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* European stocks end lower * Trump fires chief diplomat Tillerson March 13 (Reuters) - Welcome to the home for real time coverage of European equity marketsbrought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her onMessenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net CLOSING SNAPSHOT: EURO, POUND STRENGTH HITS EUROPEAN STOCKS (1715 GMT) Trump sacking Tillerson is the main driver for European equities due to the impact this hashad on the dollar and subsequently the boost this has given to the euro and pound. For exporterindexes, like Germany's DAX, a stronger currency isn't exactly good news. Here's your closing snapshot - have a good evening, and see you tomorrow! (Kit Rees) ***** DARK CAPS UPDATE: BLOCK AND AUCTION TRADING WINS OUT (1536 GMT) We've been able to crunch the numbers on market share for different European trading venuesyesterday, the first day of dark pool caps. With the caveat that volumes in general were very thin across the board yesterday (many areputting this down to the market going into a 'wait and see' mode on the regulation), data fromThomson Reuters Market Share Reporter shows: - The share of trading on dark pools halved, from 3.2 percent of total turnover on Friday,to 1.5 percent - There was an uptick in periodic auctions trading Indeed, exchange operator Cboe says yesterday was its strongest ever day for periodicauction trading. Cboe Europe's periodic auctions book set a new one-day record of 582.8 millioneuros traded yesterday, surpassing its previous record of 488 million on Feb. 6 when volatilityspiked and markets sank. The periodic auctions book operates "frequent randomised intra-day auctions" throughout theday on the lit (public) exchange, Cboe says. Auctions provide an alternative for investorslooking to avoid information leakages while abiding by the new rules limiting trading on darkpools, and as such are widely expected to be a key winner from the new rules. Large block trading was also drawing in much more money yesterday. Dark pool Turquoise'slarge block platform saw an increase in average trade size from 328,000 (post MiFID II) to573,000 yesterday. Some 81 percent of the value traded on the platform yesterday was large, upfrom 60 percent previously. The MIFID double-volume cap rules exempt large-scale orders. (Helen Reid) ***** PRIVATE EQUITY GETS DEEPER INTO GLOBAL TECH (1453 GMT) Given the amount of tech M&A newsflow today (Broadcom's Qualcomm bid blocked; Finlandbuilding stake in Nokia) it's perhaps unsurprising that the sector is attracting growinginterest from private equity buyout funds. Data from industry tracker Preqin show that information technology companies account for 23percent of global private equity buyout deals so far in 2018, building on 2017's record 19percent. North America and Europe dominated global IT deals in 2017, accounting for 56 percent and 39percent of transactions respectively. Tech is the best-performing sector in Europe year-to-date, up more than 4 percent.If this continues it will be the sector's seventh year of gains in a row. (Kit Rees) ***** STOCKS SHRUG OFF UK SPRING STATEMENT (1355 GMT) The general feeling is that there was nothing ground-breaking in the UK finance minister'sSpring statement. "There’s not a great deal of reaction on the stock market, reflecting the stripped-downnature of the statement and the lack of any clear policy changes affecting individualcompanies," Laith Khalaf, senior analyst at Hargreaves Lansdown, said. Among notable market reaction so far is sterling, which has hit a session high after PhilipHammond's more upbeat outlook for the British economy. The FTSE hit a session low,unsurprisingly. "As the global growth backdrop holds firm, and with progress on a Brexit transition dealpotentially announced next week, we believe downside risks to growth in the short-term arelimited," Dean Turner, economist at UBS Wealth Management, said, adding that they expect thepound to make progress as the year goes on. (Kit Rees) ***** STOXX WOBBLES AFTER U.S. DATA (1258 GMT) U.S. consumer prices cooled in February, giving the latest indication that an anticipatedpickup in inflation probably will be only gradual. Wall Street futures initially extended gains and Europe's STOXX 600 came off lowson the inflation figures