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LIVE MARKETS-Brexit, a lesson for trade wars?

* European stocks rise

* Sage Group (LSE: SGE.L - news) falls after cutting revenue forecast

* Klepierre (LSE: 0F4I.L - news) abandons Hammerson (Frankfurt: 876140 - news) deal

LONDON, April 13 (Reuters) - 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

BREXIT, A LESSON FOR TRADE WARS? (1353 GMT)

Berenberg's economists have drawn an interesting parallel between the kind of impact trade

wars might have and the situation the UK economy found itself in after the Brexit vote back in

June 2016.

Berenberg says that up until then, the UK had outperformed other major developed economies,

but then started to lag.

"Serious barriers to imports crimp economic growth, stoke inflation and disrupt supply

chains. By reducing competition, they can also stifle the incentive to innovate. At least the

first two effects are clearly visible in the UK," Berenberg economists say in a note.

"Serious trade wars could mean a dose of Brexit-lite for everybody."

They also point out that, while the UK hasn't actually left the European Union yet and

nothing has actually changed, it is the "mere fear" that trade could take a blow that is

weighing on the UK.

(Kit Rees)

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TARIFFS UNLIKELY TO HURT CAPITAL GOODS STOCKS (1252 GMT)

Capital (Other OTC: CGHC - news) goods stocks were a darling of the market last year, but sentiment has deteriorated

recently with rhetoric around trade wars and higher tariffs denting industrials as a whole.

Goldman Sachs (NYSE: GS-PB - news) strategists say only 20 percent of investors in their recent survey expected

industrials to outperform, but they were slightly more positive on European cap goods stocks.

Interestingly GS reckons higher tariffs - if they materialise - wouldn't be disastrous for

these firms.

The steel and aluminium tariffs should take off just 50 basis points on margin, which should

be passed through to customers, they calculate. Most-impacted are likely to be Assa Abloy (LSE: 0R87.L - news) and

Electrolux.

Results kicking off next week will shed some more light on how they've been doing.

"We expect the most negative surprises by IMI (LSE: IMI.L - news) and Alfa Laval (LSE: 0NNF.L - news) , while we

expect Philips Lighting (Amsterdam: LIGHT.AS - news) , Renishaw (Frankfurt: 868884 - news) and Metso (Amsterdam: MS6.AS - news) to post the most

positive results," GS analysts say.

Cap goods stocks have performed worse than industrials as a whole in the recent sell-off, as

you can see below:

(Helen Reid)

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MID-SESSION SNAPSHOT: EUROPEAN SHARES FLOAT HIGHER (1149 GMT)

After a week wracked by geopolitical jitters, it's not surprising that the relative calm on

Friday 13 of all days has Deutsche Bank (IOB: 0H7D.IL - news) strategist Jim Reid asking "what could possibly go wrong

today?".

And yet, European equities continue to drift steadily higher, with financials and

industrials leading gains.


Over in the U.S., stocks futures are pointing to a modestly higher start with JPM in focus

after the bank posted its first EPS miss in two years - its shares have given up some of their

premarket gains. We've still got Wells Fargo (Swiss: WFC-USD.SW - news) and Citigroup (NYSE: C - news) results to go today.

In the meantime, here's your lunchtime snapshot:

(Kit Rees)

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ITALIAN STOCKS' BAFFLING RIDE REACHES THE TOP OF THE WORLD (1139 GMT)

Crisis? What crisis? Italian shares keep outperforming the market despite the country's

political deadlock and it's puzzling analysts.

The latest edition of BAML's Flow Show is quite revealing on this, as Italian stocks have

the second-best performance in the world with a 9.4 percent return year-to-date, just behind

Brazil (9.9 percent).

Italian equities are also the most overbought:

Talking about Italian stocks at the beginning of this week, Valentijn van Niewenhuijzen, CIO

at NN Investment Partners, told us he wasn't too worried about the political situation.

"I think it's quite clear that although the outcome of the election was more clearly in

favour of the populist parties, it was less dominated by an anti-EU theme," he said, adding that

Italy was well positioned to benefit from the Euro zone economic dynamism.

"We are not too worried about owning Italian assets. It's probably more of a turnaround

story and if the rest of Europe is lifting, it can have a bit of a higher beta."

Here's the latest on the political front: Italy's president says faces political deadlock,

to wait "a few days"

And here's a post from last week: Why are Italian bonds and shares loved so much?

(Julien Ponthus and Helen Reid)

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HOW IMPORTANT IS THE SLOWDOWN IN EURO ZONE DATA? (0941 GMT)

Weaker data points, seen as hints that the #Euroboom is over, have been on everyone's minds

for the past weeks, with investors trying to figure out what impact the apparently worse

economic backdrop has on portfolios.

Industrial production, retail sales, and even trade data have been showing signs of fraying,

making Euro zone Q1 GDP growth figures (on May 2) likely to weaken, UBS (LSE: 0QNR.L - news) analysts say.

A big gap has opened up between "mediocre" hard data and still relatively strong survey

data, they note. "We are taking the disappointing hard data seriously," they say, adding they

doubt this marks the start of a sharp, lasting slowdown.

Very cold weather and unusually high instances of flu could be part of the reason for the

data slowdown.

"If our assessment is correct and bad weather and elevated sickness leave were indeed key

drivers of the weaker data in Q1, then the softness is likely to be transitory."

