LIVE MARKETS-Buying a collapse in the "economic surprise index" rarely goes wrong

* European shares down slightly

* Asia shares under pressure on Syria tensions

* Fresh dealmaking provides support

* Sulzer (IOB: 0QQ9.IL - news) says freed of U.S. sanctions, shares jump 11%

April 12 (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

BUYING A COLLAPSE IN THE "ECONOMIC SURPRISE INDEX" RARELY GOES WRONG (1044 GMT)

Until it does of course! Citi found that buying European equities when its Economic Surprise

Index (CESI) for the Euro area falls to -70 resulted in positive returns 14 times out of 15 in

the last 15 years.

The exception was 2008 when the fall in the CESI was followed by the financial crisis and

buying the STOXX 600 would have resulted in a loss a year after:

The key question is therefore whether growth has just stopped accelerating and will keep on

cruising above its historical levels, or whether it has switched to a downward trend.

"Citi European economists continue to back above-trend growth in the Euro Area despite

recent softness in data", the bank said, adding that while "the growth acceleration phase

appears done", it is likely that growth will be above 2 percent in 2018.

The bank therefore thinks that the CESI collapse is definitely a "buy the dip" signal.

What to buy then? Citi argues the EURO STOXX 50 is better than the wider STOXX 600 and that

it is a good time to raise exposure on "cyclicals, financials, Value & (high) Risk".

(Julien Ponthus)

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TRADE WARS: "THERE WILL BE WINNERS AND LOSERS" (0951 GMT)

With (Other OTC: WWTH - news) geopolitical tensions over Syria now dominating headline trading, worries over a tariff

dispute have taken a back seat. However, debate about the impact of a potential trade war

between the world's two largest economies, the U.S. and China, continues.

Ritu Vohora, investment director at M&G (Shanghai: 603899.SS - news) in London, says even though proposed tariffs are

quite targeted a further escalation cannot be ruled out, a scenario which would have diverging

impact across regions and sectors.

"There will be winners and losers," she says.

"Companies in cyclical sectors, such as miners, energy and industrials; as well as

technology (semi-conductors, high tech) are likely to suffer the brunt of the impact. Countries

open to trade - Asian manufacturers (especially those who supply components to China, to make

products that are then exported to the US) and German exporters (autos) are also likely to

suffer. Stocks deriving a large portion of their revenues from abroad would suffer more than

domestically oriented companies," she adds.

(Danilo Masoni)

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OPENING SNAPSHOT: EUROPEAN SHARES TEPID (0717 GMT)

It's not the most lively of starts at the index level but Europe's STOXX 600 is now flat

after opening slightly higher as oil stocks and banks rise but a number of firms going

ex-dividend weigh.

But earnings and deal-making news are shaking things up among individual stocks.

Playtech (Frankfurt: A1J0S4 - news) is the top gainer after the company agreed to buy a stake in Italian

betting and gaming firm Snaitech, while Dutch food supplement maker DSM is

rallying after raising its 2018 guidance.

And Sulzer's announcement that it is free of U.S. sanctions after reducing Russian

oligarch Viktor Vekselberg's stake to less than 50 pct is buoying Oerlikon, in which

Vekselberg also has a stake.

Here's your opening snapshot:

(Kit Rees)

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UK HIGH STREET BACK IN FOCUS (0657 GMT)

In contrast to Tesco (Frankfurt: 852647 - news) 's well-received update on Wednesday, today could see British

high street stalwart WH Smith (LSE: SMWH.L - news) come under pressure following a half year earnings

update.

WH Smith's shares are seen falling 2 to 4 percent after reporting that total revenue from

its high street business was down 5 percent, with comparable sales falling 4 percent.

However, an update from Mothercare (Other OTC: MHCRF - news) could offer some relief, with one premarket

indication seeing its shares up around 3 percent after the baby goods retailer said that it

remains in a constructive dialogue with its financing partners, though reduced store footfall is

still an issue.

(Kit Rees)

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WHAT YOU NEED TO KNOW BEFORE EUROPE OPENS (0644 GMT)

European shares are expected to fall further today as Syria headlines keep investors wary to

take risks, although fresh dealmaking activity and a big bounce for Sulzer shares are likely to

limit losses. Futures were down 0.1-0.2 percent.