which soothed investors' concerns. Shortly afterwards, though, news that President Trump had fired Secretary of State Tillersonsent the STOXX back down as much 0.3 percent to a fresh day's low. The pan-European index is nowoff that low again, down 0.1 percent. (Danilo Masoni) ***** LATE-CYCLE ENVIRONMENT FAVOURS EUROPEAN EQUITIES (1139 GMT) In what they call a "year of key transmissions" as central banks' balance sheets shrink andglobal economic surprises likely peak, Morgan Stanley strategists argue European equities remaina good bet. "Our cycle models are extended and the risk of a turn over the next 12 months is elevated.But they have not turned yet, and still point to equities 'over-earning' what valuations imply,"they write. And European equities in particular are undervalued, they argue. "Perennial disappointmenthas left investors less positioned for, and Europe less priced for, an inflation surprise." Relative valuations are at historical lows and Europe has underperformed the U.S. by morethan 15 percent over nine months, MS adds. Euro zone stocks are trading at a bigger-than-usualdiscount to world stocks (see below). MS' top picks in Europe are financials and energy stocks, saying financials globally arestill relatively cheap, and energy stocks are heading for a big free cash flow improvement. Kevin Gardiner, global investment strategist at Rothschild, echoed this optimism on banksearlier this morning: "My suspicion is that the financial sector in particular still retains acapacity to surprise further down the road." (Helen Reid) ***** AWAITING THE U.S. INFLATION REPORT (1104 GMT) The U.S. inflation report is today's top market mover and it may be crucial in settingexpectations about how many interest rate rises the Federal Reserve is likely to execute thisyear. Understandably markets look to be in mute mode with Europe's STOXX 600 indextreading water, up just 0.1 percent, ahead of the data release at 1230 GMT. Here's some quick views from the street, which is not expecting fireworks, althoughsurprises cannot be entirely ruled out. Swissquote's Arnaud Masset: "This is the last inflation report before the US FederalReserve’s monetary policy meeting in March FOMC. We remain sceptical about an upside surprise ininflation, but if it happens, markets will react strongly." City Index's Fiona Cincotta: "Today's report comes hot on the heels of disappointing wagegrowth numbers in Friday's report which has eased fears of a significantly more aggressive Fed.The market is still expected to show sensitivity to the numbers, however we are not expecting arepeat of last month." Rabobank: "To recall, it was higher than expected inflation published last month thatcontributed to rising market concerns that the Fed may seriously consider four hikes thisyear... Higher than anticipated inflation is likely to reignite concerns that four Fed hikesinstead of three cannot be excluded in 2018." Just as a reminder, analysts polled by Reuters forecast the U.S. consumer price index (CPI)rose 2.2 percent in February year-on-year, compared with a 2.1 percent increase a month earlier. (Danilo Masoni) ***** TRADE WARS, JUST ANOTHER EXCUSE TO DITCH CYCLICALS? (1045 GMT) The case to ditch cyclical shares at this point of the cycle has been a growing trend amongstrategists since the February correction and the threat of a global trade war only seems toreinforce that point of view. "This is yet another reason to underweight non-financial cyclicals, (excluding tech),"Credit Suisse analysts say in a note this morning. "The non-financial cyclical sectors tend to be much more reliant on the international supplychain or more vulnerable to tariffs (e.g. autos, industrials, retailing, auto components),especially where there is a political incentive to try and protect the domestic industry (i.e.it is a big employer)," they add. There were already a number of reasons suggesting it was time to underweight non-financialcyclicals, such as PMIs peaking, high valuations and an already long run of outperformance,Credit Suisse argues. Here are a few pieces of advice from CS to investors who believe there's a good chance aglobal trade war is about to erupt: * "Buy services, relative to goods: clearly, a trade war tends to focus much more on goodsthat are traded than services" * "Tech should be a relative winner (it is hard to impose tariffs on tech services, US techtends to dominate, fabless makes tariffs illogical, and tech's cash position means itoutperforms as bond yields rise)" * "Overweight financials, particularly banks: we view banks as a play on bond yields, whichrise under protectionism. Banks tend to be very domestic, thus largely immune to tariffbarriers" Here's a list from Credit Suisse of European companies with a high exposure to thecontinent: (Julien Ponthus) ***** "DEFENSIVE WILL NOT SAVE YOUR PORTFOLIO" (1025 GMT) It will not indeed, given that tech, autos and financial services have been thebest-performing European sectors so far this year. Looking ahead now to the second quarter, SocGen's equity strategists have tweaked theirsector allocations in Europe as they expect eurozone bond yields to rise further. At the beginning of the year, SocGen's strategists were overweight value and cyclicalsectors and underweight long duration defensive sectors, and they are maintaining their majorsector calls. They've upgraded diversified financials and investment banks to overweight from underweight,and moved both semis and aerospace & defence to neutral. Meanwhile food and staples retailing got a downgrade to underweight from neutral, andtobacco, oil services and media went to neutral from overweight. As the ECB moves away from QE, SocGen also expects the euro to continue to strengthen, inlight of which they favour domestic-oriented areas such as financials, small and mid caps andtheir eurozone consumer basket. (Kit Rees) ***** TRUMP'S PROTECTIONISM: WHAT'S AT STAKE FOR EUROPEAN AUTOS? (1015 GMT) JPMorgan has taken a look at what could be the impact for European autos of changes in U.S.car import duties as well as rising steel and aluminium prices. Although JPM says it still needs to be seen how exactly U.S. President Donald Trump's recentprotectionism announcements are executed, here are its two key takeaways: 1) "President Trump’s announcement that he plans to impose tariffs on imports of both metalsis a moderate negative hit for Fiat Chrysler and less relevant for VW, BMW and Daimler." 2) "Mr. Trump also alluded to the possibility of changing car import duties with tradingpartners. This latter, if executed with the EU, would be most meaningful for BMW followed by VWand Daimler. Least exposed would be FCA which sources the bulk of cars sold in the US from NA(North America)" If the U.S. were to close the import duty gap to Europe JPM estimates a 5 percent earningshit for BMW, 4 percent for VW and 3 percent for Daimler, possibly mitigated by their ability topass at least 50 percent the duty on to consumers. In the snapshot you can see a Trump tweet this weekend where he threatened Europe with ahigher import tax for carmakers. Currently, cars being shipped from the U.S. into Europe face a10 percent import duty while European cars into the U.S. face a 2.5 percent duty. (Danilo Masoni) ***** OPENING SNAPSHOT: EUROPE OFF TO CAUTIOUS START (0822 GMT) European shares are mixed in early deals with top country benchmarks showing small moves asinvestors wait for the U.S. inflation data to provide more clues on the speed of interest ratehikes in the world's largest economy. Behind the rather flat surface, however, there are bigger moves for single stocks with TPICAP and Iliad leading fallers on the STOXX, down 8.7 and 5.9 percentrespectively following disappointing updates. German utility E.ON was the biggestgainer, up 5 percent, as investors continued to cheer its deal with RWE to break up Innogy, anddividend hikes announced today. Here's your snapshot: (Danilo Masoni) **** WHAT'S ON THE RADAR BEFORE THE EUROPEAN OPEN (0755 GMT) Stock futures indicate European shares will crawl higher today after investors lost theirenthusiasm for U.S. and Asian equities overnight. Eyes will be firmly on U.S. inflation figures (1230 GMT), with the anticipation likelyputting a dampener on early trading volumes. The British finance minister’s Spring Statement,also at 1230 GMT, won’t deliver any policy shifts but is likely to reveal slightly bettereconomic growth figures. Germany-listed shares in Steinhoff could also be ones to watch after thecrisis-hit South African retailer said it would place up to 450 million shares in KAPIndustrial, reducing its holding in the firm to 26 percent from 43 