* European shares strongly higher * Focus back to earnings, M&A deals * Smurfit Kappa soars after unsolicited bid * Worries over trade wars,
Italy risk ease
LONDON, March 6 (Reuters) - Welcome to the home for real-time coverage of European equitymarkets brought to you by Reuters stocks reporters and anchored today by Kit Rees. Reach her onMessenger to share your thoughts on market moves: rm://kit.rees.thomsonreuters.com@reuters.net GOING FOR A DIP (1225 GMT) It looks like BNP Paribas Asset Management was one of those who bought the dip last month,adding to their equity longs in
Europe. They also mention they decided to hedge part of their European exposure due to the risksaround the Italian elections and German coalition vote. "We have used the correction to increase tactically our position in European equities. Thishas enabled us to make the most of the market rebound," strategists at BNPPAM say in a note. "The base case scenario for our macroeconomic roadmap remains ‘Goldilocks’ – healthy growthand subdued inflation. There is not enough evidence to challenge our assessment at this stage,"they add. Here's a chart showing how global asset classes have done since the February sell-off - asyou can see, most of them have recovered somewhat! (Kit Rees) ***** BACK TO (ATTRACTIVE) VALUATIONS! (1155 GMT) Trade war rhetoric, inflation scare, volatility jitters and political risk have combinedover the past few weeks to provide markets with good reasons for what some see as a healthypull-back. No surprise then that on a positive day for global stocks when all these worries lookto have dissipated, investors are back to looking for the best bargains. Among them is John Ricciardi, CEO at Kestrel Investment Partners, who makes a case for eurozone stocks, citing their "attractive" valuations and the favourable macro backdrop. "Valuations for European shares are attractive given the positive prospects over the nextseveral months for faster EMU consumption growth, accelerating continental production withinflation rates close to ECB targets and a widening recovery in European investment growth," hesays. "The implications are for higher EMU corporate earnings based on broad real outputexpansions across the zone giving support to European share prices". According to Kestrel calculations, European shares' price/earnings ratio is at a 5-year low. (Danilo Masoni) ***** NOT JUST AUTOS: MS POINTS TO TARIFF RISKS FOR EUROPEAN INDUSTRIALS (1133 GMT) While German carmakers have been the main sector in the spotlight as potentially heavilypenalised by
U.S. tariffs, Morgan Stanley analysts point to capital goods stocks and aerospaceas other sensitive areas. "We see most obvious risks for increasing raw materials costs if using imported steel oraluminium at companies like Assa Abloy, Dometic, Electrolux, Kone, Sandvik,Schindler, SKF and Vestas," write MS analysts. As you can see below, appliances stocks depend the most on
U.S. imports. If the
U.S. does slap tariffs on raw materials, it could be bad news for the aerospacesector as well. Aluminium constitutes 75 to 80% of the value of a naked airframe, MS writes. But tariffs on finished products are less likely in aerospace, they reckon. According to their calculations, the potential gain to the
U.S. exchequer from equalisingtariffs in the aerospace industry would be less than
$1 billion per year, compared to
$12 to
$13billion from similar protectionist measures on Autos. Among the German carmakers, they reckon BMW is the most exposed, with up to 20percent of its global sales in the
U.S., while Daimler and VW are alsounder potential threat. PSA and Renault, meanwhile, sell no cars in the
U.S.directly at the moment. (Helen Reid) ***** UNSOLICITED BID FOR SMURFIT KAPPA PUTS PACKAGING SECTOR ON FIRE (1052 GMT) As Jefferies mentioned earlier, there is definitely a "positive M&A read" on the packagingsector after Smurfit Kappa dismissed an unsolicited bid from
U.S.-based InternationalPaper. Here's what the shares in the top players in the industry look like this morning as SmurfitKappa surges 18 percent: (Julien Ponthus) ***** FEBRUARY WAS ALL ABOUT RATES (1028 GMT) February was the month when interest rates and inflation took centre stage and it seemsinvestors who ignored this new theme paid for it dearly. According to MSCI's research for February, high dividend yield strategies sustained theworst performance, while "momentum" limited losses: The same lesson can be drawn from the performance of sectors associated with bond proxies,like consumer staples, or those which are very sensitive to a rise in interest rates like realestate: (Julien Ponthus) ***** WORST DAY EVER FOR JUST EAT AS INVESTMENT SPENDING BITES (0951 GMT) Shares in Just Eat are down 10.2 percent, the worst performers on the STOXXafter the takeaway delivery company said it would invest an extra 50 million pounds in 2018 tostay ahead of the competition, which includes Deliveroo and Uber Eats. "The new CEO delivered a severe blow to earnings momentum for this market darling," notesNorthern Trust Capital Markets analyst Ameet Patel, pointing to earnings guidance nearly 25percent below consensus. It's unexpectedly bad news for a stock which has captured the imagination of many investorslooking for online alternatives to the