And slowing trade may be the first signs of impact of the stronger euro, making exports from

Europe more expensive for foreign buyers.

(Helen Reid)

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OPENING SNAPSHOT: EUROPEAN SHARES TICK HIGHER (0720 GMT)

European shares have opened slightly higher, underpinned by gains for materials stocks and

industrials as earnings shuffle into focus.

And in the results space Stora Enso (LSE: 0CX9.L - news) , a Finnish paper maker, is the biggest gainer

after beating first-quarter profit expectations, though Sage Group is nursing heavy

losses due to cutting its full-year revenue forecast.

Dealmaking news continues to keep investors on their toes as Klepierre drops its

bid for Hammerson. Klepierre's shares are up 4 percent, but Hammerson is down around 13

percent.

As we wait and see whether European shares commit to this rather feeble bounce, here's your

opening snapshot:

(Kit Rees)

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WHAT TO WATCH AT THE EUROPEAN OPEN (0646 GMT)

Here's what's on our radar today:

Easing concerns over trade and Syria should help European stocks hold near the one-month

high they hit on Thursday, with the focus turning to the incipient earnings season expected to

help boost equities. If all goes well today this should be the third straight week of gains for

the STOXX 600, the benchmark’s longest winning streak since the heady days of January when

markets were (all too) optimistic.

JP Morgan and Citigroup’s results across the pond will be keenly watched later in the

session, but in Europe L’Oreal has already reported a first-quarter sales beat helped by luxury

cosmetics and China, and the shares are indicated up 2 to 3 percent.

UK software firm Sage is expected to fall at the open, however, after cutting its guidance

for 2018 revenue growth.

In M&A developments, France’s Klepierre has dropped its takeover bid for Hammerson

, saying it doesn’t intend to make an offer after its two bids were rebuffed by the UK

commercial real estate firm.

Micro Focus could make further gains today, traders said, after yesterday’s sharp move

higher on reports Elliott Management has taken a stake in the company.

(Helen Reid)

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EUROPEAN COMPANY HEADLINE ROUNDUP (0630 GMT)

Here are the headlines catching our eye ahead of Europe's open:

Luxury cosmetics and China drive sales bounce at L'Oreal

Rocket Internet (Swiss: OXRKET.SW - news) start-ups trim losses

VW names new boss to steer sweeping overhaul

Volkswagen (IOB: 0P6N.IL - news) labour bosses back Diess as new CEO - Osterloh

British software firm Sage cuts FY revenue growth forecast

Rolls-Royce to step up inspections of Trent (BSE: 500251.BO - news) 1000 engines

London Stock Exchange Group appoints Goldman's Schwimmer as CEO

(Kit Rees)

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EUROPEAN FUTURES INCH LOWER (0612 GMT)

Futures have opened pretty vaguely this morning, lacking direction but pointing to a

slightly higher open for the DAX, while they're trading lower for the Eurostoxx 50.

In corporate news, Volkswagen will be one to watch, indicated higher in pre-markets after it

named Herbert Diess as its new chief executive.

L'Oreal is also seen rising after luxury cosmetics and China drove a sales beat for the

first quarter.

VW names new boss to steer sweeping overhaul

Luxury cosmetics and China drive sales bounce at L'Oreal

(Helen Reid)

*****

FOCUS ON ITALY AS GEOPOLITICAL CONCERNS EASE (0551 GMT)

Another saga on investors' radar today is the effort to form a government in Italy. SocGen (Paris: FR0000130809 - news)

analysts say: "Chances are that Salvini, leader of the League, will be asked to form a

government but we expect his chances of rapid success to be slim."

Talks to try to break the stalemate made no progress yesterday as parties refused to

compromise - our full story here:

Overall markets seem less concerned about geopolitics than earlier this week. SocGen

analysts note that "conciliatory comments from President Trump about prospects for a positive

resolution of the trade frictions with China and over NAFTA, and suggestions the U.S. may join

the TPP after all, helped to improve risk sentiment."

Trump said he would only join the Pacific trade pact if the deal were "substantially better"

than that offered to President Obama.

(Helen Reid)

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MORNING CALL: TEPID END TO THE WEEK FOR EUROPEAN STOCKS (0526 GMT)

Good morning.

Main European benchmarks are called very slightly lower this Friday the 13th, after a marked

recovery yesterday. Attention shifted yesterday to the U.S. earnings season expected to be very

strong, and today investors will watch reports from big banks JP Morgan and Citigroup closely.

"Recent price action might suggest that we could look to head towards the upper end of the

trading range in the coming days, particularly if U.S. earnings come in ahead of expectations,"

says CMC Markets (LSE: CMCX.L - news) ' Michael Hewson.

Over in Asia, trading was more muted on Chinese indices especially after data from China

showing March exports unexpectedly fell while imports grew more than forecast.

Spreadbetters call the DAX 2 points lower at 12,413, the CAC 40 down 4 points at 5,305, and

the FTSE 100 8 points lower at 7,250.

If all goes well today the STOXX 600 will seal its third straight week of gains, its longest

winning streak since the heady days of January when global equity markets were in a roaring

rally. Below you can see how much bigger weekly swings have been since then, with many saying

we're in a new volatility regime.

(Helen Reid)

*****

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