LIVE MARKETS-Closing snapshot: China and China

* European stocks slide

* China exports fell by their most in two years in Dec (Shanghai: 600875.SS - news)

* Luxury, tech stocks bruised by China data

Jan 14 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to

share your thoughts on market moves: josephine.mason.thomsonreuters.com@reuters.net

CLOSING SNAPSHOT: CHINA AND CHINA (1704 GMT)

Today's session has unequivocally been about the shock contraction in Chinese trade and how

it reignited fears of a sharper slowdown in global growth.

Trump's afternoon assurances that he would reach a trade deal with China didn't do any

long-lasting magic with bourses on both sides of the pound trading in the red.

As you can see below however, today's European snapshot is tainted-red but nothing dramatic

really with the STOXX 600 losing 0.6 percent.

(Julien Ponthus)

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MORE ON BREXIT... (1626 GMT)

A lot has been written about Brexit but before tomorrow's meaningful vote we thought you'd

still have some appetite left for another view. This time from Adrian Paul, economist at Goldman

Sachs, who's betting on a rather benign outcome.

Here are the highlights of his thinking:

* Tomorrow MPs in the House of Commons will vote on the Prime Minister’s Brexit deal for the

first

time. We think the deal will fail to command a majority, and the PM will return to the Commons

with minor modifications in a matter of days.

* We still expect that a slim majority of MPs (BSE: MPSLTD.BO - news) will ultimately consent to a close variant of

the

current Brexit deal. This is because Parliament has been unable to turn cross-party opposition

to a disorderly Brexit into cross-party co-ordination on a single, well-specified alternative.

* The probability of a "no deal" Brexit has fallen further in recent weeks, as Parliament

has

begun to wrest power away from the Prime Minister. Parliament remains divided over a second

referendum, but the probability of an Article 50 extension or a "no Brexit" outcome has been

rising. Taken together, we thus see the risks to our base case skewed towards a later, softer

Brexit, or none at all.

Since you read so far, here's a bonus picture:

(Danilo Masoni)

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EUROPEAN 2019 EARNINGS? UP, FLAT OR DOWN - YOU CHOOSE! (1601 GMT)

The earnings season is just about to start and investors' expectations couldn't be more

different - likely reflecting a lack of visibility following the recent growth scare and

persistent uncertainties over tariffs and Brexit, which don't seem to be going away anytime soon

(The New-Year-Old-Problems narrative is staying with us).

Among the earnings bulls is UBS (LSE: 0QNR.L - news) .

Strategists at the Swiss investment bank led by Nick Nelson are forecasting a 7 percent EPS

growth this year and have a 420 points target for the pan-regional STOXX 600 index, based on

long run average PE multiple of 14.5 times. That target would be an all-time high!

On the other side of the spectrum is Baader Bank (Xetra: 508810 - news) .

Baader's head of equity strategy, Gerhard Schwarz, expects earnings growth to be flat if not

slightly negative this year and while that may have already been priced in, he says European

markets will most likely struggle to recover until confidence improves.

(Danilo Masoni)

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BREXIT: IS JUMPING SHIPS JUMPING THE GUN? (1440 GMT)

According to Berenberg's Kallum Pickering "we are probably about to enter the phase of peak

uncertainty whereby parliament rejects Mrs May’s deal but does not yet have an alternative".

With (Other OTC: WWTH - news) that in mind and about 30 hours to go till the vote, it seems quite tricky to make

investment calls, but JP Morgan Cazenove strategists believe there's a case to jump back on the

UK Inc boat.

"While the ultimate outcome is anything but clear, we believe the probability of a No-Deal

Brexit has sufficiently reduced" to buy UK domestic exposure through the likes of homebuilders,

real estate, banks and retail, they write in a morning note.

Other reasons to buy proxies for the UK economy include a positive UK growth momentum and

improving risk-rewards, the analysts also write.

It's true there's some kind of optimism in the air with sterling hovering near seven-week

highs against the dollar as May warns that lawmakers' failure to approve her Brexit deal could

lead to no Brexit at all.

Anyhow, a lot of other pundits do still remain very cautious.

Aberdeen Standard Investments political economist Stephanie Kelly warned that "clarity on

Brexit will only come at the very last minute" while Andy Parsons from the Share Centre advised

retail investors to keep in mind a few pieces of trading common sense.

"The past year or so has shown anything is possible and investors should always be prepared

for the unexpected; taking nothing for granted," he writes.

