* European shares flat after 2-day rally
* Asian shares rise on trade optimism
* U.S. August jobs report in focus
* STOXX 600 set for third consecutive weekly gain
* End to Asia jv talks hit Telenor shares Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: rm://danilo.masoni.thomsonreuters.com@reuters.net
WANNA BEAT THE CROWD? (0949 GMT)
"With a continued macro-driven environment, a proliferation of hedge funds, increased flows into ETFs, and factor investing, crowding has become an increasing concern among a broad range of investors," say Citi analysts.
That's why they combined crowdedness rankings with fundamental analysis to identify non-consensus calls and help investors identify mis-pricings ahead of the crowd.
They have drawn up two lists.
1. Buy recommendations or Upside Catalyst Watches that are relatively uncrowded: Royal Bank of Scotland RBS.L ; UniCredit CRDI.MI ; Mondi MNDI.L ; Vonovia VNAn.DE ; Rio Tinto RIO.L
2. Sell recommendations or Downside Catalyst Watches that are relatively crowded: Akzo Nobel AKZO.AS ; Next NXT.L ; Munich Re MUVGn.DE ; Klepierre LOIM.PA ; Air Liquide AIRP.PA
(Danilo Masoni)
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BONDS VS EQUITIES MARKETS: WHO IS RIGHT? (0932 GMT)
Bond markets and equity markets are showing a clear divergence with bonds tracking the weakening factory activity while equities are tracking consumer activity.
S&P 500 tracking consumer confidence:
U.S. Treasury yields tracking manufacturing activity:
"Which asset class is 'right' thus likely depends on whether the manufacturing sector rebounds before the consumer sector falters (bullish stocks and bearish bonds) or, as usually happens at this point in the cycle, the consumer slows and drags down the wider economy," Morgan Stanley's equity strategist team led by Graham Secker says.
In light of the slowing global economy, Morgan Stanley (NYSE:MS) analysts last week slashed their earnings outlook for Europe to 0% for 2019 and 2020.
(Thyagaraju Adinarayan)
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MEANWHILE IN SPAIN... (0900 GMT)
With US-Cina trade talks, Brexit, and Italy much in focus lately, Spain has fallen off the radars of many investors.
But is it safe for markets to pass over political developments in Madrid where Socialists have re-started talks to form a coalition with Podemos before the 23 Sept deadline to avoid a repeat vote, as the stalemate continues more than 4 months after the elections?
Roberto Scholtes Ruiz, Chief Investment Officer Spain at UBS, thinks investors should not be overly preoccupied.
"The Socialist party has re-started negotiations to form a coalition with Podemos before the 23 September deadline. Our base case is for a last-minute agreement to be struck that would allow caretaker Prime Minister Pedro Sánchez to win a confidence vote in Congress, although new elections on 10 November cannot be ruled out," he says.
"Even in the case of repeat elections, investors starved of yield and the expected European Central Bank's easing measures should keep Spanish bonds in demand... We also foresee Spanish equities to remain relatively untouched by political news although banks and utilities could come under some pressure if taxes and regulations are toughened," he adds.
(Danilo Masoni)
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OPENING SNAPSHOT: AWAITING DIRECTION (0729 GMT)
European shares are taking a breather at the open today after a two-day rally on a mix of upbeat geopolitical news with markets awaiting for today's U.S. jobs report to provide new direction to markets.
Country benchmarks, sectoral indexes and single stocks are generally moving in tight ranges in early deals. Here's your opening snapshot:
An exception to the flattish trend are shares in Telenor TEL.OL , which have fallen as much as 6.6% to mid-July lows after the Norwegian telecom company ended talks with Axiata Group AXIA.KL to create an Asian joint venture with nearly 300 million customers.
Other top movers include Sodexo EXHO.PA , down 4% after a Barclays (LON:BARC) downgrade to underweight, and Glanbia GL9.I , up 2.7% after an upgrade to buy at Jefferies.
(Danilo Masoni)
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WHAT WE'RE WATCHING AT THE OPEN (0655 GMT)
European shares are expected to open flat to slightly lower as investors await for the non-farm payrolls report in the U.S. to provide fresh direction to markets after a two-day rally that lifted the STOXX 600 index to one month highs.
