LIVE MARKETS-Closing snapshot: dismal PMI cast pall over Europe

* European shares fall after disappointing PMIs * STOXX 600 down 0.8% for biggest one-day fall since Aug. 14 * DAX hits lowest in 2 weeks * Euro zone business growth stalls in September * Investors wait UK Supreme Court ruling on Brexit on Tuesday * * Travel sector stocks gain after Thomas Cook collapses 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 CLOSING SNAPSHOT: DISMAL PMI CAST PALL OVER EUROPE (1614 GMT) Gloom about the state of the euro-zone economy following dismal manufacturing data for Germany cast a pall over European stocks today, prompting a rush for the exits and sending the pan European STOXX 600 and euro-zone index down 0.8% and 1% for their worst day in weeks. Markit's flash composite Purchasing Managers' Index (PMI), which tracks both the manufacturing and services sectors, fell to 49.1 from 51.7 in the previous month. It was the first time since April 2013 that the reading fell below the 50 mark that separates growth from contraction. The usual suspects - Brexit, the trade war and the German auto industry - were likely to blame for the uncertainty among manufacturers while a softening domestic demand due to flagging labour market has started to rattle service providers. For the STOXX 600, it was the biggest one-day fall since Aug. 14 and the largest daily drop in a month for the euro-zone benchmark. Rising bond prices and falling yields in the UK and euro-zone knocked banks 2.8% lower. "The critics who claim the ECB's policy response was disproportionate got a rude shock today with the unexpected weakness revealed by the flash PMI," says Marc Chandler, chief market strategist at Bannockburn Global Forex. Defensives like food & beverage and utilities were the only gainers. (Josephine Mason) ***** THOMAS COOK: GAMECHANGER FOR TROUBLED TRAVEL SECTOR? (1435 GMT) Thomas Cook's demise has triggered a rally in tour operators - TUI and Dart Group - as investors bet on its rivals grabbing some market share in Europe's highly competitive holiday industry. Budget airlines easyJet and Ryanair have also jumped amid hopes that the closure will remove some of the overcapacity that has hammered ticket prices and eroded profits in recent years. TUI stands to benefit the most, according to Citigroup analysts who estimate Thomas Cook had about 8% of the UK tour operating market, compared with about 19% held by the German holiday company. In Germany, it had about 10%, compared with TUI's 17%. With Thomas Cook shutting up shop, TUI will also be the only remaining operator with significant retail presence in the UK. But it may not be the game changer the industry's been hoping for. In previous instances when rivals have gone bottoms up - Monarch and Air Berlin - the euphoria has proved to be shortlived before the lingering worries returned. JPMorgan equity analysts reckon it will also only be a brief fillip because existing concerns over Brexit worries, a stronger dollar, higher fuel cost, a fare war in Germany, delays with Boeing's MAX, and industrial unrest haven't suddenly gone away. The chart below shows the boost to TUI and low-cost carriers in the months after Air Berlin and Monarch closed, but the shares have been steadily falling since May last year. (Josephine Mason) ***** GERMAN CLIMATE PLAN: IS THAT FISCAL STIMULUS? (1112 GMT) The terrible PMIs out of the euro zone have promptly rekindled debate over what could policymakers do more to prop up the region's economy and speaking about stimulus, Germany's 54-billion-euros climate plan announced on Friday springs to mind. But it seems people aren't overly excited. "The macro impact from the climate spending package seems limited - this is not a proper fiscal stimulus," say UBS economists led by Felix Huefner. Under "very optimistic" assumptions, UBS estimates an up to 0.3 percentage points boost to GDP from the package - which compares to the 1 percentage point lift from the 2008/2009 stimulus. "The primary objective of more climate spending was not to boost demand, but rather to intensify efforts to meet the 2030 emissions reduction targets amid increased voter focus on environmental issues," UBS economists add. Meanwhile, SocGen says the package was a little underwhelming, as it didn't include a cash for clunkers scheme, which would have provided an immediate fiscal boost. Anatoli Annenkov, senior European economist and ECB watcher at ScoGen argues that unless there's an economic crisis, fiscal stimulus measures are unlikely to be a "gamechanger". That being said, UBS believes the package could well have a sectoral impact: investment in renewables (RWE, E.ON, Siemens-Gamesa), EV infrastructure (Schneider Electric, Siemens), EV (Valeo, Hella), and railways (Alstom, Knorr Bremse, Stadler Rail). (Danilo Masoni and Jospehine Mason) ***** GROWTH FEARS ARE BACK (0941 GMT) Flash PMIs from Germany and France not only crushed expectations of a timid recovery in manufacturing but also showed contagion to the service sector, heightening concerns over the fallout