LIVE MARKETS-Closing snapshot: Europe snaps 4-day winning streak

* European stocks slip

* Henkel (LSE: 0IZ8.L - news) biggest faller after announcing increased investments

* China Q4 GDP growth in line at 6.4%

* Overall 2018 growth slowest since 1990

* NYSE closed for Martin Luther King Day

Jan 21 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to

share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net

CLOSING SNAPSHOT: EUROPE SNAPS 4-DAY WINNING STREAK (1659 GMT)

It's been a day of slight losses in Europe with data confirming an economic slowdown in

China and persistent Brexit uncertainty pushing the pan-regional STOXX 600 index

down 0.3 percent from 6-week highs to score its first negative day in five.

Other regional bourses were also slightly in the red with the closure of US markets for the

Martin Luther King Day likely reducing afternoon activity.

"Even (Taiwan OTC: 6436.TWO - news) with the Chinese data dump that greeted the European markets at Monday’s open, the

session turned out to be a bit of a snooze, lacking an injection of energy from the US thanks to

Martin Luther King Day," said Connor Campbell, analyst at Spreadex.

The FTSE ended just flat, perhaps highlighting how investors remained unimpressed by efforts

from PM May to break the deadlock over her Brexit deal.

Here's your snapshot with provisional closing levels:

(Danilo Masoni)

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HISTORY IS ON THE SIDE OF 2019 (1531 GMT)

Interesting fact dug up by Russ Mould at AJ Bell: the third year of a U.S. president's reign

are usually the best for Wall Street, meaning that History may be on 2019's side.

"Since 1945, the Dow Jones Industrials has fallen just three times in the third year of 17

different Presidential third terms, defined as running from the inauguration date of 20 January,

and generated an average capital return of 12.6%", the investment director found.

Nota bene: Investors should keep in mind that statements such as Nikita Khrushchev's

"History is on our side" in 1956 are no guarantees on future returns.

(Julien Ponthus)

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UK STOCKS: LOW VALUATIONS REFLECT SLUGGISH GROWTH EXPECTATIONS (1448 GMT)

While many trumpet the virtues of UK domestic stocks based on their cheap valuations and the

idea they are mispricing the threat of Brexit, Goldman Sachs (NYSE: GS-PB - news) equity strategists disagree.

For them, "Valuation is not really the issue with UK domestic companies... The issue is the

lack of underlying growth."

So, to an extent, the damage from Brexit has already been done, with the economic

uncertainty hurting companies.

"There is no mispricing: the low level of valuation is a function of low expected growth,"

they write, adding: "In most Brexit scenarios this is likely to persist, in our view."

A convincing comeback would, therefore, depend on investors becoming convinced of better

growth prospects.

There is, however, "definitely" room for more upside if a no-Brexit or very soft Brexit

scenario (a Norway-style deal) becomes more likely in the coming weeks - and today's plan B from

PM May will go some way towards determining that.

Goldman's FX strategists expect EUR/GBP to move to 0.85 over three months, a rise of just

under 5 percent for sterling. And because moves in the pound are more or less directly reflected

in domestic stocks, the equity strategists led by Sharon Bell expect a similar-sized rally for

them in the event of a no-Brexit or very soft Brexit.

As you can see below, Goldman's UK domestic basket has both low P/E and low expected 2020

sales growth, while their UK international basket has much stronger expected sales growth and a

higher valuation accordingly.

(Helen Reid)

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WHAT DO CITI, CONTI AND SAMSUNG TELL US ABOUT THE EARNINGS SEASON? (1422 GMT)

All three cut their guidance but their share price reaction wasn't dramatic and JP Morgan

sees that as encouraging as the fourth quarter reporting season gets into gear and is likely to

see more downward revisions.

"Investors already anticipate weaker results and might end up adding post the profit

warnings," say strategists at the U.S. investment bank led by Mislav Matejka, highlighting how

this season marks a stark contrast to the second half of 2018 when any misses were punished

severely.

"Now (Frankfurt: 11N.F - news) , some argue that the market will not stabilise as long as earnings are being cut. We

disagree. The 2015-16 episode, the one we think the current backdrop has strong similarities to,

is a case in point," they add.

Equities bottomed out in February 2016, as much as 10 months before EPS revisions turned

positive, they note.

(Danilo Masoni)

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JANUARY SALES: IS THE "BREXIT" DISCOUNT THE REAL DEAL? (1324 GMT)

May's 'Plan B' speech is scheduled in just a few hours (1530 GMT) and so far the general

feeling is that a disorderly, chaotic, Armageddon-like no-deal Brexit is getting increasingly

unlikely after defiant MPs (BSE: MPSLTD.BO - news) inflicted a historic blow to the PM's EU exit plan last week.

