LIVE MARKETS-Closing snapshot: three in a row
* European stocks close higher
* Autos rise on hopes of suspension of U.S. tariffs threat
* Sodexo jumps after Q3 sales update
* U.S. tariffs on Chinese imports to go into effect on July 6
LONDON, July 5 (Reuters) - Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored today by Kit Rees. Reach her on
Messenger to share your thoughts on market moves: kit.rees.thomsonreuters.com@reuters.net
CLOSING SNAPSHOT: THREE IN A ROW (1603 GMT)
European shares have closed in the black for the third session in a row, not bad considering
that the scenario of a full-blown trade war is still in every investor's mind.
The fact that there is a sense that the European Union might escape the wrath of Trump and
avoid being at the centre of the dispute is definitely helping.
Today's rise was led by carmakers on hopes the United States will suspend threats to impose
tariffs on cars imported from the EU.
(Julien Ponthus)
*****
WORLD CUP: OFF-THE-PITCH ACTION (1457 GMT)
Just because there are no games today at the soccer World Cup, it doesn't mean there's no
action going on.
Shares of Italy's Serie A champions Juventus are up almost 10 percent amid
speculation that Portuguese superstar and serial Ballon d'Or winner Cristiano Ronaldo could join
the Turin side from Champions League winners Real Madrid.
As a reminder, at the start of the World Cup, the Thomson Reuters Intelligence team noted
that the combined M&A activity for 2018 so far of Senegal, Tunisia, Panama, Uruguay, Iran,
Croatia, Costa Rica and Iceland -- which was $973.6 million at the time -- wouldn’t be enough to
meet the reported 1 billion euros ($1.2 billion) buyout clause that Real Madrid had in place for
Ronaldo.
Now, the game changer, or so goes the rumour, is that the buy-out fee has been slashed to
closer to 100 million euros. More reasonable maybe but not exactly small change and still over
the half the market capitalisation of French soccer side Olympique Lyonnais. Portugal
and Ronaldo exited the World Cup on Saturday, the question is will the goal machine now leave
Madrid too?
(Julien Ponthus and Marc Jones)
*****
A NOT-SO-OPTIMISTIC VIEW ON GLOBAL TRADE (1343 GMT)
And back to trade.
"The risk of a full-blown trade war is high — not least because both sides believe strongly
that they are in the right," says Charles St Arnaud, senior investment strategist at Lombard
Odier Investment Managers.
"The dispute has already, in our view, affected investors’ risk tolerance, leading to the
underperformance of many risk assets. There is significant potential for a period of tit-for-tat
retaliation," St-Arnaud warns, adding that investors need to monitor their investments in
equities and emerging markets in particular.
(Kit Rees)
*****
NOW, ABOUT THE BIGGER PICTURE (1330 GMT)
With European markets now firmly in positive territory despite the overnight gloom from
China, now is perhaps a good time to take a step back from the day-to-day trade war swings and
look at the bigger picture.
As many investment houses have stressed in their mid-year outlook, things don't look that
bad for global growth in general and European equities in particular.
"Despite markets being more volatile than in 2017, our base case scenario remains one of
robust global growth and contained inflation," BNP Paribas wrote in its quarterly note on asset
allocation.
"This underpins our bullish view on equities, with a preference for Euro zone equities where
we see positive earnings growth prospects and room for margin expansion," the French bank's
analysts said, adding that their "optimistic roadmap" took into account "political risk, trade
protectionism and softer global growth."
Anyhow, according to BNP Paribas, European equities is the place to be:
(Julien Ponthus)
*****
ZERO AUTOS TARIFFS - A DARING THOUGHT (1234 GMT)
It's good to look on the bright side of life, and Gary Paulin, head of global equities at
Northern Trust Capital Markets, has explored the intriguing - if "unlikely" - scenario of a zero
tariff world for autos stocks.
Paulin writes that, if the offer from the U.S. ambassador to German car chiefs also included
trucks, then this would benefit Daimler the most as trucks attract higher tariffs
than cars.
But it could be painful for anyone caught on the wrong side of the tariff trade if it all
ultimately amounts to nothing.
"While the prospect of ZERO tariffs seems unlikely, the market seems to have under-priced
that probability such that any softening away from hard line trade wars toward something else
could be painful for those underweight/short," writes Paulin.
(Kit Rees)
*****
TRADE: "THE NOISE HAS GOTTEN HARDER TO IGNORE" (1041 GMT)
That what Joseph Amato, president and CIO – equities at Neuberger Berman says about the
trade spat between the U.S. and China.
