going to join ITV (LON:ITV). Traders expect its shares to rise 1-2 percent at the open on its slightly better-than-expected FY revenue.
Siemens Healthineers forecast higher earnings for next year after it posted fiscal fourth-quarter profit above expectations on Monday.
Lloyd's of London underwriter Hiscox reported a 14.3 percent rise in gross written premiums for the first nine months of the year, but warned that growth could moderate over the balance of the year. Its shares are seen by dealers falling 2-3 percent at the open.
(Julien Ponthus)
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EUROPEAN FUTURES OPEN ON THE BACK FOOT (0713 GMT)
European futures have just started trading and while they have reduced their losses in the first minutes of the session, they are still very much on the back foot.
(Julien Ponthus)
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MORNING CALL: LITTLE VISIBILITY SO FAR (0644 GMT)
Trade war angst hit Asian stock markets again and amid fears of faster rate hikes in the United States and many hoping for a breathrough in Brexit negociations, visibility is not optimum ahead of the open.
The picture given by different financial spreadbetters is not very clear either at the moment so it might be best to wait for the European futures to open before making any calls.
(Julien Ponthus)
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https://tmsnrt.rs/2D6zNLc Stocks
https://tmsnrt.rs/2D6H79E indices
https://tmsnrt.rs/2D3AXXV EUROPEAN EARNINGS LOADING
https://tmsnrt.rs/2D0I7My kubrik
https://tmsnrt.rs/2P9XXvU UBS overweight and underweight biggest active positions Nov 5
https://tmsnrt.rs/2PeSVOv Europe outflows Nov 5
https://tmsnrt.rs/2D4gFxF test
https://tmsnrt.rs/2D49EwQ 9 European picks
https://tmsnrt.rs/2Pf08yl
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