There's also a feeling that the risk-discount, which has weighed on shares exposed to the UK

economy since the 2016 referendum, has lost much of its raison d'être (scuse my French).

A quick look at the data gives very similar price-earning ratios for the FTSE 250 (13.7) -

that's the most British segment of the London stock exchange (Other OTC: LDNXF - news) - and for the Euro Stoxx (13.2),

which is the Euro zone benchmark.

That would suggest that based on the PE prices there's not so much of a Brexit discount

there at all - quite on the contrary - even if the FTSE 250 and the Euro Stoxx ain't exactly the

same kind of apples.

But that would be overlooking that the FTSE 250 was actually more expensive prior to the

referendum.

As you can see below on 12-month forward PEs, the FTSE 250 has not caught up with the edge

it had on the euro zone before the referendum:

Another thing to consider before joining the January sales and buying the British midcaps is

the huge performance gap between companies with total or overwhelming exposure to the British

economy.

As you can see below (highlighted in yellow) from this Barclays (LSE: BARC.L - news) list of UK exposed stocks,

the breadth of performance within the same sectors shows the difficulty of stock-picking your

way through the Brexit discount.

With (Other OTC: WWTH - news) 100 percent exposure to the UK economy, Barrat Developments vs Countryside Properties

or Greene King (Frankfurt: A0F66P - news) vs JD Wetherspoon, unveil performance gaps of 45 percent and 88 percent

respectively!

A closer look at the price label can't hurt:

(Julien Ponthus and Helen Reid)

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WHAT DO U.S. BANK RESULTS POINT TO FOR EUROPE? (1202 GMT)

After European banks enjoyed a strong rally in 2019 so far (up 7.8 percent year-to-date),

Morgan Stanley (Xetra: 885836 - news) is sounding a cautious note ahead of Europe's big investment banks' results.

Look no further than American investment banks' results, Morgan Stanley analysts say, for

signs of strain for Europe. They note that U.S. banks highlighted slowing growth in Europe,

Brexit, and uncertainty in trade in Asia as main concerns.

These are of course more directly a worry for European behemoths Deutsche Bank (IOB: 0H7D.IL - news) , BNP Paribas (LSE: 0HB5.L - news) ,

Barclays, Societe Generale (Swiss: 519928.SW - news) and Natixis (LSE: 0IHK.L - news) . Soc Gen's vulnerability was highlighted already last

week with its profit warning.

"U.S. banks are seeing growth, healthy profitability that allows them to invest aggressively

in technology and reap the benefits (either via lower cost/income ratios for BAC for example, or

via 40 percent higher electronic FICC business for GS)," writes MS.

"On the other side, European banks are still in restructuring mode and in our view could be

cutting more to try and increase returns - Deutsche Bank the best example."

Morgan Stanley analysts reckon Deutsche Bank will keep losing market share. They prefer

wealth managers, with an overweight rating for UBS (LSE: 0QNR.L - news) : "Admittedly, the fourth quarter will see

lower AUM and weaker margins, but we think this is a cyclical downtick which could be reversed

in Q1," they write.

Below you can see that analysts' expectations for earnings are pretty low - meaning any sign

things are actually going slightly better will likely be very well received. Analysts have been

cutting their estimates since March last year - roughly 10 months straight.

(Helen Reid)

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UTILITIES, TIME TO LOOK ELSEWHERE? (1140 GMT)

The fourth quarter was a good one for utilities stocks as fear of a global economic

slowdown pushed investors towards investments less exposed to the cycle, but now that their

share prices have run quite a bit, is it time to look elsewhere?

Credit Suisse (IOB: 0QP5.IL - news) analyst Vincent Gilles acknowledges that valuations for the sector are no

longer attractive, but believes its dividend yield and earnings growth prospects actually are.

And in a time of uncertainty that's a plus.

"European utilities stocks should offer welcome predictability and earnings visibility in a

volatile equity market," he says.

Higher power prices, better volumes, still attractive regulated returns and falling

financial costs should result in growth acceleration in the next 2 years, CS says.

CS expects utilities to show a Compound Annual Growth Rate for EPS of 7.8 percent in

2018-2021, above the 5.8 percent of the overall European market. On top of that, CS doesn't see

gearing as an issue for the time being.

(Danilo Masoni)

*****

A POSSIBLE CASE OF MARKET OVER-REACTION TO GROWTH FEARS: LOGISTICS (1010 GMT)

The weak Chinese GDP data isn't hurting European shares that much and that's probably

because a lot of negativity has already been priced in during the tumultuous end of last year.

