LIVE MARKETS-Closing snapshot: May mayhem continues

* STOXX 600 hits lowest since March 11 as trade row grows

* Pan European index closed 1.4% lower

* China threatens to retaliate using its vast rare earths resources

* Elekta and ProSieben rally

May 29 - 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: rm://helen.reid.thomsonreuters.com@reuters.net

CLOSING SNAPSHOT: MAY MAYHEM CONTINUES (1545 GMT)

What a day! STOXX 600 closes 1.4% lower and all major sectors were in red as fears of a

trade war induced recession rise.

European shares have now lost about 5% or half-a-trillion euros in value since U.S.

President Donald Trump's tweet on May 3 which rekindled fears of a trade war between the world's

two biggest economies.

Swedish radiation therapy equipment maker, Elekta, was one of the very few stocks

bucking the trend today. Its shares jumped 19% after Q4 profit raced past expectations.

Retail, tech and basic resources indexes dropped 2% or more on day. European steel makers

declined after ArcelorMittal cut production for the second time this month.

Euro-zone banking index is barely positive for the year with most of this year's

gains wiped off in just over one month. The index fell 1.7% on day -- no it was not the Italian

banking index weighing on them today.

Italian banks were 0.3% higher on Wednesday, driven by strong gains at UniCredit, which a

trader cited to tightening Italy-Germany bond yield spread.

"Wake up call!" - that's how a trader explained the slump in banking stocks.

"There were no fundamental explanation as to the recent bank sector outperformance," he

added.

(Thyagaraju Adinarayan)

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MORE DEALMAKING IN TV? (1145 GMT)

Mediaset's purchase of nearly 10% of German peer Prosiebensat.1 has put

European TV broadcasters back in focus with investors wondering whether this move is a prelude

to more dealmaking to come in the battered sector.

UBS analysts led by Richard Eary don't think so, at least in the near term.

"We have long argued there is a lack of material synergies from a Pan-European FTA-TV

consolidation given language barriers with advertising and content spend conducted locally,"

they say.

"Synergies do exist from technology (OTT platforms, addressable technology) and a stronger

regulatory voice but these are not material... and are already happening," they add, referring

to platforms like Salto, LovesTV and BritBox.

On top of that, ownership structures which see the presence of majority shareholders holding

a firm grip on broadcasters and the sector's high leverage may be additional hurdles, they say.

Shares in Mediaset, Mediaset Espana, Atresmedia, TF1, RTL

, ITV and Prosiebensat.1 have all underperformed the broader STOXX 600

benchmark over the last 6 months, while analysts have continued to cut their estimates for the

broader media index - 13 straight weeks of downgrades.

And looking at the latest Q1 numbers, UBS said they highlighted the headwinds the sector is

facing.

(Danilo Masoni)

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SMOKED! (1134 GMT)

We just wrote about booze stocks and how they've outperformed wider indices YTD, now let's

talk about cigarettes and how that's leaving a bad taste in investors' mouth.

Stocks of British American Tobacco, Imperial Brands, Altria and

Philip Morris are slumping for the second straight day after Nielsen data showed that

cigarettes volume decline worsened.

Analysts have turned more bearish on tobacco stocks with "sell" calls rising recently. For

instance, there were no "sell" ratings on Imperial last June, now 4 out of 19 analysts covering

the stock have a "sell" rating.

Similar trends are observed in other tobacco stocks.

BAT is poised for its worst day since January and Imperial Brands is hovering near 8-year

lows after Nielsen data showed a whopping 11.2% decline in cigarette volume for 4 weeks ending

May 18 compared with the previous four weeks.

Credit Suisse says the Nielsen volume data has been weaker than those reported by the

companies and Wells Fargo says it still expects a 6% decline for 2019 versus Altria's 4-5%

expectations.

Are we getting rid of bad habits? Note: Beer sales in the U.S. also declined

(Thyagaraju Adinarayan)

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CHECKING THE ECB'S TOOLBOX (1113 GMT)

The market now expects no rate cuts until early 2022, and even reflects rising expectations

for an interest rate cut by year-end.

