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LIVE MARKETS-Closing snapshot: Europe closes at 2-week low

* European stocks fall after pharma stocks slide * STOXX 600 closes down 0.1%, healthcare stocks weigh: Siemens Healthineers -6% * Autos drag Germany's DAX 0.3% lower * UK housebuilders rise on upbeat survey * Indivior soars after lifting profit guidance, Reckitt rises after U.S. settlement Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: CLOSING SNAPSHOT: EUROPE CLOSES AT 2-WEEK LOW (1601 GMT) Profit taking in pharma stocks has derailed the Powell-induced gains, pushing the STOXX 600 into the red in late afternoon trade and to its lowest close since June 28. Volumes were low though with only 80% of the daily 90-day average changing hands on the day. The pan European benchmark is now on track for its first weekly drop since late May. The healthcare index ended down 0.7% after the White House dropped plans for an overhaul of drug rebates, a programme that was expected to provide a big boost to drug companies' earnings. Worries that the White House will now ramp up its push to cut drug prices has unnerved investors. Autos and their supplies fell amid renewed worries that Washington will turn its attention to Europe amid the escalating trade tensions and after a string of sector profit warnings. (Josephine Mason) ***** HEALTH CHECK FOR PHARMA AS U.S. SHIFTS FOCUS TO HIGH DRUG PRICES (1527 GMT) European pharma stocks are taking a hit this afternoon on worries that U.S. Congress will now look at doing something about high drug prices. The White House announced earlier it's ditching its push for changes to the pharma rebate structure, providing some relief to the health insurance companies. "The bigger winner would have been drug companies under the rebate programme," said David Madden at CMC Markets. But since that's out of the window, now focus shifts back to debates about drug price control. U.S. Health and Human Services secretary Azar has said: "Congress now has the opportunity to do something about high drug prices" and that's roiling the pharma sector, which otherwise was enjoying a pretty decent rally since morning. Novo Nordisk, UCB, Astrazeneca and Roche are all down 2% each, dragging the STOXX pharma index 0.7% lower. Meanwhile, the world's largest maker of medical imaging equipment Siemens Healthineers has slumped 6% on worries about performance of its Diagnostics business. "We believe a potential further deterioration of the Diagnostics profitability in Q3 could jeopardise the company's ability to reach the bottom of their guidance," says broker Exane BNP. (Thyagaraju Adinarayan) ***** WHY BUY WHEN IT LOOKS EXPENSIVE? (1121 GMT) With U.S. equities trading at 18 times earnings, well above historic averages, and Europe at about 14 times (chart below), at a time when there's hardly any earnings growth expected, some investors are finding the premium increasingly difficult to justify. "I still feel the markets are baying for something that doesn't feel rational," says Neil Dwane, global strategist and portfolio manager at Allianz Global Investors. Investors are grabbing yield in bond proxies like utilities where they can and taking shelter in defensive sectors amid uncertainties over trade war, global growth worries, Brexit etc. But with some sectors getting particularly crowded as investors pile, is that a good strategy? "We have had this rotation into defensiveness but it's almost like it's been defensiveness at any price," Dwane says. "You just think how much longer can that go on before people sit there and say, why am I buying these things on 25 times earnings and no earnings growth when I probably should just hold cash and wait till things come back down." (Marc Jones and Thyagaraju Adinarayan) ***** AUTOS: THAT UGLY DENT IS HARD TO FIX (0943 GMT) Auto stocks are in red again today and that's five straight sessions of losses. In build-up to earnings, auto stocks have lost about 2% since the start of July. They are still up 9% for this year as a broader stock market rally on hopes of rate cuts and a de-escalation of U.S.-China trade war offset fundamental concerns over a steep fall in global auto sales. "We remain cautious and would not buy into any rally as we believe the hope for a China sales recovery will likely reverse in July... Depressed production across regions is unlikely to pick up materially," analysts at Bank of America Merrill Lynch say. Recent warnings from Daimler, China's Geely, BASF and Fuchs Petrolub highlight the weakness in the sector. And more from today by European small-caps Aumann and Sensirion, and one from Hong Kong's Johnson Electric, shows nobody in the sector is spared and that we are far from seeing any recovery in this sector. BAML: "As we move into Q2/H1 2019 we see risks to companies' guidance again as the anticipated recovery in Q2 has not materialised and many market participants also flag risks and lack of visibility for H2, when we no longer anticipate a market recovery." Ouch! That hurts. On top of this, Trump might soon turn his attention back to Europe, especially on autos. Yesterday, a European Union member said the bloc should brace for U.S. tariffs on several fronts in the months ahead, just hours before Washington launched a probe of a planned French digital tax. Despite the sector trading at a huge discount (see below), investors are likely to avoid autos until there is some comforting news. (Thyagaraju Adinarayan) ***** OPENING SNAPSHOT: AUTO SUPPLIERS, UK HOUSEBUILDERS, RECKITT & INDIVIOR (0748 GMT) European stocks are 0.4% higher driven by oil & gas and defensive stocks as strong rate-cut