LIVE MARKETS-Block trading on the rise

In this article:

* 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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