The pan-European equity benchmark is up 1.7% so far this week, set for its third weekly gain, amid optimism over U.S.-China trade talks and hopes the UK could avoid a no-deal exit from the European Union.
Futures on the Euro STOXX 50, DAX and CAC are moving between flat and a fall of 0.1% while FTSE futures are down 0.2% as the pound steadies at 5-week highs.
The latest economic data out of Germany disappointed once again with industrial production falling unexpectedly in July, likely boosting the case for more policy action ahead of next week's ECB meeting where the central bank is expected to unveil a stimulus package.
On the corporate front it looks rather quiet so far. Among possible stock movers is Telefonica TEF.MC which is expected to rise as much as 2% with traders citing a report in El Confidencial the telco could buy back 2% of its capital.
Berkeley BKGH.L is seen rising 1% after the housebuilder said conditions in London were robust, and pricing stable, in the first four months of its financial year against the backdrop of Brexit jitters, while Ashmore ASHM.L shares are also seen rising as much as 2-3% after its FY core profit rose 10%.
Other stock movers: Peugeot, Dongfeng agree to restructuring plan for Chinese venture; Dutch telco KPN poaches new CEO from Belgian rival; Airbus won 262 gross aircraft orders in the January-August; Ericsson's CEO tells staff report of his imminent exit is incorrect; Novartis joins Pfizer (NYSE:PFE) with FDA fast-track tag for lung cancer hopeful.
(Danilo Masoni)
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FUTURES POINT TO WEAKER OPEN, FTSE TO LAG (0625 GMT)
European stock futures are trading down slightly following two days of strong gains and with investors awaiting for today's non-farm payrolls (NFP) to provide new direction to markets.
The FTSE .FTSE is expected to lag the market again, as hopes a no-deal Brexit can be avoided support the pound.
"The US nonfarm payrolls data could beat the soft market expectations. A consensus of analyst expectations points at 160000 new nonfarm jobs in August, versus the past twelve-month average of 190000. A strong NFP read near or above 200000, could further soothe the dovish Fed expectations...," says Ipek Ozkardeskaya, Senior Market Analyst at LCG.
It's rather quiet on the corporate front so far. Anyhow here is your European headlines roundup: Peugeot, Dongfeng agree to restructuring plan for Chinese venture Dutch telco KPN poaches new CEO from Belgian rival weighs sale of Ecuadorian unit for up to 800 mln euros - El Economista Novartis wins FDA's breakthrough tag for lung cancer hopeful Sumitomo Dainippon Pharma to invest $3 bln in Swiss Roivant H&M halts leather purchases from Brazil due to Amazon (NASDAQ:AMZN) wildfires Airbus won 262 gross aircraft orders in the January-August Kone explores partnership to bid for Thyssenkrupp (DE:TKAG) elevator business -sources Enel (MI:ENEI) kicks off sale of $1.1 bln Romania assets - sources approves use of special powers over 5G supply deals TomTom: Microsoft (NASDAQ:MSFT) integrating our navigation in connected vehicles platform EU row with Bern: short-term gain, long-term pain for Swiss stock exchange Deutsche Bank (DE:DBKGn) cutting dozens of jobs in fixed-income trading - Bloomberg Credit Suisse (SIX:CSGN) bolsters life sciences banking team -memo Masoni)
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EUROPE SEEN MIXED (0532 GMT)
European shares are expected to open mixed this morning following a two-day rally that lifted regional benchmarks to one-month highs amid optimism over U.S.-China trade talks and hopes the UK could avoid a no-deal exit from the European Union.
The STOXX 600 is up 1.7% so far this week, set for its third straight week of gains.
Over in Asia, hopes for easing U.S.-China trade tensions lifted shares while safe havens such as government bonds and the yen were on the defensive.
Here are your opening calls, courtesy of LCG.
FTSE to open 7 points lower at 7,264
DAX to open 10 points higher at 12,137
Later in the session the attention will shift to the U.S. August jobs report, which is expected to show an increase of 158,000 in non-farm payrolls.
(Danilo Masoni)
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