LIVE MARKETS-Closing snapshot: winning streak ends
* European stocks fall more than 1 percent
* STOXX ends six-day winning streak
* U.S. may impose tariffs on $200 bln of Chinese goods
* Wall Street slides
LONDON, July 11 (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: WINNING STREAK ENDS (1559 GMT)
A six-day winning streak abruptly ended today after the Trump administration raised the
stakes in the trade dispute with China by threatening tariffs on $200 billion worth of Chinese
imports. Losses were widespread: all country indexes fell with the main benchmarks falling by as
much as 1.5 percent. Here's your closing snapshot:
(Danilo Masoni)
*****
TRADE WAR: "HOPE IS NOT A STRATEGY" (1429 GMT)
Many investors have been shrugging off trade talk as simply rhetoric, and hoping Trump's
further tariffs plans don't materialise. But today's reaction to the administration's new list
of $200 billion of Chinese imports to be taxed suggests the market has begun taking it more
seriously.
"We are worried about tariffs but hopefully as with previous political moves by Trump he
starts very high and then dilutes his ideas," Artur Baluszynski, head of research at Henderson
Rowe, tells us.
"Hope is not a strategy, though, so we're preparing for the worst."
Baluszynski emphasises it's difficult to identify clear victims or winners as global supply
chains are so intricately connected, but says European companies exporting to China are
vulnerable, and that he has tried to avoid capital goods and other sensitive cyclical companies
like Caterpillar (LSE: 0Q18.L - news) and Boeing (NYSE: BA - news) .
"It's been very well flagged up since Trump's campaign that he's going to get into arguments
with China and anyone that he sees as an enemy because the U.S. is running a deficit with it,"
he adds.
Goldman Sachs (NYSE: GS-PB - news) analysts say the newly released list raises the probability further tariffs
will be implemented, but they add "the publication of the list is not a commitment to
implementation, which would need to be ordered in a separate step following a comment period."
They see the implementation of this next round of $200 billion, if it happens at all, as
unlikely until September at the earliest.
Whether Trump rows back on, or dilutes, these further tariff plans before then remains to be
seen.
(Helen Reid)
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RETURN OF THE BUY-BACK? (1331 GMT)
Buy-backs could be stepping back into the spotlight in Europe as cash-rich companies look to
offload some dollars (or euros) in the next 12 months.
UBS (LSE: 0QNR.L - news) has carried out a survey of around 600 company chiefs in the Euro zone and one-third of
respondents said they are likely to increase pay-outs to shareholders.
When asked to choose between pay-outs and reinvestment, around half said they were more
likely to return money to shareholders.
See below for UBS' findings:
(Kit Rees)
*****
MIDDAY SNAPSHOT: TRUMP TRADE THREAT WIPES OFF 3 DAYS OF GAINS (1128 GMT)
There is no softening in selling pressure on European market and U.S. futures are also
heading south after the Trump administration threatened to slap tariffs on an extra $200 billion
of imports from China, sharply escalating the trade war between the world's two biggest
economies.
"With (Other OTC: WWTH - news) escalating trade tensions between the world’s two largest economies presenting a
significant threat to global economic growth and stability, there are no winners... global
sentiment (is) expected to remain fragile," says FXTM analyst Lukman Otunuga.
The STOXX 600 is falling more than 1 percent, wiping off gains made in the previous three
session when a lack of bad news on trade helped investors focus on solid expectations for the
upcoming earnings season.
Here's your midday snapshot:
(Danilo Masoni)
*****
TELECOMS: A PLACE TO HIDE FROM TRADE WARS? (1051 GMT)
There's a lot of talk about how to build a defensive portfolio as the summer is shaping up
as a hot one on the trade war front.
One possible sector on the European stock market to consider for its defensive qualities is
telecoms, although its growth outlook remains challenged by continued competition.
Here's how Barclays (LSE: BARC.L - news) analysts led by Maurice Patrick see it.
"The sector has defensive characteristics (limited sensitivity to GDP growth, digitalization
driven cost cutting) and valuation is attractive with low but sustainable EBITDA and OpFCF
growth," they say in a note.
"After two and a half years of underperformance these characteristics could prove attractive
if concerns about global growth emerge," they add.
Europe's telecoms index has done slightly better then the broader market over the
last month, although it has clearly underperformed since the start of 2016, as you can see.
Turning to second quarter earnings, Barclays says it expects strength at Orange (LSE: 0OQV.L - news) ,
Telenor (LSE: 0G8C.L - news) and DNA (Frankfurt: 24D.F - news) .
(Danilo Masoni)
*****
IT'S COMING HOME TO FRENCH TV, EVIL KNIEVIL BETS AGAINST ENGLAND (AGAIN)(1037 GMT)
Among the handful of France's biggest caps sailing through the trade war storm in
positive territory this morning is - surprise, surprise - national broadcaster TF1 (Paris: FR0000054900 - news) , a
clear World Cup winner.
With an audience of over 19 million, according to French media, and even more expected on
Sunday now that Les Bleus beat Belgium's Red Devils to make it to the final, TF1 is set to see
its advertising revenues jump, as Goldman Sachs noted yesterday.
Still on the soccer front, our Brussels bureau reports that commuters in the Belgian capital
were treated to a French soccer anthem this morning after the city's public transport lost a bet
with its counterpart in Paris.
While on this side of the Channel, England's "It's coming home" World Cup anthem is
everywhere, we, sadly for English fans, have to report a sinister omen ahead of their game
against Croatia.
You may remember that about two weeks ago, we told you that veteran London trader Simon
Cawkwell - nicknamed Evil Knievil - had bet on Belgium to beat England.