But even so Amato, along with other investors, isn't expecting there to be a full-blown
trade war situation.
"Risks are rising from this game of chicken. Markets are not yet ready to trust the Trump
administration on trade negotiations. The next few months will be a vital proving period for
that trust, during which the noise and anxiety are likely to increase. We still believe the two
biggest players are likely to swerve from their collision course and avoid a truly damaging
outcome," says Neuberger Berman's Amato.
Larry Lau, manager of the Trium Diversified Macro Fund, sees more volatility in the
near-term and a "strong reaction as markets sniff a resolution."
For now, stocks appear quite happy to hope that some kind of resolution is on the cards,
though trading could remain choppy in the meantime.
(Kit Rees)
*****
EARLY SNAPSHOT: EUROPEAN STOCKS IN POSITIVE TERRITORY (0747 GMT)
Following a flat start to the session, European stocks have accelerated gains thanks to a
boost from autos, which are the top-gaining sector following a report that the U.S. has offered
to suspend threats to impose tariffs on cars from the European Union.
However, trading could remain choppy ahead of tomorrow when U.S. tariffs on Chinese goods
are set to go into effect.
Here's your early snapshot:
(Kit Rees)
*****
WHAT WE'RE WATCHING AHEAD OF THE OPEN (0637 GMT)
It's set to be a quiet session for European shares with futures pointing to a broadly flat
start ahead of tomorrow's deadline for U.S. tariffs on $34 billion of Chinese imports to go into
effect.
The uncertainty over global trade has meant that stocks have been pretty rangebound this
week, and are set to end the week unchanged following two weeks of straight losses.
While the Q2 earnings season is still a little while away, a number of British companies
have given various updates including housebuilder Persimmon, Primark owner AB Foods and
Superdry, the latter two which will provide further evidence as to the health of the UK high
street.
Here are this morning's key headlines:
France's Sodexo keeps goals despite weaker Q3 sales
Persimmon's revenue rises 5 pct on higher sales, prices
Primark owner AB Foods maintains full-year profit guidance
Glencore announces $1 bln share buyback
Superdry posts double-digit growth in FY revenue, pretax profit
US offers German car bosses 'zero tariffs' solution to trade row-Handelsblatt
Airbus CEO says expects results from CSeries deal in time for Farnborough
Airbus CEO worried US trade dispute escalation could impact air traffic
Italy's Generali to sell 89.9 pct of German life insurance portfolio to Viridium
WPP warns Sorrell he could lose payout over M&A clash - source
Proxy advisor ISS backs Premier Foods in battle with Oasis
Thyssenkrupp, Tata Steel may need asset sales to get EU nod for JV
FOCUS-Bar by bar, Heineken battles AB Inbev in Brazil
Content-hungry bidders circle 'Big Brother' maker Endemol
Britain's Lloyds offers $100 million so far to HBOS fraud victims
Britain's JLR says 'bad Brexit' would mean it could not stay in UK
SBM Offshore: Brazilian court orders Petrobras to withhold some
payments
India's Future Lifestyle Fashions to invest about 1.40 bln rupees in Koovs
GRAPHIC-Trade war could hurt these economies far more than U.S., China
Investors demand 500 companies disclose more data on employees
German industrial orders rebound with stronger-than-expected rise in May
IMF cuts German 2018 economic growth forecast to 2.2 pct
(Kit Rees)
*****
EUROPEAN STOCKS FUTURES OPEN BROADLY FLAT (XX GMT)
It looks like trading is going to remain rangebound today as European stocks futures have
opened broadly unchanged.
Analysts are pointing to ongoing tensions over global trade.
"With the continued uncertainty as to what the actual next move will be, from either power,
traders were opting to sit on the side lines," analysts at London Capital Group said in a note,
referring to the U.S. and China.
Here's your snapshot:
(Kit Rees)
*****
MORNING CALL: EUROPEAN SHARES SEEN OPENING FLAT (0532 GMT)
Good morning. European shares are expected to open roughly unchanged, according to financial
spreadbetters, ahead of a U.S. deadline to impose tariffs on Chinese imports.
"While trade tensions could escalate in the near term, we remain optimistic that the risks
will diminish in coming months," analysts at Credit Suisse Wealth Management said in a note.
Spreadbetters saw Britain's FTSE 100 opening flat, Germany's DAX flat and France's CAC 0.1
percent lower. Futures for Wall Street indicated a mixed start for U.S. stocks later in the day,
while Asian equities were in negative territory as markets remain on edge.
(Kit Rees)
(Reporting by Kit Rees and Julien Ponthus)