Here's how J.P. Morgan (Other OTC: MGHL - news) sees probability of a no-deal Brexit fall and here's a link for a

useful QnA factbox on tomorrow's action:

(Julien Ponthus)

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UK EQUITIES: REASONS TO BE CHEERFUL AS BREXIT CRUNCH DRAWS NEARER (1337 GMT)

It may not seem logical but ahead of tomorrow evening's Brexit vote in parliament, some

market watchers are resolutely cheery about UK stocks.

Morgan Stanley (Xetra: 885836 - news) 's equity strategy team is among them: they're overweight UK equities (and

have been since May 2018), saying dividend yields and valuations are just too good to ignore.

As you can see below, the median dividend yield of MSCI UK stocks is at its highest since

the financial crisis. The gap (Frankfurt: 863533 - news) between dividend yield and gilt yield has also never been higher,

Morgan Stanley's Graham Secker and team write.

Valuations are attractive, with the median stock's 12-month forward P/E at a five-year low.

A positive outcome from tomorrow's vote (the deal being passed by Parliament) would boost

the FTSE 100 by 5 percent and the FTSE 250 up 10 to 15 percent, Morgan Stanley's strategists

reckon. Domestic banks are likely to soar 25-30 percent and real estate stocks are also seen to

be the biggest beneficiaries.

A negative outcome would drive the inverse moves, with pharma, staples, tech and commodity

sectors likely to outperform as investors rush to relative safety.

(Helen Reid)

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CRATERING ECONOMIC CONFIDENCE POINTS TO EARNINGS DOWNGRADES AHEAD (1301 GMT)

As investors get ready for the fourth-quarter results season, it's looking pretty gloomy for

European stocks.

The euro zone's composite economic sentiment indicator dropped sharply in December and is

now "firmly in recessionary territory", Bernstein's quantitative strategists Inigo

Fraser-Jenkins and team write.

As you can see below, the year-on-year percentage change in the indicator is at its lowest

since 2012, when the euro zone was in the throes of a sovereign debt crisis.

"While we do not expect a recession this year we are nevertheless concerned by such a sharp

decline in economic sentiment over the last month," they write, adding that sentiment has been

"extremely volatile".

And while consensus sees 8 percent earnings growth for 2019, Bernstein's tactical earnings

indicator now projects just 3.5 percent earnings growth over the next 12 months.

The strategists say they expect further downward revisions, particularly in Europe.

So: where are investors hiding?

European consumer staples, technology, and financials have seen a significant drop in

crowding, while it has shot up in Utilities and Energy, currently the most crowded sectors in

Europe, Bernstein analysts note.

They themselves favour energy, healthcare, consumer staples, materials, and tech while

they're underweight industrials and consumer discretionary sectors.

(Helen Reid)

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BREXIT: GETTING READY TO TRADE "HEADLINE BY HEADLINE" (1140 GMT)

Nomura analysts held a conference call this morning to sum up what's at stake ahead of

tomorrow's Brexit vote and, given the chaotic nature of the beast, actionable takeaways are

relatively scarce.

One sensible piece of advice though, given the flurry of scenarios which could unfold after

Tuesday evening, is for investors to get ready to trade "headline by headline" for a while.

For those who still have bitter memories of the June 23 2016 referendum night, it's indeed a

tad safer to take a neutral stance and avoid running the risk "of being long sterling and being

on wrong side of history," they advise.

The Nomura analysts caution that tomorrow's expected defeat of May's Brexit plan is a

non-binary event which would lead to many alternative scenarios to May's deal, from a hard-core

disorderly Brexit to no Brexit at all.

At least one key event to wait for before taking any directional position, they advise, is

to wait to see whether Labour immediately lodges a no-confidence motion in the prime minister.

After all, many investors believe a Labour government could be equally as negative, if not

even worse, for their portfolio than a no-deal Brexit.

Indeed, what kind of visibility could there be while the possibility of a general election

keeps on looming on the pound?

Below, a trader doing his thing:

(Julien Ponthus and William Schomberg)

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STRESSED ABOUT GROWTH... HOW ABOUT A DRINK? (1045 GMT)

Having a drink may be a good way for stock investors to ease the stress from slowing

economic activity, and today's data from China is just another reminder of how painful the

economy can be for markets.

Credit Suisse (IOB: 0QP5.IL - news) in fact expects the beverages sector to deliver the highest organic growth

across the consumer staples universe for a third consecutive year.

And that's partly due to the industry's efforts to shift its focus from cost savings to

growth and innovation, which are now bearing fruit, CS analyst Sanjeet Aujla writes.

