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LIVE MARKETS-Boris, Hong Kong drag London deeper into red

* STOXX 600 falls 0.5%, FTSE 100 down 0.9% * Adidas falls 2.2% as traders say GBL sells some of its stake * Pendragon drops more than 20% after warning of full year loss * LafargeHolcim down 2.9% on share placing * BATS falls most in months after results * Axel Springer jumps on KKR offer June 12 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net BORIS, HONG KONG DRAG LONDON DEEPER INTO RED (1215 GMT) You might think investors would be glued to news about Boris Johnson, favourite to replace Theresa May as Prime Minister, who launched his campaign for the top job this morning. Sterling did jump ever so slightly after he pledged at the launch to try and avoid a no-deal exit from the EU, quelling some nerves that he would break with the bloc without an agreement. That pushed the FTSE 100 slightly lower. But worries further from home are dragging the blue-chip index deeper into the red this afternoon as losses in heavyweights British American Tobacco, BP and Standard Chartered steepen. The index is down 0.9% currently at its day low and lagging its European peers. BATS is on track for its worst day in seven months and is the single biggest drag on the blue-chip index, accounting for 13 of the 51 points loss so far. BP isn't far behind, dragging the FTSE 100 down by 12 points as crude prices sink. Headlines about the escalating and violent protests in Hong Kong, as well as the sharp drop on the Hang Seng overnight (it had its worst day in a month), are now catching investors' attention, stirring worries about the potential wide implications. Hong Kong-focused Standard Chartered, down 2.6%, is bearing the brunt of the selling. HSBC is down 1%. "Continued protests in Hong Kong were not shrugged off as they have been in the last couple of sessions," says Bannockburn Global Forex's chief market strategist Marc Chandler in a note earlier. (Josephine Mason) **** "MOMENTUM" STOCKS RUNNING ON EMPTY (1057 GMT) Morgan Stanley's turned negative on Momentum - citing overly positive sentiment, near record high valuation, and crowding, as heightening the risk of an unwind in the factor. By Morgan Stanley's calculations, Momentum outperformed Value by 17% last month. "This... monthly spread between the two factors is (unsurprisingly) extremely rare," they write. In one of the worst ever months for Value - a factor that's been severely bruised recently - the cheapest stocks underperformed the most expensive by more than 8%. Momentum itself isn't necessarily the issue - though it's admittedly hard to measure the fundamental credentials of a factor that's meant to track stocks which tend to maintain recent price trends in the future. It's the fact momentum has become so highly correlated with low volatility and quality that is concerning to MS. "Momentum has a big overlap with quality and low volatility," the strategists note, saying three-month rolling correlations with both have surged recently. If you're also jumping off the Momentum bandwagon, MS recommends dropping stocks that score highly on both Quality and Momentum, and which they rate Underweight: Carlsberg, Adidas, and Sandvik for example. Meanwhile, those in the bottom fifth of the Momentum factor, which MS rates highly, include Accor, Covestro, Daimler, Prysmian, TUI, UBS, and Weir Group. You can see below how Momentum, Low Vol, and Quality have moved increasingly in concert over the past five years while Value has lagged significantly. (Helen Reid) ***** HOW TO PLAY FX IN A TRADE WAR? (0911 GMT) Part of the reason for today's move is simply technical: after the STOXX 600 enjoyed a 4% rally in just six sessions, nervous investors are cashing in their gains. But there's also a degree of concern creeping into the market that the trade war will escalate and that even if the Fed cuts rates it won't be enough to halt a global slowdown. "Republicans and Democrats remain supportive of levies on China," note Goldman Sachs strategists. "So while it remains a close call, we think the Trump Administration will ultimately move forward with tariffs on the remaining $300bn in Chinese goods, though most likely at a 10% rate (rather than the initially-proposed 25%)." Though the outcome is still hard to call, forex is one way of playing the trade war if you've got a clear view or a crystal ball to hand. GS recommends shorting the currencies of export-oriented economies (China's yuan, the Taiwanese dollar and the Korean won) versus those more reliant on domestic demand (Indian rupee, Indonesian rupiah, and Philippine piso). As you can see below, the latter have outperformed against the dollar - with the Philippine piso even gaining slightly - over the past 12 months while the former have lagged. (Helen Reid) ***** EUROPE TUMBLES, DRAGGED DOWN BY OIL AND BANK STOCKS (0720 GMT) Europe's STOXX 600 is down 0.5% in early deals, with oil stocks sliding 0.8% as crude prices fall. With utilities, media, and telecoms stocks the top gainers it's clearly a defensive day with investors banking their gains. Sectors sensitive to growth, such as banks, were falling along with trade-sensitive tech stocks AMS and STMicro. Axel Springer is a rare gainer, jumping 12.5% to the top of the STOXX after KKR offered 63 euros a share to buy out minority shareholders in the German publisher. LafargeHolcim shares are down 3% after major shareholder Thomas Schmidheiny placed a 3.7% stake in the stock at 48.70 euros - a 3% discount from yesterday's closing price. British American Tobacco shares are down 2.4% after its results, while Spain's Inditex is up 0.9% after reporting a 10% rise in profit. Among UK small-caps, car dealership chain Pendragon is dropping 19.6% after it warned it would make a loss in the full year. Peer Auto Trader is also falling, down 1.7%. Belgian food retailer Colruyt is down 4.6% after a downgrade from Goldman Sachs. (Helen Reid) ***** WHAT'S