That gamble paid off for Cawkwell, who said he made 25,000 pounds when Belgium beat England
in the group stages.
Evil Knievil, who won his nickname from successful bets on the communications firm of late
tycoon Robert Maxwell, the failed British bank Northern Rock and Brexit, is now preparing to bet
in the range of 20,000 pounds against the Three Lions who face Croatia this evening.
"The whole country appears to have gone potty. I just feel I have to bet against England,"
he just told us.
Cawkwell added he had also made money from specialist bets offered by Sporting Index dubbed
"Shocking Decision, Ref!" - which allowed gamblers to predict the amount of goals that would end
up being cancelled by VAR (Video Assistant Referee).
Cawkwell rightly predicted that hardly any goals would be scrubbed because of VAR, with only
one cancelled so far in the tournament.
(Sudip Kar-Gupta, Julien Ponthus, Robert-Jan Bartunek and Helen Reid)
*****
OPENING SNAPSHOT: NOT A SPAT, NOT A DISPUTE (0728 GMT)
"Let me put this in simple language for the markets to try to understand: 'This is a
T-R-A-D-E W-A-R. Not a spat'," - Rabobank Global Daily.
Accordingly European bourses are tanking as the trade war negative vibes spread from Asia.
(Julien Ponthus)
*****
WHAT'S ON THE RADAR AHEAD OF EUROPE'S OPEN (0638 GMT)
It's looking like a gloomy start to European equity trading this morning after the U.S. said
that it may impose tariffs on an additional $200 billion worth of Chinese goods, sending
European stocks futures 0.5-0.8 percent lower.
While the STOXX 600 has risen for the past six sessions, this is likely to come to an end
today as tariffs talk knocks risk appetite. However, the upcoming earnings season could provide
some distraction.
Today a number of British companies have given trading updates. Burberry's Q1 sales rose in
line with expectations, while recruiter PageGroup (Frankfurt: 658848 - news) 's said that it expects full-year profit to
come in ahead of consensus.
And M&A news is never lacking these days after Rupert Murdoch's 21st Century Fox said it had
agreed a deal to buy Britain's Sky (Frankfurt: 893517 - news) in a $32.5 billion bid.
Here are this morning's key headlines:
Murdoch's Fox agrees $32.5 billion bid for Sky (Amsterdam: BK8.AS - news)
Burberry first quarter sales rise 3 pct, in line with forecasts
UK recruiter PageGroup says FY profit to beat estimates
Indivior (Frankfurt: 2IVA.F - news) says 2018 revenue, net income to come in below expectations
UK housebuilder Barratt sees 9 pct FY pretax profit growth
Britain's NEX Group says first-quarter revenue rose 7 pct
Sainsbury (Amsterdam: SJ6.AS - news) 's says Martin Scicluna to be next chairman
Wetherspoon comparable sales rise but cautions on rising costs
Maintenance at Romanian refinery to weigh on OMV (IOB: 0MKH.IL - news) 's Q2 operating profit
Electrical upset triggers flaring at Shell Deer Park complex -sources
Indian airline Vistara places $3.1 bln order for Airbus, Boeing jets
M&S chairman tells investors there's no quick fix
(Kit Rees)
*****
EUROPEAN STOCKS FUTURES ON THE BACK FOOT (0612 GMT)
The fresh news on the trade front is weighing on European stocks futures, which have opened
lower. So it looks like the STOXX's six-day winning streak is going to come to an end.
Here's your snapshot:
(Kit Rees)
*****
EUROPEAN COMPANIES: WHO'S REPORTING WHAT (0555 GMT)
While European Q2 earnings are yet to kick off in earnest, we've got a few updates today
with a trading statement from luxury retailer Burberry and preliminary results from
troubled software company Micro Focus.
Here's the full list below:
ENTRA (LSE: 0R3Y.L - news) .OL Q2 2018 Entra ASA Earnings Release
BDEV.L Barratt Developments PLC Trading Statement Release
KLED.ST Q2 2018 Kungsleden AB Earnings Release
KVAER.OL Q2 2018 Kvaerner ASA Earnings Release
COMH.ST Q2 2018 Com Hem Holding AB Earnings Release
OMVV.VI Half Year 2018 OMV AG Trading Update
FOE.OL Q2 2018 Fred Olsen Energy ASA Earnings Release
PAGE.L Q2 2018 Pagegroup PLC Trading Statement Release
BRBY.L Q1 2019 Burberry Group PLC Trading Statement Release
MCRO.L Preliminary 2018 Micro Focus International PLC Earnings Release
ORX.ST Q2 2018 Orexo AB Earnings Release
KOF.PA Q2 2018 Kaufman & Broad SA Earnings Release
(Kit Rees)
*****
MORNING CALL: EUROPEAN SHARES SEEN OPENING LOWER (0533 GMT)
Good morning. An escalation in the U.S.-China trade dispute is set to knock back European
shares this morning, after the Trump administration said it would slap 10 percent tariffs on an
extra $200 billion worth of Chinese imports.
"While this marks a significant escalation in the US-China trade dispute, we believe a
negotiated settlement is still likely to happen before the new tariffs are implemented,"
analysts at Credit Suisse (IOB: 0QP5.IL - news) wealth management said in a note.
Nevertheless, financial spreadbetters expect Britain's FTSE 100 to fall 0.5 percent,
Germany's DAX is seen retreating 0.6-0.7 percent and France's CAC is seen opening 0.5-0.6
percent lower.
The U.S. threat of additional tariffs hit Chinese shares, though Wall Street ended in
positive territory with the S&P 500 reaching its highest close since the February sell-off.
(Kit Rees)
(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)