"In 2013, only one beverages company had incorporated revenue growth into its (management)

remuneration objectives... By 2015, all eight European beverages companies in our universe had

adopted some measure of organic growth in its incentive mechanisms," he notes.

That being said, Credit Suisse say they prefer Spirits and Coke bottlers due to superior

organic growth and better quality of earnings growth than Beer, singling out Diageo (LSE: DGE.L - news) , ABI

and CCH as their top picks.

(Danilo Masoni)

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WAITING FOR A CHINESE TURNAROUND (1031 GMT)

Today's poor data on Chinese exports has poured cold water over investors' hopes that last

week's rally might mark a turning point for markets.

The same old pressures are still very much alive and kicking, the data has shown, confirming

again the hit to China's economy from an ongoing trade war.

You can see an interactive graphic showing China's trade data over time here: https://tmsnrt.rs/2HlcocG

We spoke to one investor on Friday, however, who was pretty optimistic on China. Gregory

Perdon, co-chief investment officer at UK private bank Arbuthnot Latham, says: "Chinese A-shares

are one of our top picks for 2019."

"Domestic investors really ran for the exit when credit was constrained, so now the

government is saying we need to stabilise markets... and we think all of that will translate

into a bit of a renaissance for Chinese assets this year when that transmission mechanism is

activated," Perdon adds.

The surprise to everyone in the market has been how long that hoped-for transmission

mechanism has taken to materialise.

"We haven't seen any good data optics up to now, which is a bit of a surprise," says Perdon.

He also says China needs a deal much more than the Americans do, and any deal announced is

more likely to be short-termist than a longer-term solution.

"Our view is we get some headline-grabbing announcements... once that gets announced it

dovetails with fiscal stimulus and monetary easing," he says. "If that doesn't work then we have

to go back to the drawing board."

As you can see below, Chinese economic surprises haven't been as bad as they were in 2014

and 2015 - and Citi's economic surprise indicator is currently much lower for the euro zone than

for China.

(Helen Reid)

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CHINA DATA SENDS EUROPEAN STOCKS SLIDING (0849 GMT)

European shares are dropping this morning after China reported exports unexpectedly fell by

their most in two years in December, while imports also contracted.

The weak data from China is hurting the usual suspects: luxury stocks first and foremost.

LVMH, Hermes, and Gucci owner Kering (LSE: 0IIH.L - news) are among the top CAC 40 fallers, down 1.2 to 2 percent,

while Italy's Moncler is down 2.1 percent.

Affordable luxury jeweller Pandora (LSE: 0NQC.L - news) is falling 6 percent, the top STOXX faller, after Morgan

Stanley (Shenzhen: 002588.SZ - news) cut its price target on the stock and as the China data weighs.

The tech sector is also down 0.8 percent after Dialog Semiconductor (LSE: 0OLN.L - news) delivered the

latest negative news from the chipmaker sector, reporting Q4 sales at the bottom end of its

forecast range.

Burberry is the odd one out in the luxury sector, rising 2.2 percent after BAML upgraded the

stock to "neutral" from "underperform".

A downgrade from Exane was also weighing on French retirement home operator Orpea (EUREX: 1402467.EX - news) , down 3.8

percent and the second-worst STOXX performer.

Next (Frankfurt: 779551 - news) was also suffering, down 2.7 percent after Credit Suisse cut it to

"underperform".

(Helen Reid)

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THAT SINKING FEELING (0751 GMT)

Investors are digesting a slew of corporate news out this morning, which will likely cement

gloomy sentiment and dent confidence as we head into the Q4 earnings season.

One of the first majors to release results, German automotive supplier Continental (IOB: 0LQ1.IL - news) has

warned operating margins will fall this year amid mounting pressure on the car industry. Its

shares are indicated 3 percent lower in early Frankfurt trade.

German carmaker VW may come under pressure from a report it could face recall of more cars

over its emissions scandal.

Adding to the chipmaker sector's mounting woes after Apple (NasdaqGS: AAPL - news) 's warning earlier this month will

be news from Anglo-German chip designer Dialog Semiconductor, which posted preliminary Q4 sales

at the low end of its target range. The Apple supplier's shares are seen opening as much as 5

percent lower.

Some good news on the high street: JP Sports, Britain's biggest sportswear retailer, has

forecast FY profits at the upper end of expectations and its shares are indicating up at the

open.

