LIVE MARKETS-Block trading on the rise
* European shares rise on easing trade war worries
* FTSE hits new record high, DAX closed for holiday
* Bargain hunters support Italian stocks
May 21 (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
BLOCK TRADING ON THE RISE (1134 GMT)
The sweeping changes of MiFID II have been continuing to make their mark on equity trading
in Europe, with large block trades now accounting for more than half of total dark pool trading,
according to the latest figures from Fidessa.
The regulatory changes implemented in January aimed to restrict the size of trades that can
be done in dark pools, forcing investors to trade in large blocks to make it harder for
high-frequency traders to front-run trades in non-transparent venues.
Block trading venues have benefited from this, with the LSE's Turquoise Plato executing the
most block trades last week, Fidessa figures showed. With Liquidnet's Posit platform, it had the
highest weekly block turnover among European venues.
(Helen Reid)
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PRESSURE ON EURO IS BOON FOR STOCKS (1036 GMT)
While investors' concerns over the new government in Italy are weighing on the euro,
European stocks are enjoying strong gains.
"An inexperienced and malcontent government appears set to assume office and poses a new
potential threat to the euro even if the data improves," write BBH currency strategists, noting
"strong downside euro momentum" in the past couple of months.
"Along with a large speculative long position skew (extrapolating from the futures market),
the market hardly needs a fresh reason to sell the euro."
As Deutsche Bank strategists noted recently () the weakening euro could be part
of what's supporting euro zone equities higher, and if it continues this means a strong outlook
for the region.
Indeed, you can see below that the euro zone STOXX and the single currency have
been moving in opposite directions this quarter. The STOXXE is currently just 10 points away
from its mid-January high.
(Helen Reid)
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THUMBS UP FOR AN EPS BEAT? NOT ALWAYS IN Q1 (0946 GMT)
Investors might be getting wise to the company tactic of lowering expectations and then beating
them.
Barclays (LSE: BARC.L - news) ' European equity strategists say that this is the first time in the six years they
have monitored the earnings season that the median relative share price reaction has been
negative for companies that had positive EPS surprises.
They offer up a few explanations for this phenomenon, one being that investors could be
becoming more efficient at discounting such "lower and beat" strategies. Barclays add that Q1
2018 saw the lowest beat since Q3 2015.
Currency, rates, divisional breakdowns and geopolitics are other factors which investors
might be focusing on more.
(Kit Rees)
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OPENING SNAPSHOT: TRADE WAR TIME OUT LIFTS EUROPE THOUGH ITALY FALLS (0719 GMT)
The U.S. calling time out on a trade war with China is lifting risk appetite in Europe,
driving benchmarks up 0.2 to 0.3 percent, while the FTSE 100 has hit a fresh record in early
deals.
Italy is the weak link today, though the FTSE MIB's 1.7 percent fall is largely down to a
slew of stocks going ex-dividend. Italian futures are only marginally underperforming,
down 0.1 percent as 5-Star and League come closer to installing their chosen prime minister.
Financials and utilities stocks are, again, the worst-performing.
Overall basic resources stocks are the biggest drag, with miners falling on lower
nickel and aluminium prices.
A strengthening dollar is helping the FTSE 100 outperform, up 0.5 percent as its big
dollar-earning stocks climb.
(Helen Reid)
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WHAT TO WATCH AHEAD OF THE EUROPEAN OPEN (0651 GMT)
European shares are expected to open higher this morning with the FTSE set to start the
session at a fresh record high, while elsewhere in Europe activity will be reduced by the
closure of some markets including Germany and Switzerland for Whit Monday.
Euro Stoxx 50, CAC and FTSE futures were trading up 0.3-0.5 percent.
On the corporate front, Ryanair will be in focus after the Irish budget carrier posted a
record annual profit as it brushed off a rostering mess-up that forced it to cancel flights and
sparked a dispute with pilots, but warned profits would fall back in the coming year due to
higher costs and no fare growth.
Investors will also keep an eye on political developments in Italy where the leaders of the
far-right League and the 5-Star Movement are due to meet President Sergio Mattarella to get his
blessing to their government programme and to their candidate for prime minister.
Giuseppe Conte, a little-known 54-year-old law professor who had previously been proposed to
the president, is seen as frontrunner.
A surge in Italian government bond yields this morning could put banking stocks and
utilities under further pressure.
(Danilo Masoni)
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EUROPEAN STOCK FUTURES RISE AS TRADE WAR "ON HOLD" (0628 GMT)
After posting their longest winning streak since May 2014, European shares are set for
further gains this morning with stock index futures up 0.3-0.5 percent.
The mood in Asia was supported by remarks from U.S. Treasury Secretary Steven Mnuchin, who
said the trade war with China was "on hold" after the world's largest economies agreed to drop
their tariff threats while they work on a wider trade agreement.
Activity in Europe could however be reduced by a public holiday in Germany.
Here's your futures snapshot:
Investors will also keep an eye on political developments in Italy where the leaders of the
far-right League and the 5-Star Movement agreed on a prime minister candidate for their planned
coalition government. They will meet President Sergio Mattarella, who must give his blessing to
the programme and to their candidate for prime minister, later today.
(Danilo Masoni)
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EARLY MORNING HEADLINE ROUND-UP (0555 GMT)
Ryanair posts record annual profit, pessimistic on year ahead
BP back on its feet but CEO senses no respite
Regulators flag possible birth defect link to GSK's HIV drug
RBS (LSE: RBS.L - news) considers restarting dividends on scale that will rival Lloyds
Glencore (Frankfurt: 8GC.F - news) declines comment on report of UK bribery probe
Outgoing Dixons Carphone UK boss in talks to join M&S
Dialog Semiconductor (LSE: 0OLN.L - news) gets new Apple (NasdaqGS: AAPL - news) orders - Euro am Sonntag
BMW (EUREX: BMWE.EX - news) expands UK vehicle recall to 390,000 cars
EDF (Paris: FR0010242511 - news) in talks to sell half of its UK wind assets - FT
AstraZeneca (NYSE: AZN - news) pay report rejected by 35 pct of shareholders
German cities free to ban older diesel cars immediately
Enel (LSE: 0NRE.L - news) would look at EDP assets in case of break-up - source
Italy must present Monte dei Paschi (Milan: BMPS.MI - news) exit plan by 2019 - CEO tells paper
Don't neglect to pay the middleman: How Shell and Eni (LSE: 0N9S.L - news) ended up on trial
Sanctioned Russian oligarch Vekselberg cuts Swiss stakes
Rusal (HKSE: 0486-OL.HK - news) says Deripaska has not formally resigned; reiterates sanctions may hit business
After hullabaloo, Greek lawmakers drop Novartis (IOB: 0QLR.IL - news) probe against ex ministers
Russia's InterRAO says no plan to buy entire 23.5 pct stake in itself
En+ set to ask U.S. for more time for Deripaska stake sale-source
Global insurers review business after US exit from Iran deal
(Danilo Masoni)
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MORNING CALL: FTSE SET TO OPEN AT RECORD HIGH, DAX CLOSED (0527 GMT)
European shares are set for a positive open today, following gains in Asia overnight, with
financial spreadbetters expecting London's FTSE to open at a record high, up 52 points at 7,831.
Paris' CAC is seen up 20 points at 5,634, while the DAX will be closed for holiday.
Over in Asia, stocks rose as U.S. Treasury Secretary Steven Mnuchin declared the U.S. trade
war with China "on hold" following an agreement to drop their tariff threats that had roiled
global markets this year.
(Danilo Masoni)
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