Asking whether markets have got ahead of themselves is thus a fair question. A possible case

of market over-reaction in Europe could be the logistics sector, where analysts at HSBC led by

Edward Stanford see some nice value appearing.

"The HSBC economics team thinks markets have overreacted to evidence of deteriorating global

growth," they say in a note.

Despite that, caution is still warranted, they believe, given the lack of visibility due to

the still unresolved Sino (Dusseldorf: 1205802.DU - news) -US trade tensions.

"The way ahead seems binary: if an agreement is reached share prices should re-rate and if

they do not we expect further disruption to volumes," they say.

"We turned more cautious on the sector in November 2018. We think this is still justified,

though value is now appearing," they add.

The chart below compares the PE changes for five European logistics firms - AP Moller Maersk

, Deutsche Post (IOB: 0H3Q.IL - news) , DSV (LSE: 0JN9.L - news) , Kuehne+Nagel, Panalpina

- to the consensus EPS and their share price moves, over the last 12 months.

(Danilo Masoni)

*****

FOLLOW THE (ETF) FLOW (0938 GMT)

ETFs (Shenzhen: 395013.SZ - news) in Europe are growing fast, and while the second-largest market for ETFs is still only

a quarter of the size of the U.S., it could catch up soon.

ETFs now own nearly 4 percent of the average STOXX 600 constituent, up from less than 0.5

percent in 2005, Citi quantitative strategists say.

The impact of such a rapid increase in ETFs' market share has been much debated with some

saying the products must be changing market behaviour. But Citi's ETF strategist Louis Odette

believes evidence that ETFs are distorting markets remains elusive.

Over time, it is clear stocks that have higher ETF ownership do outperform those with less

strong ownership (see Citi's chart below):

However, that effect is not linear: looking year by year the high-ownership stocks don't

consistently outperform.

"High ETF ownership stocks have outperformed the market over time but in distinct periods -

not consistently through time," Citi notes.

So how can investors play this ETF growth theme?

Attractive stocks which may have the added "kicker" of high ETF ownership and potential

flows include ING, Bayer (IOB: 0P6S.IL - news) , BASF and Vonovia (Milan: VNA.MI - news) , Citi says.

The list of stocks in the top quintile (or top 20 percent) by ETF ownership and rated "buy"

by Citi analysts also includes Siemens (BSE: SIEMENS.BO - news) , Volkswagen (IOB: 0P6N.IL - news) , Deutsche Wohnen (IOB: 0OBQ.IL - news) , adidas, and Total (LSE: 524773.L - news) . You can

see the full list here: https://tmsnrt.rs/2T1MqfY

(Helen Reid)

*****

OPENING SNAPSHOT: EUROPE TAKING CHINESE GDP DATA IN ITS STRIDE (0833 GMT)

Pan-European shares are taking a breather after four straight days' gains last week that saw

the index hit six-week highs, but in early dealings the markets are taking Chinese GDP data in

their stride.

That suggests much of the pessimism about the world's second-largest economy may be baked in

after months of nasty headlines (a slew of macro data as well as Apple (NasdaqGS: AAPL - news) 's warning earlier this

month and 2018 car sales falling for the first time since 1990s)

STOXX 600 is down 0.3 percent - Germany's exporter-heavy DAX is down 0.3 percent while the

FTSE 100 is up slightly even as investors brace for more Brexit tumult this week.

(Helen Reid)

*****

WHAT'S ON THE RADAR: SCOUT24 (IOB: 0RB8.IL - news) , WIENERBERGER (IOB: 0MKZ.IL - news) , WILLIAM HILL (Frankfurt: 633847 - news) (0744 GMT)

European stocks are expected to fall, with futures down 0.1 to 0.3 percent after a strong

rally at the end of last week took indices to six-week highs.

China’s fourth-quarter growth data showed 2018 was the weakest year for the world’s

second-biggest economy since 1990, confirming a slowdown which has sent markets in Asia and

worldwide into a spin. Asian markets held onto gains despite the news, but exporter-heavy

European stocks, many of which depend on demand from China, were likely to be hit.

The closure of U.S. markets for Martin Luther King Day will likely keep trading thin, but

there's a lot for traders to digest on the company news front.

Sources said EU antitrust regulators were poised to veto Siemens and Alstom’s plan to

combine to form a European rail champion, despite German and French support for the deal.

Also in M&A news, German online classifieds company Scout24 is seen jumping 10 percent after

it rejected a 4.7 billion euro takeover offer from private equity firms Hellman & Friedman and

Blackstone (NYSE: BX - news) , potentially paving the way for a bidding war.

