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LIVE MARKETS-Autos 2.0: A costly ride

* European shares down 0.2 pct

* DAX lags peers as carmakers, SAP weigh

* Safran knocked lower after Boeing output cut

* U.S.-China trade talks to resume this week after ending on Friday without major progress

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters

stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your

thoughts on market moves: josephine.mason.thomsonreuters.com@reuters.net

AUTOS 2.0: A COSTLY RIDE (0757 GMT)

Consolidating, co-operating and reducing costs is the way to go for European carmakers,

Morgan Stanley analysts say, as the new technology to move to electric vehicles costs "a lot of

money."

"Instead of simply spending more money on new technologies, which has depressed FCF (free

cash flows), OEMs are deciding to cut costs and/or share technologies to reduce investment

headwinds," the analysts write.

They note some recent tie-ups in the space, including VW-Ford co-operation,

Toyota-Softbank-Uber strategic tie-up for self-driving technology, talks between Fiat Chrysler

and Peugeot, among others.

Morgan Stanley sees potential for more.

European carmakers investment spend has almost doubled in the last 10 years to an estimated

60 billion euros ($67 billion) this year, hitting their cash flows.


Morgan Stanley lists some "most obvious" ways autos could reduce costs:

1. More outsourcing to China

2. Modular platforms - using key parts for multiple models

3. Share modular platforms with other carmakers

4. Co-operation at technology levels

5. Reducing the number of models, engines, transmissions, and even colours

(Thyagaraju Adinarayan)

*****

OPENING SNAPSHOT: EUROPE PAUSES (0738 GMT)

As expected, STOXX 600 is slightly lower with investors taking a breather after the

market hit fresh August highs on Friday and hoping for fresh news from the U.S.-China trade

talks, while Frankfurt is lagging after a string of bad corporate and macroeconomic news.

A pause was overdue after the meteoric gains so far this year and traders say a truce

between the world's top two economies is likely priced into the market, although the terms of

any deal are still unclear, with talks ended on Friday without significant progress.

In Germany, weak trade data have raised fresh concerns about the health of Europe's largest

economy, SAP shares are down 1.5 percent after its cloud chief became the latest in a string of

high-level departures and BMW is down 1.2 percent after warning a hefty fine from the European

watchdog will hurt profits as it set aside 1 billion euros.

Shares in Boeing supplier Safran are at the bottom of the CAC 40, scaling back from record

highs it hit on Friday, after Boeing cut its monthly output for its 737 aircraft.

Oil & gas and mining stocks are among the gainers on higher crude and copper prices and

supported by a hint from Beijing of more stimulus after the government said it will continue to

cut banks' required reserve ratios, in a further push to spur more lending to small- and

medium-sized companies and shore up the slowing economy.

Here's your snapshot:

(Josephine Mason)

*****

ON OUR RADAR: GERMAN CARS, EXPORT DATA DRAG ON FRANKFURT (0657 GMT)

Frankfurt's DAX is lagging its European peers this morning as carmakers drag after EU

antitrust regulators charged BMW, Daimler and VW with colluding to block the rollout of clean

emissions technology and weak export data cast fresh doubt on the health of Europe's largest

economy.

BMW's shares are down almost 3 percent after warning it expects a significant" fine that

will hurt 2019 results as it set aside 1 billion euro. Its shares are down almost 3

percent in early trade, and Daimler is down more than 2 percent.

Under a worst-case scenario, carmakers could face a fine as much as 10 percent of global

revenues, says Citi in a note this morning.

"While we have limited visibility on the eventual outcome of the case, applying a similar

downgrade as seen at BMW we estimate this could imply a provision of 2.4 bln euro at VW and 1.7

bln euro at Daimler," they say.

European stocks are expected to open lower this morning as investors lock in profits after

the pan European STOXX 600 scaled fresh August highs on Friday and await further details from

the Beijing-Washington trade talks. Futures are down between 0.1-0.4 percent.

The latest round of negotiations to resolve the spat that has rattled global markets over

the past year ended on Friday with few details of progress.

In other corporate news, Boeing suppliers - including French aerospace group Safran which

makes the planemaker's engines - could be under pressure after the U.S. company said it would

cut monthly output of its 737 aircraft by nearly 20 percent in the wake of two deadly crashes.