Elsewhere on the high street, Debenhams (Frankfurt: D2T.F - news) has earmarked as many as 90 of its high street

stores for closure, more than half the current total, as part of a radical turnaround plan,

according to a Daily Telegraph report.

Dealmaking captured other headlines, with pan-European stock market operator Euronext (Euronext: ENX.LS - news)

officially launching its all-cash $729 million bid for Oslo Bors, just hours after the Norwegian

stock market operator's board said it had found alternative bidders.[ nL8N1ZE0TC]

Euronext offered to pay 145 Norwegian crowns per share of Oslo Bors, which would value the

whole company at 6.24 billion Norwegian crowns ($729 million), or about 625 million euros.

Ophir Energy (Other OTC: OPGYF - news) has rejected Indonesian oil and gas group Medco Energi's potential buyout

offer, saying it "undervalues" the British energy company.

Other headlines:

Unclear how deep and lasting Germany's economic problems are -ECB's Nowotny

Italy Treasury minister sees stagnation rather than recession

Italian senator says rules prevent Carige nationalisation - report

Banco BPM CEO rules out tie-ups at present given market uncertainty

Bids for French Elior's Areas catering unit due end Jan-sources

Vinci Airports reports higher traffic figures

U.S. warns German companies of possible sanctions over Russian pipeline

Julius Baer (LSE: 0QO6.L - news) proposes SIX Group's Lacher as new chairman

T-Systems to sell mainframe unit to IBM (Swiss: IBM-USD.SW - news) -Handelsblatt

Fraport (EUREX: 1234108.EX - news) - 4.9 Million Frankfurt Passengers In Dec. 2018, Up 7.8 Pct

German antitrust body opposes Siemens (BSE: SIEMENS.BO - news) -Alstom (LSE: 0J2R.L - news) merger-report

(Josephine Mason)

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CHINA DATA SPOOKS EUROPEAN SHARES (0728 GMT)

European futures have opened firmly in the red, as predicted by financial spreadbetters

earlier, after China's weaker-than-expected monthly trade data spooked investors, reinforcing

worries about the faltering health of the world's No. 2 economy and damage from Washington's

trade spat with Beijing.

Exports unexpectedly fell the most in two years in December, while imports also contracted,

suggesting China's economy may have cooled faster than expected late in the year, despite a slew

of growth-boosting measures in recent months ranging from higher infrastructure spending to tax

cuts.

China's December exports unexpectedly fell 4.4 percent from a year earlier, with demand in

most of its major markets weakening. Imports also saw a shock drop, falling 7.6 percent in their

biggest decline since July 2016. Analysts had expected export growth to slow to 3 percent with

imports up 5 percent.

Signs of a cooling Chinese economy are increasing: on Monday, China's top auto industry

association confirmed sales in the world's top car market went into reverse for the first time

since the 1990s, while data showed that foreign direct invesment into North America and Europe

fell to a six-year low in 2018.

On Friday, Reuters reported the government is preparing to lower its growth target of 6-6.5

percent in 2019 compared with last year's target of "around" 6.5 percent.

(Josephine Mason)

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EUROPEAN SHARES EXPECTED TO FALTER (0622 GMT)

European shares' longest winning streak since November is expected to falter today after

surprisingly weak trade numbers from China exposed further cracks in the world's second-largest

economy, renewing worries about a global economic slowdown ahead of Q4 earnings season.

UK investors will also remain on edge ahead of the Brexit vote in Parliament tomorrow too.

"Economic risks along with geopolitical uncertainty are still set to remain front and centre

this week, as the US government shut down heads into its fourth week, and tomorrow the UK

parliament votes on Prime Minister Theresa May's highly contentious Brexit withdrawal

agreement," said Michael Hewson, chief market analyst at CMC Markets UK.

Asian shares and U.S. futures hit the skids overnight after the shock drop in Chinese

exports, cementing fears that Washington's trade war with Beijing continues to bite.

The data will also likely offset news that Beijing's top negotiator will visit the U.S.

capital later this month to try and agree a truce to end the tit-for-tat trade dispute between

the world's top economies.

"Despite last week's gains, it remains premature to sound the all clear. Markets are still

very much in sell the rally mode given how far below last year’s peaks we still are," said

Hewson.

Financial spreadbetters at IG (Frankfurt: A0EARV - news) expect London's FTSE to open 32 points lower at 6,886,

Frankfurt's DAX to open down 102 points at 10,820 and Paris' CAC to open 50 points lower at

4,731.

(Josephine Mason)

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