ON THE RADAR: PROFIT-TAKING, DEALMAKING, EUROTUNNEL BREXIT WOES (0646 GMT) European stocks are set to slide as investors cashed in their gains after a strong week-long rally and rhetoric on trade tariffs between the U.S. and China showed no signs of improving. A 2% drop in oil prices as U.S. crude inventories rose will also likely put pressure on the market. M&A is making big headlines this morning. French tech company Dassault Systemes is expected to slip 1% after agreeing to buy Medidata Solutions, a U.S. software company dealing in clinical trials, in a move to bolster its life sciences business. It marks the French firm's biggest takeover yet, at $5.8 billion - though the offer is at a slight discount to Medidata Solutions' closing price. Private equity firm KKR has offered 63 euros a share to buy out minority shareholders in Axel Springer, in a deal agreed with the German publishing company's main shareholders. Axel Springer shares are seen jumping 12%. Results from Inditex, British American Tobacco, and Getlink are also in focus. Zara owner Inditex reported a 10% rise in first-quarter profit, helped by a weaker euro. Inditex generates more than half its sales in other currencies that have to be converted back into euro for its financial reports. Its shares are seen up 2%. British American Tobacco is seen rising 1% after the tobacco company affirmed its full-year targets, saying it expects revenue growth in vaping and e-cigarette products to accelerate in the second half of the year. Shares in British car dealership chain Pendragon are seen falling 15-20% after it issued its latest profit warning, forecasting a small loss for the full year. LafargeHolcim shares are falling 1.6% in pre-market trading after a placing of a 3.7% stake in the Swiss cement maker by its largest shareholder, Thomas Schmidheiny. The placing is being done by UBS and Goldman Sachs, at a price of 48.70 euros – 3% down from Tuesday’s close. Getlink, operator of the Eurotunnel, blames political uncertainty in the UK for a decrease in trucks using its Channel shuttle service. Truck traffic in May 2019 is down 11% compared to May 2018, the company said. (Helen Reid) ***** FUTURES SLIDE, EYES ON LAFARGEHOLCIM, INDITEX, ITALGAS (0614 GMT) European futures are sliding 0.4 to 0.6% as investors bank gains after a strong rally and barbed comments from U.S. President Trump suggest the trade war with China is far from being resolved. An update from Italian utility Italgas gave a full-year guidance with "midpoints a touch below estimates", a trader says. Reports of a significant recall https://www.bbc.co.uk/news/uk-48603753 of Whirlpool dryers - after a lawsuit accused the company of making products that contributed to a deadly 2017 fire at Grenfell Tower in London - could hurt shares in Swedish rival Electrolux today. LafargeHolcim shares are down 1.6% in pre-market trading after a placing of a 3.7% stake in the Swiss cement maker by its largest shareholder, Thomas Schmidheiny. The placing is being done by UBS and Goldman Sachs, with the price not disclosed. Zara owner Inditex is also reporting this morning. In other headlines, including some management changes at Sage, Reckitt Benckiser, and ABB: BRIEF-Saga CEO Lance Batchelor to step down in January 2020 Reckitt names Pepsico executive Laxman Narasimhan CEO ABB names ex-GE exec Maryrose Sylvester to lead U.S. business BRIEF-Inditex Q1 Net Profit Up 10% At 734 Mln Euros YoY (Helen Reid) ***** DEALMAKING IN FOCUS: DASSAULT SYSTEMES' BIGGEST EVER TAKEOVER (0557 GMT) The biggest news so far this morning is in dealmaking. French tech company Dassault Systemes has agreed to buy Medidata Solutions, a U.S. software company dealing in clinical trials, in a move to bolster its life sciences business. It marks the French firm's biggest takeover yet, at $5.8 billion - though the offer is at a slight discount to Medidata Solutions' closing price. Private equity firm KKR has offered 63 euros a share to buy out minority shareholders in Axel Springer, in a deal agreed with the German publishing company's main shareholders. And ten states led by New York and California filed a lawsuit to stop T-Mobile Inc's $26 billion purchase of Sprint Corp, warning the deal would crimp competition and cause consumer prices to jump. Here are your early headlines: Dassault Systemes to buy Medidata Solutions in $5.8 bln deal KKR offers 63 euros per share to buy out Axel Springer minorities Ten U.S. states sue to stop Sprint-T-Mobile deal, saying consumers will be hurt End of the road for Volkswagen's self-driving Aurora deal BRIEF-Nordex Wins 93 MW Wind Turbine Order From Spain Italgas plans to spend up to $2 bln on M&A, to upgrade grid Thomas Schmidheiny reduces stake in Switzerland's LafargeHolcim (Helen Reid) ***** EUROPEAN SHARES TO FALTER AT THREE-WEEK HIGH (0532 GMT) European stocks are expected to slip this morning after yesterday's strong rally took the STOXX 600 to a three-week high. Overnight, Asian share markets took a step back as the White House took a tough line on trade talks with China, while a looming reading on U.S. inflation could shuffle the odds for an early cut in interest rates there. The lack of progress in trade talks between the U.S. and China is one brake on stock markets, while data from China showing factory inflation slowed due to sluggish commodity demand and faltering manufacturing activity adds to growth worries. With under three weeks to go before proposed talks between the Chinese and U.S. leaders, expectations for progress toward ending the trade war are low and sources say there has been little preparation for a meeting even as the health of the world economy is at stake. Financial spreadbetters at IG expect London's FTSE to open 18 points lower at 7,381, Frankfurt's DAX to open 34 points down at 12,122, and Paris' CAC to open 12 points lower at 5,396. (Helen Reid) ***** (Reporting by Helen Reid, Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)