So it's no surprise that many investors are seeking clarity on the other tools the ECB may

be able to use to ease financial conditions.

There's been a lot of talk about the ECB returning to some forms of monetary policy easing

in the event economic conditions deteriorate further.

"An extension of QE into riskier private-sector assets - such as bank bonds or ETFs -

appears feasible in principle, but would come with significant institutional risks and therefore

seems unlikely," write GS economists.

"The hurdle is lowest for a maturity twist on the ECB's sovereign bond portfolio and

additional corporate bond purchases. This intermediate easing option could be called for if

growth remained subdued over the coming quarters and core inflation failed to pick up, but would

likely only deliver a moderate boost to financial conditions."

But the central bank will likely stop short of returning to full-blown quantitative easing,

they reckon.

(Helen Reid)

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PROBABLY THE BEST SECTOR IN THE WORLD.... (1034 GMT)

Carlsberg admitted last month its lager was probably not the best in the world (https://bit.ly/2XdGTos)

as the Danish brewer launched a massive rebranding effort to lure younger drinkers.

But it doesn't seem to be hurting investors' appetite for the stock. The company and its

rivals are among the best performers so far this year, a clear sign that investors are betting

on trade tensions boosting a thirst for booze.

This month food and beverage stocks have overtaken tech as the best performing

sector since January, rising more than 20% year to date, while telecoms remain the only industry

in negative territory.

Within the sector, Carlsberg, Anheuser Busch and Heineken are among the top gainers, each up

more than a quarter. That kind of performance may undermine the idea that investors increasingly

want to steer clear of companies that make money from people's addictions, as seen with Norway's

pension fund yesterday.

It's also the only sector across Europe still in positive territory since May 3, the last

trading day before U.S. President Trump plunged the Washington-Beijing trade talks into fresh

disarray. Even utilities, the other popular defensive play, are down now.

Perhaps unsurprisingly, the row has inflicted the most pain on car and auto supplies stocks,

which are exposed to both Chinese and U.S. markets and have fallen almost 12% this month.

"The latest geopolitical developments keep on vindicating our quintessentially

defensive-friendly/cyclical-unfriendly allocation," says Stéphane Barbier de la Serre, macro

strategist at Makor Capital Markets. He's been overweight food and beverages and underweight

banks for the last three months.

The rally in beer stocks might lose its fizz if it's a cooler summer. The latest Nielsen

data shows a sequential decline in beer sales in the U.S. for four weeks through May 18 just

ahead of the Memorial Day weekend, which kick starts the U.S. summer.

(Josephine Mason)

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OPENING SNAPSHOT: TWO-WEEK LOW AS TRADE TENSIONS RATCHET UP (0719 GMT)

European stocks hit a two-week low in early trade as U.S.-China tensions heated up, with the

STOXX 600 down 1.1% and the DAX down 1.2%.

Chipmakers and carmakers are under pressure in a typical move after trade talk got a touch

more tense with China's threat to use rare earths in retaliation against the U.S..

Basic resources stocks are the worst-performing, down 1.6% as ArcelorMittal drags the sector

down. Shares in the steel producer are down 5.8% after it cut steel output in Europe further,

hit by weaker market demand in the region.

Among gainers, Elekta is soaring up 14% to a three-month high, topping the STOXX after its

profit beat. ProSiebenSat.1 is jumping 7% on Mediaset's stake purchase.

Casino meanwhile is down 4.3% after S&P cut its rating on the supermarket chain's credit to

"B" and the company announced it would not deliver an interim dividend.

(Helen Reid)

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WHAT'S ON THE RADAR: BROADCASTERS, ELEKTA, CASINO (0640 GMT)

Threats from China that it could retaliate against the U.S. by using its dominant position

as an exporter of rare earths as leverage in an ongoing trade war are sinking European stock

futures on Wednesday with the especially trade-sensitive DAX set to fall 0.9% at the open.

Dealmaking in Europe’s broadcasting sector is a driver with shares in Germany’s

ProSiebenSat.1 jumping 9% in early deals after Italy's Mediaset announced an acquisition of a

9.6% stake in the German broadcaster.