hints by the U.S. Fed and higher crude oil prices brought back some cheer to markets after four straight sessions of losses. Gerresheimer is rallying 9% and on track for its best day since February after its results, while Fresenius Medical Care is leading Frankfurt's blue chip index, up 1.8%, after Washington pushed ahead with its plans to move more kidney disease treatment into patients' homes. UK housebuilders are rallying after an industry survey showed tentative signs of recovery in the battered housing market in June as interest among buyers rose for the first time since shortly after the 2016 Brexit referendum. Barratt Developments (+3%), Taylor Wimpey (+1.9%) and Persimmon (+1.5%) were among the top risers on the FTSE 100. Barratt is getting additional boost from bullish broker notes by Morgan Stanley and Berenberg. Reckitt Benckiser was among the best performing stocks on FSTE 100 after it reached settlement in a U.S. probe related to its involvement in the mis-selling of Suboxone in the U.S. Jefferies sees the resolution of uncertainty as a positive, while among negatives the broker believes the company might be barred from participation in other Federal programmes. Meanwhile, FTSE small-cap Indivior, which Reckitt used to own, is soaring 40% after sharply increasing its outlook driven by lower-than-expected erosion of Suboxone film by generic competition. A slew of warnings by small-cap auto/industrial suppliers are hitting large-cap car parts suppliers Valeo and Continental. JohnsonElectric slumped 10% in Hong Kong after the motor manufacturer forecast sharp decline in first-half profits citing a decline in light vehicle production globally, Germany's Aumann and Switzerland's Sensirion flagged similar issues and warned on profits. Aumann has slumped 18% and Sensirion is down 8%. (Thyagaraju Adinarayan) ***** STOCK FUTURES RISE ON RATE CUT HINTS, BUT WORRIES ABOUT RESULTS WEIGH (0642 GMT) European stock futures are rising 0.4% to 0.5% as investors seem to be shifting focus back to rate cuts after U.S. Fed chairman Powell's testimony strongly hinted at "insurance" cuts later this month. But, global growth worries and the impact on corporate profits could keep a lid on gains as the second-quarter earnings season gets underway. Last afternoon's trading highlighted the nervousness among investors after Europe swung from negative to positive to then closed in the red. That's "a neat summary of the current battle of influence between central bank support and the still cloudy outlook for economic growth and hence corporate profits," Ian Williams, economics & strategy research analyst at Peel hunt said. Germany's Aumann, Krones and Deutsche Beteiligungs have issued warnings on profits, sending their shares down 8-10% in premarket trade. Europe's largest sugar refiner, Suedzucker, is seen 7% lower as it continues to struggle with a collapse in world sugar prices. In positive news, Barry Callebaut is rising 2.6% premarket after the Swiss chocolate maker confirmed its mid-term guidance and posted an acceleration in sales volumes for the nine months to May 31. But news not related to results may take the spotlight this morning. The boss of Europe's Ryanair has warned the impact of the prolonged grounding of Boeing's 737 MAX on the budget airline's growth plans may start to spill over to next summer if the airplane is not flying again by November. Swiss Re is seen 0.5% lower after suspending its planned $4.1 billion public offering of its UK life insurance company ReAssure citing weak demand from institutional investors. Reckitt Benckiser shares could be hit after it said it would pay up to $1.4 billion to resolve all U.S. federal investigations into the firm in connection with the sales and marketing of Suboxone Film by its former prescription pharma business Indivior. Reckitt had set aside just $400 million relating to the issue. U.S. criminal charges accused Indivior, formerly owned by Reckitt, of illegally increasing prescriptions for its opioid addiction treatment Suboxone. In latest Deutsche Bank news, the U.S. Justice Department is investigating if the German lender violated foreign corruption or anti-money-laundering laws in its work for state fund 1Malaysia Development Berhad (1MDB), the Wall Street Journal reported. Dialysis machine maker Fresenius Medical Care shares are up in premarket trade after the U.S. announced plans to change kidney disease treatment. Key corporate headlines: Suedzucker quarterly earnings slump after sugar price collapse Swiss Re suspends ReAssure IPO amid weak demand Barry Callebaut confirms guidance as sales growth picks up U.S. probes Deutsche Bank's dealings with Malaysia's 1MDB - WSJ UK's Reckitt to pay up to $1.4 bln to resolve Indivior probe Ryanair sees risk to 2020 growth if 737 MAX grounded beyond November Norwegian Air CEO Bjoern Kjos steps down (Thyagaraju Adinarayan) ***** EUROPE SEEN HIGHER ON STRONG HINTS OF RATE CUT BY FED (0530 GMT) European stocks are expected to open higher this morning as U.S. Fed Chairman Jerome Powell's testimony before Congress reinforced expectations of a rate cut later this month. The commentary drove U.S. stocks to fresh record highs last evening. Financial spreadbetters IG expect London's FTSE to open 26 points higher at 7,557, Frankfurt's DAX to open 47 points higher at 12,421, and Paris' CAC to open 27 points higher at 5,595. Oil & gas stocks in focus after crude prices soared 4.5% last night after U.S. crude inventories shrank and as major producers cut nearly a third of offshore Gulf of Mexico production ahead of an expected storm. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)