Airbus may get a lift from its rival's deepening woes.

German residential property group Deutsche Wohnen is under pressure after thousands of

Berlin residents took to the streets on Saturday to vent anger over surging rents and demand the

expropriation of more than 200,000 apartments sold off to big private landlords, which they

blame for changing the character of the city.

A report that UBS is interested in buying Julius Baer may stir hopes of more M&A in banking.

Shares in Julius Baer are seen up 1-4 percent. France's finance minister signalled he supports

efforts to further consolidate the euro zone's fragmented banking industry.

Italy's third biggest lender, Banco BPM, could be interested in tie-ups with banks close to

its home turf in the north of the country, its CEO said on Saturday in comments that appeared to

play down a possible deal with Monte dei Paschi di Siena.

(Josephine Mason)

*****

EUROPE FUTURES DOWN: BANKS, PLANES AND AUTOMOBILES IN FOCUS (0619 GMT)

European stocks futures are lower this morning, with Frankfurt lagging its peers, as

investors lock in profits after the pan European STOXX 600 touched fresh August highs on Friday

and await further details from the Beijing-Washington trade talks.

The latest round of negotiations to resolve the spat that has rattled global markets over

the past year ended on Friday with few details of progress.

In corporate news, banks, planes and automobiles are catching the main headlines today.

Boeing suppliers may get hit by news on Friday that the U.S airplane maker will cut

production of its 737 aircraft by nearly 20 percent in the wake of two deadly crashes.

The move suggests it does not expect aviation authorities to allow the plane back in the air

anytime soon. Deliveries of its bestselling aircraft have been frozen since the March 10

incident. Safran, Senior, Meggitt and Melrose Industries count Boeing as their biggest customer.

BMW shares are indicating down almost 3 percent in early Frankfurt trade after putting aside

1 billion euro ($1.12 billion) for fines it faces after EU antitrust regulators charged the

German carmaker, VW and Daimler with colluding to block the rollout of clean emissions

technology.

Keep an eye on Italian banks. Reuters reported on Sunday that Rome will probably raise its

2020 budget deficit goal to around 2.1 percent of GDP this week, well above the 1.8 percent

targeted in December as the government struggles to keep its finances in check.

France's finance minister signalled he supports efforts to further consolidate the euro

zone's fragmented banking industry.

Italy to hike 2020 deficit goal to around 2.1 percent -sources

UPDATE 1-EU says Italy's slower growth might trigger spending freeze

Carlyle agrees to buy 30 pct stake in Spain's Cepsa - FT

EXCLUSIVE-Deutsche Bank open to U.S. revamp in merger talks -sources

UPDATE 3-Petrobras agrees to sell pipeline unit to Engie for $8.6 bln

UK competition watchdog probes Visa's acquisition of Earthport

UPDATE 1-Italy to consider backing legal action against former Monte dei Paschi execs

KKR plans IPO for Swiss group SoftwareONE - sources

Berlin activists march to demand city seize housing from landlords

Air France KLM's March passenger numbers rise 3.4 pct y/y

(Josephine Mason and Thyagaraju Adinarayan)

*****

EUROPE SEEN LOWER (0525 GMT)

European stocks are expected to open lower after last week's relatively strong run up,

although they may find support from broader markets overnight after more positive signals from

China about its stimulus programme.

Investors are likely to welcome news on Sunday from China that the government says it will

continue to cut banks' required reserve ratios, in a further push to spur more lending to small-

and medium-sized companies as Beijing aims to shore up the slowing economy.

Oil stocks will be in focus after crude prices shot to their highest since November 2018 due

to OPEC's ongoing supply cuts and U.S. sanctions against Iraq and Venezuela. Tensions in Libya

also supported.

Asian shares inched up to seven-month highs as investors cheered a rebound in U.S. payrolls

and hints of more stimulus in China, though there was some caution ahead of what is likely to be

a tough U.S. earnings season.

Financial spreadbetters expect London's FTSE to open 9 points lower at 7,438, Frankfurt's

DAX to open 33 points lower at 11,977 and Paris' CAC to open 1 point lower at 5,476.

(Josephine Mason)

*****

($1 = 0.8909 euros)

(Reporting by Danilo Masoni, Helen Reid, Julien Ponthus and Josephine Mason)