percent, in a bid to plug aliquidity gap. M&A drove shares in German utilities RWE, E.ON and Innogy up yesterday, and shareholderswill likely be pleased with RWE’s latest announcement, that it will hike its dividends in 2018and 2019. In fresh dealmaking news French bank Natixis is buying stakes in three independentboutique advisory firms including Vermilion Partners, which focuses on cross-border M&Ainvolving China. The bank hopes to diversify its banking activities and increase its presence inChina through the acquisitions. Encouraging earnings from Geberit could drive the stock up 2 to 3 percent,according to pre-market calls, while traders say premium drinks maker Fevertree, asmall UK-listed stock, could dip despite strong results, as investors take profits on thefast-growing stock.(Helen Reid) ***** EUROPEAN HEADLINES ROUND-UP (0720 GMT)Finland takes stake in Nokia to boost national ownershipQatar sells its 4.6 pct stake in VeoliaTelecoms group Iliad dials up higher annual profitsRWE pledges higher dividends after Innogy break-up dealAustria's OMV aims to increase core profit by 70 pct by 2025Wacker Chemie sees 2018 earnings growing faster than salesChilean miner Antofagasta sees profits surge, raises dividendLegal & General Capital takes full ownership of Cala HomesGeberit sees decent construction market in 2018French bank Natixis buying into 3 M&A boutiques, bolsters China presenceCrisis-hit Steinhoff cuts stake in South Africa's KAP to 26 pctPremium drinks maker Fevertree's profit jumps 64 pctUnder pressure, ING scraps plan to raise CEO payEUROPE RESEARCH ROUNDUP-Capital & Counties Properties, Inmarsat, Norsk Hydro(Tom Pfeiffer) FUTURES POINT TO LACKLUSTRE TRADING (0709 GMT) European stock futures have opened modestly higher this morning, with only slight gainspointing to muted trading as investors await U.S. CPI data. FTSE futures are lagging the rest,down 0.1 percent ahead of the Spring Statement at 1230 GMT. Here's SocGen's economists' take ahead of the statement: "The OBR will present updatedeconomic and (better) fiscal forecasts. Mr Hammond’s speech will be very short, however, becausehe will only acknowledge and welcome the improved forecasts but will not make any policychanges." Policy tweaks will have to wait for the Autumn Budget. (Helen Reid) ***** EARLY MORNING COMPANY HEADLINE ROUND-UP (0657 GMT) While U.S. inflation is likely to focus the attention of investors today, there's also a lotof company results with OMV, Iliad, Wacker Chemie and Geberit among the firms reporting. And RWE's promised its shareholders higher dividends after its deal to break up Innogy withE.ON. Here's a quick round-up of the morning company headlines so far: RWE pledges higher dividends after Innogy break-up deal Telecoms group Iliad dials up higher annual profits Austria's OMV aims to increase core profit by 70 pct by 2025 Wacker Chemie sees 2018 earnings growing faster than sales French bank Natixis buying into 3 M&A boutiques, bolsters China presence Geberit sees decent construction market in 2018 Under pressure, ING scraps plan to raise CEO pay (Helen Reid) ***** MORNING CALL: STOCKS TO STALL AS INVESTORS EYE INFLATION FIGURES (0624 GMT) Good morning and welcome to Live Markets. European stocks are called to open slightly lower this morning as investors await inflationfigures from the U.S. and an update on the UK's public finances. Asian shares lost momentum overnight, trading hesitantly after a weaker session on WallStreet saw the S&P 500 and Dow slip, while the Nasdaq hit a new record high thanks to a boost intech stocks. The biggest data point on everyone's minds today is U.S. CPI (1230 GMT) which could informinvestors further on the probable pace of Fed rate rises this year. Today's Spring Statement from Chancellor Philip Hammond is being called a "non-event" bysome. "The only area of real interest could be the updated OBR economic and public spendingforecasts, which could provide a small injection of volatility into the pound," says JasperLawler of LCG in a morning note. He's expected to announce a small improvement in the UK's slow economic growth outlook. Spreadbetters call the DAX 13 points lower at 12406, the CAC 40 down 5 points at 5272, andthe FTSE 100 13 points lower at 7202. (Helen Reid) ***** (Reporting by Danilo Masoni, Kit Rees, Julien Ponthus, Helen Reid)