Sulzer is up 15-20 percent pre-market after the Swiss pumpmaker said it freed itself of U.S.

sanctions after authorities approved its buyback of shares that has reduced Russian oligarch

Viktor Vekselberg's stake to less than 50 percent. Sulzer shares have fallen 22 percent in the

last 3 days due to sanction worries.

In M&A, Shire (Xetra: S7E.DE - news) is indicated up 1-2 percent after sources told Reuters Takeda has sounded out

creditors for loans to help finance a possible bid for the British rare disease specialist.

Firstgroup (LSE: FGP.L - news) could see a low double-digit gain at the open after news it rejected a takeover

approach from Apollo.

Results could also be in focus. Carrefour (LSE: 0NPH.L - news) is down 3 pct pre-market as it gave a cautious

outlook for 2018 after first-quarter sales growth slowed due to continued weakness in its core

French market. French food services and facilities management group Sodexo also sounded cautious

over its medium terms goals, but its shares could get a lift from a share buyback plan.

Other stock movers:

Gerresheimer Q1 earning per share up due to U.S. tax reform;

DSM pre-announces Q1 earnings, raises 2018 outlook;

Playtech agrees to buy a 70.6 percent stake in Italian betting firm Snaitech;

Italy regulator says Vivendi (LSE: 0IIF.L - news) transfers part of Mediaset (LSE: 0NE1.L - news) stake in trust;

London-listed miner CAML reports 35 pct jump in core earnings;

Hedge fund Man Group (LSE: EMG.L - news) says assets up 3 pct on net inflows;

VW to give workers a management seat to try to unlock reforms.

(Danilo Masoni)

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DAX, FTSE FUTURES EDGE LOWER ON SYRIA WORRIES (0613 GMT)

Stock index futures are pointing to a slightly weaker opening for European shares today with

DAX and FTSE futures down around 0.1 and 0.2 percent.

Michael Hewson, chief market analyst at CMC Markets UK, says upbeat Fed minutes overnight

are unlikely to offer much comfort to investors who remain nervous due to Syria

concerns.

"It is probably safe to presume given President Trump's comments earlier in the week, that

we may well see a military response by the end of the week, as the situation in Syria ramps up

further, and this may well temper investor enthusiasm to buy back into the market ahead of the

weekend," he writes in his morning note.

Here's your futures snapshot.

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUNDUP (0556 GMT)

Takeda sounding out banks for loans to buy Shire (Hamburg: 3979575.HM - news) - sources

Sulzer says free of sanctions as U.S. approves buyback

Retailer Carrefour's Q1 sales growth slows, with France a weak spot

French group Sodexo's H1 core profits fall, keeps toned-down guidance

Britain's FirstGroup rejects Apollo takeover approach

Playtech agrees to buy a 70.6 percent stake in Italian betting firm Snaitech

Steinhoff raises $314 mln from stake sale in African unit to help cut debt

Glencore (Frankfurt: 8GC.F - news) to declare force majeure on some aluminium supply -source

IPO of Volkswagen (IOB: 0P6N.IL - news) truck unit planned for Q1 2019 - sources

VW to give workers a management seat to try to unlock reforms

Italy regulator says Vivendi transfers part of Mediaset stake in trust

SoftBank CEO running out of time to clinch Sprint-T-Mobile merger

Healthcare (Shanghai: 603313.SS - news) group Sanofi (LSE: 0O59.L - news) to invest 350 mln euros in Canada vaccine facility

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN WEAKER (0520 GMT)

European shares are expected to open slightly lower as geopolitical tensions that sent the

STOXX 600 down 0.6 percent on Wednesday persist, keeping investors wary.

Financial spreadbetters expect London's FTSE to open 24 points lower at 7,242, Frankfurt's

DAX to open 47 points lower at 12,350 and Paris' CAC to open 14 points lower at 5,293.

Over in Asia, stocks came under pressure as the threat of imminent U.S. military action in

Syria rattled investors and sent oil prices to their highest levels since late 2014 on concerns

about supply.

Minutes of the Federal Reserve's last policy meeting on March 20-21 released on Wednesday

after the European market closed showed all of its policymakers felt that the U.S. economy would

firm further and that inflation would rise in the coming months.

(Danilo Masoni)

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