LIVE MARKETS-Better safe than sorry: UBS buy a "put" option on the S&P 500

* STOXX up slightly

* Earnings in focus

Feb 23 (Reuters) - 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: danilo.masoni.thomsonreuters.com@reuters.net

BETTER SAFE THAN SORRY: UBS BUY A PUT OPTION ON THE S&P 500 (1300 GMT)

You just never know, do you? While UBS takes the consensual view that global growth and

corporate earnings should continue to support equity markets, the wealth manager has drawn a few

lessons from the early February correction.

Among those is the idea that it's worth sacrificing some potential profits "to boost

portfolio stability".

"While we believe the worst of the volatility is likely behind us for now, we acknowledge

that we are entering choppier waters, in which fears of higher inflation and interest rates

could start to compete with, or even overwhelm, hopes for higher growth", it writes in a monthly

note.

"So while we still see opportunities in today's market, we also prepare for the new

environment by protecting part of our equity holdings by buying a 10% out-of-the-money put

option on the S&P 500, and may add to this position in the months to come in order to diversify

our strike prices".

A simple explanation of the early February sell-off found on Twitter (Frankfurt: A1W6XZ - news) :

(Julien Ponthus)

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TIME TO UPGRADE 2018 EUROPEAN EARNINGS FORECASTS? (1234 GMT)

More than halfway into Q4 results season, it turns out markets have been too pessimistic on

the earnings power of European companies. But are the 2017 profit upgrades enough

reason to bump up estimates for this year too?

Mike Bell, Global Market Strategist at JPMorgan Asset Management, says the most recent PMI

business confidence data supports the idea that earnings growth will be in line

with the ongoing consensus of about 8 percent.

"Our bet is (earnings) growth this year will still be very healthy but more in line with

consensus rather than significantly above. But we think the risk to that view is still skewed to

the upside rather than the downside," says Bell (LSE: 0QPQ.L - news) .

JPM AM's big overweights in Europe right now are financials (higher bond yields/steepening

curves) and tech stocks.

"We think there are a lot of good European tech companies where valuations are still very

attractive in comparison with the very stretched valuations you see in the U.S."

JPM AM are "substantial underweight" on bond-proxy, defensive type stocks like consumer

goods which "tend not to perform so well in a rising yield environment," says Bell.

(Tom Pfeiffer)

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RISING RATES WHET APPETITE FOR BANKS AGAIN AFTER 2017 REFLUX (1125 GMT)

Buying European banks to capture the benefits of "monetary normalisation" was a hot trade

last year but didn't go that well as central banks deferred and interest rates made a rather

elusive comeback.

So, with analysts now expecting the Fed (at least three times) and the BoE (Shenzhen: 000725.SZ - news) (possibly twice)

to hike in 2018 and the ECB to end QE by the end of the year, it seems the "go long on European

banks" is back with a vengeance.

"We choose to remain a strong overweight of banks in the context of our view that Bund

yields can rise to 1%, and US bond yields to 3.2%-3.5% by year-end", Credit Suisse (IOB: 0QP5.IL - news) said in a

note this morning where it stresses that "banks are the most sensitive sector to both real and

nominal yields".

Other factors than the rise in the euro and rates are also making the sector attractive: the

"euro boom" economic recovery with its positive impact on real estate both supports retail

banking and helps reduce bad debt.

Also banks are likely to benefit from equity strategists advising rotating portfolios

towards cyclicals and keeping a long exposure on equities.

"Global sector risk appetite has just hit 'euphoric' levels, with banks the most correlated

sector to risk appetite", Credit Suisse also argues.

Its analysts say they like Spanish lenders, particularly Caixabank (Amsterdam: CB6.AS - news) , Swiss private banks like

UBS (LSE: 0QNR.L - news) and UK banks with a sweet spot for Lloyds and Barclays (LSE: BARC.L - news) .

While European banks have recently outperformed, there is still a big catch up to do to

fully recover from the financial crisis:

(Julien Ponthus)

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ITALY & GERMANY STAND OUT AS INFLOWS REBOUND CONTINUES (1115 GMT)

Italy and Germany have both posted stock inflows over the past week, indicating that

investors look quite relaxed ahead of two separate votes next Sunday that will set the political

future of the two euro zone counties.

"German Equity Funds did post big inflows for the second straight week as investors

responded to progress towards the formation of a coalition government five months after the last

election and Italy Equity Funds, helped by a reduction in the general Eurosceptic rhetoric ahead

of next month's general election, recorded their first inflow since late November," says

fund-tracker EPFR in its latest update.

This result comes as global equity funds tracked by the Boston-based firm continued to

rebound following the outflows seen at the start of February when worries over

faster-than-expected rate hikes in the United States triggered a global equity sell-off.

"Europe Equity Funds had already erased the outflows they suffered during the first week of

February, and the latest commitments took their YTD total over the $15 billion mark. At the same

point last year their total stood at $1.7 billion," EPFR added.

(Danilo Masoni)

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FUND MANAGERS HOLD TIGHT TO EUROPEAN GROWTH THEME (1050 GMT)

As investors have had some time to reflect on the market sell-off at the beginning of the

month, faith in the European growth story seems to be the order of the day - just look at how

good the results season has been so far:

Rogier Quirijns, senior vice president and portfolio manager at Cohen & Steers (NYSE: CNS - news) , sees

opportunities within European real estate stocks, citing attractive valuations and demand driven

by a lack of supply and a robust economic backdrop.