of a drawn-out trade war and deepening recession worries. No surprise then that after a 5-week positive run (and having the ECB already committed to indefinite stimulus) shares in Europe have taken the news as it is, ie quite badly, with traders quickly pointing out that policy support may not be enough. "The data will provide an excellent soundboard for investors to gauge the depths of the global manufacturing demise and this data will signal to policymakers that more stimulus is needed," says Stephen Innes, strategist at AxiTrader. And Connor Campbell, analyst at Spreadex, adds: "The Eurozone's flash PMIs gave the region rather severe cause for concern, suggesting the scale of the turnaround needed may go beyond the measures announced by the ECB earlier in the month". Euro zone stocks are down 1.3% led by rate- and growth-sensitive banks, while Germany's DAX has hit its lowest in nearly two weeks, down 1.6%. For more reading on today's PMIs surveys and ahead of data from the U.S. check out the following stories: * Euro zone business growth ground to a halt in Sept -PMI * German private sector shrinks in Sept for first time in over six yrs -PMI * French business growth slows unexpectedly in Sept (Danilo Masoni) ***** EUROPE DIPS, THOMAS COOK COLLAPSE LIFTS TRAVEL STOCKS (0738 GMT) European shares are off to a slightly weaker open but the collapse of Thomas Cook that has left hundreds of thousands of travellers stranded is giving a lift to rivals of the UK firm, while airlines are also getting a lift on expectations that the failure of the world's oldest travel firm will remove some overcapacity. Travel agent TUI has shot up 8.1%, making it the biggest gainer on the STOXX 600 and set for its biggest one-day gain since April, while budget airlines easyJet and Ryanair are rallying 5.7% and 2.8% respectively. The FTSE 350 travel & leisure index has hit its highest since October 2018, up 0.7%, while Europe's broader travel & leisure index is up 0.4%. Elsewhere losses prevailed on fresh uncertainty over the course of trade talks between the US and China, while investors were disappointed by weak German and French PMI. The STOXX 600 was last down 0.7%, while the FTSE was flat, helped by a weaker pound, as you see in the snapshot: (Danilo Masoni) ***** WHAT'S ON OUR RADAR (0659 GMT) European shares are expected to start the week on a softer footing amid fresh uncertainty over Sino-U.S. trade talks, with futures pointing to losses of around 0.2-0.3% for major euro-zone benchmarks while a weaker pound could help the FTSE outperform. On the corporate front, eyes on the travel sector after the world's oldest travel firm Thomas Cook collapsed, entering compulsory liquidation and leaving hundreds of thousands of travellers stranded. Thomas Cook shares have been suspended with immediate effect. Two traders said travel operator TUI could benefit from the demise of its rival and sees TUI shares opening up 4%. Eyes also on airlines, which could be supported as Thomas Cook’s collapse is expected to remove overcapacity in the sector. But package holiday provider On The Beach has warned of a one-time charge as it makes alternate arrangements for passengers affected by the shutdown. Other stocks linked to tourism such as Amadeus, Melia and NH HOTEL will also be on investors' radars. Elmos Semiconductor is seen rising as much as 5% after it agreed to sell Silicon Micro, while German real estate company Vonovia could be hit after it agreed to buy Swedish Hembla from Blackstone. Still in dealmaking, Bloomberg reported that private equity firm Advent is in talks to join Bain in its takeover bid for Germany's Osram, a move that could further fuel the bidding war with AMS for the lighting group. A profit warning from Deutz is seen sending shares in the engine maker down 5%. Marks & Spencer Group Plc is seen under pressure after its CFO stepped down after little more than a year. In the battered banking sector, Spanish banks could benefit after S&P’s upgraded the country's credit rating. Other stock movers: Vivendi set to widen legal battle against Mediaset beyond Italy-sources; Utility EDF warned of a 24-hour strike starting Monday Sept. 23; Sports Direct makes cash offer for Goals Soccer Centres; Deutsche Bank, BNP reach transition agreement for global prime finance platform; Budget carrier XL Airways seeks rescue deal with Air France; UBS won't pass negative interest rates to small savers -COO (Danilo Masoni) ***** EUROPE SEEN STARTING WEEK DOWN SLIGHTLY (0530 GMT) European shares are expected to start the week on a weaker footing following losses in Asia overnight and ahead of the latest flash PMI data for services and manufacturing. Spreadbetters at IG expect London's FTSE to open 6 points lower at 7,339, Frankfurt's DAX to open 32 points lower at 12,437, and Paris' CAC to open 15 points lower at 5,676. Most Asian share markets fell as investors waited for more clarity on the Sino-U.S. trade talks after recent negotiations. (Danilo Masoni) ***** (Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)