UK's bricks and mortar retailers. "CEO Peter Plumb's maiden results presentation will be under real scrutiny now as bulls(basically all of the sell-side) will no doubt be searching for positives," says Patel. Hargreaves Lansdown analyst Laith Khalaf says the big move in the shares is down to "shockand concern that the move may in fact represent an admission that competition is intensifyingfor Just Eat." Pressure will be on Plumb to argue returns on this investment will be strongenough to justify derailing near-term earnings growth, he adds. Interestingly Liberum added Just Eat to its 'top ten buys' list just this morning. Strategyanalysts there argue the threat from competition is overdone as Just Eat is "the leader in allof the countries it operates in". It's Just Eat's worst day since it listed in 2014. (Kit Rees and Helen Reid) ***** OPENING SNAPSHOT:
EUROPE BACK IN "RISK-ON" MOOD (0815 GMT) European shares are clearly in a "risk-on" mood this morning at the open as markets aroundthe world appear to shrug off trade war fears and political risk in
Italy, with
Milan's FTSE MIBup more than 1 percent despite the weekend's inconclusive general election. Some M&A to spice things up too with Smurfit Kappa up 18 percent after rejecting anunsolicited bid from International Paper. (Julien Ponthus) ***** MORNING HEADLINE ROUND-UP (0740 GMT)Smurfit Kappa rejects unsolicited International Paper approachWilliam Hill to sell
Australia business to CrownBet unitAirbus sets services goal, targets productivity gainsFiat Chrysler to spin-off Magneti Marelli without raising money - sources
France's Thales says expects to exceed medium-term targetsActivist Elliott building fresh stake in Telecom ItaliaVW ponders trucks IPO amid broader efficiency push -CEOCovestro to replace ProSiebenSat.1 on
Germany's DAX indexVonovia sticks with 2018 guidance after FY profit riseLindt expects
U.S. business to weigh on sales growth this yearLighting group Zumtobel Q3 loss higher than expected
France's Eurofins raises 2018 target after strong 2017 resultsMelrose should seek pensions regulator approval for GKN takeover-lawmakersBUZZ-Global miner BHP rises on report
Mexico's Pemex seeks JV partnersEvonik to sell methacrylates plastics business
UK shoppers keep on spending more on food as inflation bites-BRCSaipem sees tough year ahead after 2017 guidance missAshtead sees FY results in line on
North America strength
France's Orange threatens to cut Tf1's signal - Le FigaroQualcomm takeover battle intervention shows
U.S. security panel's expanding reachTotal acquisition of Maersk Oil to close this week -CEO(Tom Pfeiffer) ***** REMEMBER FEBRUARY 6? EURONEXT DOES! (0726 GMT) Feb. 6 was the worst (-2.4 percent) day for the STOXX 600 since the Brexit referendum ofJune 2016. Fears concerning inflation in
the United States were then dragging global equitymarkets into a correction. It was also quite a good day for Euronext: "On 6 February 2018, Euronext daily volumereached a new record for the year, at €16,848 million, representing the 11th most active daysince 2010", the bourse operator wrote this morning. Overall on the month, volumes increased significantly: "the average daily transaction valueon the Euronext cash order book stood at €9,141 million, up +29.4% compared to February 2017 andup +17.6% from the previous month". (Julien Ponthus) ***** EUROPEAN STOCKS FUTURES BOUNCE (0708 GMT) It is, indeed, looking like it's going to be another positive session in
Europe, with theSTOXX 600 set to pull further away from the six-month low hit in the previous session. Here's your futures snapshot: (Kit Rees) ***** EARNINGS: WHO'S REPORTING WHAT (0653 GMT) It's not looking like the busiest earnings day, but updates to watch will be TelecomItalia's fourth quarter results and a full year update from online luxury retailer YooxNet-a-Porter. It's a quiet day on the macro front too. Here are all the European companies set to report results today: TLIT.MI Q4 2017 Telecom Italia SpA Earnings Release OERL.S Full Year 2017 OC Oerlikon Corporation Ag Pfaeffikon Earnings Release FORN.S Full Year 2017 Forbo Holding AG Earnings Release DOKA.S Half Year 2018 Dormakaba Holding AG Earnings Release IFA1V.HE Q4 2017 Innofactor Plc Earnings Release BUCN.S Full Year 2017 Bucher Industries AG Earnings Release YNAP.MI Full Year 2017 Yoox Net-A-Porter Group SpA Earnings Release DANI.MI Half Year 2018 Danieli & C Officine Meccaniche SpA Earnings Release VNAn.DE Full Year 2017 Vonovia SE Earnings Release ESCH.L Full Year 2017 Escher Group Holdings PLC Earnings Release APAX.L Full Year 2017 Apax Global Alpha Ltd Earnings Release IWG.L Full Year 2017 IWG Plc Earnings Release DNORD.CO Q4 2017 Dampskibsselskabet Norden A/S Earnings Release EUFI.PA Full Year 2017 Eurofins Scientific SE Earnings Release AHT.L Q3 2018 Ashtead Group PLC Earnings Release AGGK.L Full Year 2017 Aggreko PLC Earnings Release BOY.L Full Year 2017 Bodycote PLC Earnings Release ROR.L Full Year 2017 Rotork PLC Earnings Release HWG.L Full Year 2017 Harworth Group PLC Earnings Release SDL.L Full Year 2017 SDL PLC Earnings Release TCFP.PA Full Year 2017 Thales SA Earnings Release SPMI.MI Full Year 2017 Saipem SpA Earnings Release LISN.S Full Year 2017 Chocoladefabriken Lindt & Spruengli AG Earnings Release EVKn.DE Full Year 2017 Evonik Industries AG Earnings Release ONTEX.BR Full Year 2017 Ontex Group NV Earnings Release (Kit Rees) ***** MORNING CALL: EUROPEAN SHARES SEEN RISING (0632 GMT) Good morning! Financial spreadbetters see European stocks rising at the open, shrugging offuncertainty sparked by
Italy's inconclusive election and as concerns over possible trade warsease. Spreadbetters expect
Britain's FTSE to gain 34 points,
Germany's DAX to rise 91 points and
France's CAC to advance 28 points. Asian stocks gained overnight, as
U.S. President Donald Trump faces growing pressure frompolitical and diplomatic allies as well as
U.S. companies over his plan to impose steel andaluminium tariffs. Wall St closed higher. (Kit Rees) (Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)
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