"We see attractive real estate opportunities across Europe and nowhere is this more evident

than in Berlin – which has attracted both German nationals and immigrants with its low costs of

living and doing business," Quirijns said in a note.

On a similar theme, Chris Hiorns, portfolio manager of the Amity European Fund at EdenTree

Investment Management, said that he expects growth to feed through into a surge in construction

in the region, which will benefit and builders and suppliers.

Hiorns also mentioned "attractively-priced media businesses" which would gain from an

increase in discretionary spending.

(Kit Rees)

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OPENING SNAPSHOT: EARNINGS, EARNINGS AND MORE EARNINGS (XX GMT)

It's not the biggest opening move from the STOXX 600, but what is interesting are the

sizeable drops for Valeo (LSE: 0RH5.L - news) , Kingspan Group (LSE: KGP.L - news) and RBS (LSE: RBS.L - news) , down 4 to 9 percent

following updates.

Once more though telcos are in favour with Britain's BT leading the pack

higher after British regulator Ofcom unveiled new rules to boost full-fibre broadband.

Here's your opening snapshot:

(Kit Rees)

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WHAT WE'RE WATCHING BEFORE THE OPEN (0748 GMT)

European shares are set to open up slightly with futures trading between flat and a gain of

0.3 percent. The pan-European STOXX 600 is set to end the week flat as markets stabilise and

volatility calms down following a turbulent start to the month that sent the index to a near 6

month low. The STOXX is up 3.5 percent above that low but needs to climb another 6 percent to

reach its January peak.

The earnings season is in full swing with Royal Bank of Scotland in focus after the UK bank

posted its first profit in a decade, although the stock is called down 1-2 percent with traders

saying numbers were a touch light and the rate of cost cutting was materially reduced.

Shares (Berlin: DI6.BE - news) in Swiss Re (LSE: 0QL6.L - news) , Rightmove (LSE: RMV.L - news) and Pearson (Xetra: 858266 - news) are however seen opening higher after their

updates, while Valeo could fall 4-5 percent following a disappointing guidance. Earnings for the

STOXX 600 are seen rising 16.9 percent in the fourth quarter of 2017, according to Thomson

Reuters I/B/E/S data.

On the M&A front, Standard Life (LSE: SL.L - news) is seen supported after it agreed to sell its insurance

division to Phoenix Group for 3.24 billion pounds. Elsewhere, Shire (Xetra: S7E.DE - news) is seen rising 4-5 percent

after the U.S.'s FDA accepted its Biologics License Application and granted priority review for

its lanadelumab treatment.

(Danilo Masoni)

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FUTURES MIXED (0702 GMT)

Stock futures are pointing to an uncertain open in Europe this morning with the DAX seen up

slightly and the FTSE down just marginally, as investors reassess prospects of monetary policy

in the U.S. after concerns of faster rate hikes weighed in the previous session.

(Danilo Masoni)

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EUROPE'S EARLY MORNING HEADLINES ROUNDUP (06XX GMT)

Swiss Re weighs SoftBank (Swiss: SOFB.SW - news) deal as 2017 profit beats estimates

Temenos confident it can accelerate sales at Fidessa - CEO

Sika (IOB: 0QMA.IL - news) earnings beat estimates as Saint-Gobain still looms

French group St Gobain's profits rise, eyes more earnings growth

Valeo profit falls on R&D push, tax charge

Phoenix in talks over $4 bln purchase of Standard Life Aberdeen unit - source

EXCLUSIVE-Telecom Italia (Amsterdam: TI6.AS - news) picks Goldman and Credit Suisse for network spin-off

Italy's F2i, Rai Way raise bid for Telecom Italia's Persidera unit - sources

Bond changes insulate Avolon from HNA (Shanghai: 600221.SS - news) woes

EXCLUSIVE-EWE stake sale to attract interest from Macquarie, Shell (LSE: RDSB.L - news) -sources

Stobart in talks about potential deal with airline Flybe - source

Rio Tinto (Hanover: CRA1.HA - news) says changing structure, moving some staff

(Danilo Masoni)

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MORNING CALL: EUROPEAN BOURSES SET TO RETREAT (0619 GMT)

Good morning and welcome to Live Markets.

European shares look set to open up slightly after ending off lows in the previous session

on the back of a rebound at Wall Street on easing interest rate worries. The STOXX 600 is set to

end the week little changed little changed, stabilising 3.5 percent above the nearly 6 month-low

hit in the wake of the heavy sell-off earlier this month. The FTSE however is seen down slightly

today.

Over in Asia, shares rebounded as comments from a Federal Reserve official eased worries

about faster rate rises in the United States, while the safe-haven yen held on to its gains amid

heightened volatility across markets.

Here are your morning calls, courtesy of CMC Markets (LSE: CMCX.L - news) :

DAX is expected to open 30 points higher at 12,491

CAC40 is expected to open 11 points higher at 5,320

FTSE100 is expected to open 10 points lower at 7,242

(Danilo Masoni)

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(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)