Meanwhile in results, brake systems maker Knorr Bremse had strong results, raising its

guidance for the year after reporting order intake hit a record, helped by its rail and

commercial vehicle businesses. Its shares are up 3% in pre-market trading.

Swedish radiation therapy equipment maker Elekta reported Q4 earnings beat expectations, and

forecast profitability would improve in the new fiscal year. Traders expected the shares to jump

10%. Falling after results, however, is French catering company Elior after it cut its full-year

growth outlook.

Britain's Telford Homes reported record annual revenue, as an increased focus on

build-to-rent contracts helped it navigate a difficult housing market in London. Shares in

industrial software company AVEVA were seen rising 1-2% after it met market expectations with a

20% rise in profit.

Casino’s announcement that it will not pay an interim dividend in 2019, coupled with S&P

cutting its rating on the French supermarket chain to “B”, was likely to hurt the shares.

(Helen Reid)

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FUTURES FALL AS U.S.-CHINA TENSIONS RISE (0618 GMT)

Futures across the euro zone and UK are down 0.5 to 0.7%, with the trade-sensitive DAX

leading falls, as investors dump risky assets in the face of escalating threats of retaliation

from China.

On the stock level, shares in ProSiebenSat.1 are jumping 8.9% in early deals after Italy's

Mediaset announced an acquisition of a 9.6% stake in the German broadcaster.

British industrial software company AVEVA met expectations with a 20% rise in full-year

earnings, saying it's confident it will meet medium-term targets.

In further headlines:

Telford Homes FY Pretax Profit 40.1 Mln Stg Vs 46 Mln Stg

UK software group AVEVA confident after 20% rise in profit

Mediaset Buys 9.6% Of German Broadcaster Prosiebensat.1

Experian Appoints Mike Rogers As Chairman

France pledges to fight for plant where GE plans 1,044 job cuts

Competition watchdog consults on Provident, NSF merger

(Helen Reid)

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CHINA'S RARE EARTHS THREAT, RESULTS FROM KNORR BREMSE, ELEKTA, ELIOR (0556 GMT)

In a sign of the extent of ill feeling towards the Trump administration after a ban on

Huawei, China's Communist Party newspaper warned the U.S. that the country was ready to use rare

earths to strike back in their bitter trade war, saying in an extremely strongly worded

commentary "don't say we didn't warn you."

Also sapping risk appetite is Huawei's motion in its lawsuit against the U.S. government

asking to declare the 2019 National Defense Authorization Act (which instated the Huawei ban)

unconstitutional.

Meanwhile in company news, brake systems maker Knorr Bremse had strong results, raising its

guidance for the year after reporting order intake hit a record, helped by its rail and

commercial vehicle businesses.

Swedish radiation therapy equipment maker Elekta reported Q4 earnings beat expectations, and

forecast profitability would improve in the new fiscal year.

Knorr Bremse raises guidance on strong order intake

BRIEF-Elior Group H1 Revenue Up At 2.60 Billion Euros

Elekta Q4 core profit tops forecast

Finnish IoT company Uros' sales soar 175% last year

UBS believes regulatory costs have peaked, compliance chief says

HSBC plans retail wealth headcount boost; eyes Singapore expansion

(Helen Reid)

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EUROPEAN STOCKS TO DROP AS INVESTORS SHED RISK IN GROWTH SCARE (0529 GMT)

European stocks are set to tumble this morning, following a slide in Asia overnight as

investors rush into safer assets, seeking protection from a worrying spike in trade tension

between the U.S. and China which is likely to hurt global economic growth.

Asian shares sank on Wednesday and bonds rallied as investor sentiment soured over growing

worries about world growth with trade tensions between Washington and Beijing showing no signs

of easing.

The Trump administration said nine countries including China required scrutiny due to

currency practices.

Tensions over Italy are also bubbling with Deputy Prime Minister Matteo Salvini saying EU

budget rules should be changed.

Financial spreadbetters expect London's FTSE 100 to open 34 points lower at 7,235,

Frankfurt's DAX to open 85 points lower at 11,943, and Paris' CAC to open 55 points lower at

5,257.

(Helen Reid)

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(Reporting by Helen Reid, Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)