LIVE MARKETS-In case you needed another reason to avoid European banks

* European shares slightly down, FTSE falls 0.8% * U.S. widens trade war with tariffs on European goods * Eyes on US ISM services report * Frankfurt closed today for public holiday 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: rm://danilo.masoni.thomsonreuters.com@reuters.net IN CASE YOU NEEDED ANOTHER REASON TO AVOID EUROPEAN BANKS (1159 GMT) Given their total helplessness in recovering from the financial crisis and their abyssal performance in the last two years, most investors won't touch euro zone banks with a barge pool. But with some analysts such as Saxo's predicting the end of the U.S. equity outperformance, a 'European banks versus U.S. banks' play could appear somewhat tempting. So for those who feel EZ banks' rock bottom valuations and juicy dividend yields could lure them into buying the dip despite seemingly never-ending negative interest rates, here's another word of caution. "Profitability for European banks and asset managers will remain below that of US peers as the European Union's fragmented markets hamper cost-efficiency and restrict revenue sources", warns Moody's. The rating agency's analysts also point out how "profits at European banks have been eroded by cyclical factors such as lower interest rates, slower economic growth and large amounts of non-performing loans". Here's a self explanatory chart of how euro zone banks have fared in the last decade versus their U.S. peers. (Julien Ponthus) ***** EXCLUSIONS LIFT SPIRITS (1003 GMT) Analysts have been wading through the updated list of Europe-made goods the U.S. is set to slap tariffs onto starting from Oct. 18 and found out with surprise that some products such as cognac and champagne that initially featured among the possible tariff targets were not there. That has triggered visible relief across shares of spirits companies such as Remy Cointreau and Pernod Ricard as the scope of the new duties is smaller than initially expected. The 25% tariff itself is also less than feared and some companies may even transfer down to consumers the tariff costs. "The list... only includes single-malt Irish and Scotch whiskey, wine and liqueurs and cordials," say Citi analysts. "We had been assuming that cognac and all blended whiskies would be impacted, meaning the impact for EU spirits companies is much less negative than we originally expected," they add. Likewise, Jefferies analysts say there are surprised that cognac, champagne (wine non carbonated) and liqueurs from France have been omitted from the list. "Irish and Scotch Whiskies are included but specifically UK (ie N.Ireland) but not ROI," they add. On a more cautious note, Credit Suisse analysts note: "The USTR has the authority to further increase the tariffs (up to 100%) or change the products affected". Anyhow, here's a snapshot taken from the USTR (United States Trade Representative) list and below a link to the full list. https://ustr.gov/sites/default/files/enforcement/301Investigations/EU_Large_Civil_Aircraft_Final_Product_List.pdf In more detail, here's a breakdown on what's the expected impact by company. * Pernod Ricard: Citi sees only 1% of group sales at risk with Glenlivet (only 5% of US sales) facing the 25% tariff. Jefferies says omission of cognac (c4%) and champagne (c.4%) and likely omission (per our read) of Jameson (c.28%) leaves only single-malt scotch. * Remy Cointreau: Citi sees only 1% of group sales at risk with its Bruichladdich whiskey brand subject to tariffs but crucially not its cognac portfolio. Jefferies says cognac (Remy Martin 73% of U.S.) and liqueurs from France (Cointreau 16%) are excluded. * Diageo: Citi sees only 1% of group sales at risk. They say Baileys is considered under liqueurs/cordials. * Campari : Jefferies says Grand Marnier not captured (French liqueur/cognac) but liqueurs from Italy captured. Assume bitters Aperol/Campari not captured. (Danilo Masoni) ***** YOUR DAILY SHOT OF MACRO GLOOM (0945 GMT) It was indicator galore in Europe this morning and yet another vulgar display of economic gloom. Most spectacular was the data which suggests the UK is sliding into recession with the IHS Markit/CIPS services Purchasing Managers' Index tumbling to a six-month low of 49.5. That's of course bad news for the FTSE which is the worst performer among its European peers. While the blame is of course put on Brexit, bleak indicators from the rest of Europe show the continent's woes run deep not withstanding and that the "peak bad macro news" some investors were waiting ain't just there yet. Euro zone producer prices fell indeed more than expected in August signalling weakening inflationary pressures in a slowing euro zone economy. That came after bad news from Germany (German services lose momentum, leaving private sector in contraction ) and France (French business growth slowed more than expected in Sept ). As Michael Browne, portfolio manager at Martin Currie told us yesterday: "Europe is in recession, there is no way around it", adding that "what it does mean is that earnings estimates are too high". Seems investors are rather blase about the current grimness with the STOXX 600 keeping a rather flatish stance but that could of course change this afternoon at 1400 GMT with the U.S. ISM non-manufacturing report. Take a glimpse at the the worse than expected data this morning: (Julien Ponthus and Joice Alves) ***** EUROPE STEADIES: U.S. TARIFFS NOT SO SCARY (0740 GMT) Selling pressure has clearly attenuated in Europe after worries over global growth caused a two-day rout that wiped off all gains made last months. It looks that the tariffs Washington will slap on a number of European goods starting from Europe-made Airbus planes are not as bad as some feared, while there also were some exemptions. Euro zone stocks are up 0.2%, while the broader STOXX 600 index is flat, weighed down by losses among UK stocks. The FTSE is down 0.4%. The Trump administration's 10% tariffs on Airbus planes and 25% duties on French wine, Scotch and Irish whiskies, and cheese from across Europe are set to take effect on Oct. 18. Commenting on sprits tariffs, Jefferies said: "Less penal than our worst case scenarios". Traders said that tariffs on Airbus also weren't as bad as feared. As a results shares in Remy Cointreau are shooting up 6.7% to the top of the STOXX, while among other drink firms Pernod is up 3.2%, Diageo up 1.5%, and Campari up 0.5%. Airbus shares are rallying 3.2% after falling 2% in the previous session. A solid update from H&M is sending shares in the world's second-biggest fashion retailer up 6.4%. The company reported its first quarterly rise in pretax profit in over two years and said efforts to meet rapid changes in its industry were on track. Here's your opening snapshot: (Danilo Masoni) ***** WHAT'S ON OUR RADAR: AIRBUS, TARIFFS, ISM SERVICES (0655 GMT) European shares are set stay at 1-month lows at the open after Washington said it would slapped tariffs on Airbus planes and a range of other European goods, with eyes also squarely focused on the U.S. ISM services report to assess whether an slump in factory activity that roiled markets this week is spilling over to other parts of the economy. EuroSTOXX 50 futures are down 0.2% but above the intraday lows hit in the previous session, indicating that selling pressure could ease after a two-day rout that wiped off all gains made by European stocks in September. CAC futures are slightly positive, up 0.1% and FTSE futures are 0.3% lower, while Frankfurt is closed for a holiday, likely reducing activity. The Trump administration's 10% tariffs on European-made Airbus and 25% duties on French wine, Scotch and Irish whiskies, and cheese from across Europe are set to take effect on Oct. 18. Investors are assessing the impact of these tariffs of companies' profitability but early indications suggest the duties are in line with expectations or in some cases even better, given some exemptions. One trader sees Airbus shares rising 2% at the open after heavy losses yesterday, saying the U.S. tariffs are not as bad as feared and noting that the new U.S. list spare some Airbus parts. Safran shares are also seen up, but Thales down, while among drink companies Campari shares could fall and Pernod Ricard rise. Traders also say luxury names could find support after the US spared luxury labels from its original list, even though continued tensions in Hong Kong are seen as a negative. One trader sees LVMH rising 2% at the open. In the UK a profit warning is set to hit Ted Baker hard, while Imperial Brands is also in focus after news that its CEO will step down. In earnings, H&M the world's second-biggest fashion retailer, reported its first quarterly rise in pretax profit in over two years and said efforts to meet rapid changes in its industry were on track. Its shares are seen rising 1%. Here's your full headlines roundup: U.S. widens trade war with tariffs on European planes, cheese, whisky to punish subsidies U.S. hits Scotch whisky, Italian cheese, French wine with 25% tariffs U.S. to hit EU with tariffs of 10% on aircraft, 25% on other goods -official Airbus plant in Alabama spared fallout from U.S. tariffs French group Thales targets higher profit margin of up to 12% Imperial Brands CEO Alison Cooper to step down Ted Baker warns on full-year; hit by weak demand, hefty discounting H&M posts first quarterly profit rise in over 2 years U.S. DOJ says Eni probe not closed for lack of evidence, could re-open AMS to publish results of its Osram takeover offer on Friday Alpiq alliance holds 89.94% of utility in contested going-private bid Sika aims to boost sales, operating margin as part of 2023 plan Atlantia seeking radical revision of Alitalia rescue plan-source MEDIA-Allianz chief Oliver Bate lambasts ECB over rates- FT (Danilo Masoni) ***** EUROPE SEEN FALLING FURTHER (0541 GMT) European shares are expected to fall further following a two-day rout on worries over the health of the U.S. economy that sent the STOXX 600 regional benchmark down 4%, wiping off all the gains it made in September. A WTO ruling opening the door for Washington to slap tariffs on European goods ranging from Airbus-made planes to wine, whiskies, and cheese exacerbated concerns over slowing global growth, and financial spreadbetters are calling for more losses at the open today. A key data point to watch today is the ISM services report out of the U.S. which will be closely watched to assess whether the unexpected malaise detected in the manufacturing sector is spreading to other areas of the economy. The Frankfurt Stock Exchange is closed today for the Day of German Unity public holiday, likely reducing activity. Here are you opening calls, courtesy of a London based trader: * FTSE -24 points at 7,098 * CAC -4 at 5,41 (Danilo Masoni) ***** (Reporting by Danilo Masoni, Joice Alves, Josephine Mason, Julien Ponthus and Thyagaraju Adinarayan)