Earnings started to flow in with Wienerberger and William Hill reporting.

Some good news for the construction sector as the world’s largest brickmaker, Wienerberger,

raised its dividend, saying it would reach the upper end of its 2018 earnings guidance thanks to

acquisitions and cost savings.

Bookmaker William Hill struck a more pessimistic note, saying it sees lower 2018 profit.

Shares (Berlin: DI6.BE - news) in French supermarket Casino could be moved after it announced it plans to sell 26

stores worth 501 million euros – in its latest step to reduce debt.

Pharma giant GSK and food delivery firm Just Eat (Frankfurt: A1100K - news) both announced management changes, with

GSK’s chairman to step down after more than three and a half years in the role and Just Eat’s

CEO Peter Plumb leaving with immediate effect.

(Helen Reid)

*****

FUTURES DIP AFTER CHINA DATA, AS BREXIT PLAN B AWAITED (0718 GMT)

Despite spreadbetters' calls for gains, European futures have opened down 0.1 to 0.3

percent, indicating a fall after China's fourth-quarter growth data showed 2018 was its slowest

year in 28 years.

Traders and investors will also be looking ahead to the next development on the Brexit front

with Prime Minister Theresa May set to present her plan B to parliament after her deal got

soundly defeated last week.

"Plan B to look suspiciously like Plan A," Societe Generale economists write. "We are rather

puzzled about what changes she intends to present... Presumably the debate on her plans in the

days that follow will discuss alternatives to her negotiated deal."

In UK company news:

William Hill sees lower 2018 adjusted operating profit

UK's Just Eat CEO Peter Plumb steps down

GSK Chairman Hampton to step down

Meggitt (Other OTC: MEGGF - news) signs 750 mln pound contract with engine maker Pratt & Whitney

Patisserie Still In Discussions With Bankers To Extend Standstill Of Bank Facilities

(Helen Reid)

*****

HEADLINES TO WATCH: ALSTOM (LSE: 0J2R.L - news) -SIEMENS, PROSIEBEN, CASINO (0655 GMT)

With results starting to come in thick and fast this week, there's also a lot of corporate

news to keep traders busy, despite today being slightly thinner due to U.S. markets being closed

for Martin Luther King day.

EU antitrust regulators are to throw a spanner in the works for Siemens and Alstom's plan to

create a European rail champion, sources said, despite Germany and France backing the deal.

Shares in ProSiebenSat. 1 Media could be moved by the firm's CEO Max Conze saying he saw

price increases by U.S. streaming giant Netflix (Xetra: 552484 - news) as potentially easing competitive pressure on

the group's core TV business.

In retail, further evidence of the drive for supermarkets to cut down on physical stores as

France's Casino sells six stores to rival Leclerc.

And potentially bad news for pricing power among British energy suppliers as data shows a

record number of customers switched supplier in 2018.

Nissan's Ghosn offers to wear electronic ankle tag for bail

Nissan, Renault (LSE: 0NQF.L - news) not ready to discuss new capital ties - Saikawa

ProSieben sees pressure easing as Netflix raises prices

Western Australia claims BHP owes up to $215 mln in underpaid iron ore royalties

Supermarket retailer Casino to sell six stores to rival Leclerc

EU to derail Siemens, Alstom's European champion plan - sources

Record (LSE: REC.L - news) number of British energy customers switched supplier in 2018 - data

Engie (LSE: 0LD0.L - news) set to sell some coal power plants to Riverstone -Les Echos

Italy regulator gives TIM's network separation plan thumbs down

(Helen Reid)

*****

EUROPEAN STOCKS TO SHAKE OFF WEAK CHINA GROWTH DATA (0616 GMT)

European shares are seen rising modestly this morning after Asian markets held on to gains

despite data showing China's economy cooled in the fourth quarter, dragging 2018 growth to the

lowest in 28 years (at 6.6 percent) and pressuring Beijing to roll out more stimulus.

Asian markets kept their nerve on Monday as data showed the Chinese economy slowed at the

end of last year, underlining the urgent need for more stimulus as Beijing wrestles with the

United States over trade.

The world's second-largest economy grew 6.4 percent in the fourth quarter from a year

earlier, as had been expected and matching levels last seen in early 2009 during the global

financial crisis.

Yet there were some bright spots with industrial output rising a surprisingly strong 5.7

percent, while retail sales rose 8.2 percent in December, from a year earlier.

Financial spreadbetters expect London's FTSE to open 15 points higher at 6,984, Frankfurt's

DAX to open 14 points higher at 11,220 and Paris' CAC to open 10 points lower at 4,866.

(Helen Reid)

*****

(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus)