LIVE MARKETS-Corbyn's Brexit move: it's complicated

* European stocks hit 3-week high

* Hiscox (Swiss: 27373019.SW - news) , Bank of Ireland (EUREX: 1269463.EX - news) fall after results

Feb 26 (Reuters) - Welcome to the home for real-time coverage of European equity markets

brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on

Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net

CORBYN'S BREXIT MOVE: IT'S COMPLICATED (1350 GMT)

What to make of Jeremy Corbyn's decision to support a customs union with the EU?

Analysts have generally taken the view that it makes a "soft" Brexit more likely, which is a

good thing for the pound, but of course it's a bit more complicated than that.

"On first sight the increased risk that the next UK government will support continued

membership of the UK into the customs union is GBP supportive," Rabobank said in a note.

"However, the GBP will not take kindly to the prospect of a hard-left government", it adds

as Corbyn's new support for frictionless trade with the EU could potentially prove fatal for

May's government.

For Berenberg, the real question is whether Labour would be able to convince enough MPs

outside its own rank to pass a resolution.

"All hell would break loose in the Conservative Party, to put it mildly," senior UK

economist Kallum Pickering believes, adding that fresh elections would then become a

possibility.

"This risk is not negligible – hence our 15% chance of Corbyn in No. 10 before 2022,"

Berenberg says. Many in the City take the view that a Labour government poses more of a threat

than Brexit itself.

To make things even more complicated, the FTSE 100 is currently rising (+0.64 percent) in

rare harmony with the pound (+0.45 percent). The two only rarely travel in the same direction.

Here's the reaction of Boris Johnson. As you may have guessed, he is not pleased:

(Julien Ponthus)

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"A MORE COMPLICATED MACRO ENVIRONMENT LIES AHEAD" (1034 GMT)

This is the view from Deutsche Bank (IOB: 0H7D.IL - news) 's strategists, who expect rates and bond yields to

continue rising given that the Fed is tightening in the U.S. and the ECB is nearing the end of

QE.

"An era of higher rates and yields won't be without risks and will bring higher vol and more

regular risk sell-offs, but we'd argue that central banks shouldn't fight it at the front end,"

Deutsche Bank strategists say in a note.

"If they do, they'll risk keeping policy too loose and asset prices will get even more

expensive and dangerous bubbles will likely form."

Worth (Shenzhen: 300483.SZ - news) bearing in mind in a busy week of speeches from central bankers...

(Kit Rees)

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OPENING SNAPSHOT: UP AND AWAY (0815 GMT)

While it's not the busiest of opens, it is at least positive, with the STOXX 600 up at a

three-week high.

Consumer staples are leading the gainers along with miners (particularly steelmakers) and

oil and gas stocks.

A number of stocks are down on the back of earnings, namely insurer Hiscox and Bank

of Ireland (Other OTC: IRLD - news) , while semiconductor maker AMS (IOB: 0QWC.IL - news) has dropped after launching a 600

million euro convertible bond.

Here's your opening snapshot:

(Kit Rees)

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ON THE RADAR: FOCUS SHIFTING FROM EARNINGS TO MACRO AND POLITICS (0752 GMT)

The focus is gradually shifting from the earnings season to central bankers this week with

speeches from Coeure and Draghi today, Powell tomorrow and Carney on Friday.

From that stage politicians will take over for a few days with May’s Friday Brexit speech,

the SPD members’ vote on the “GroKo” coalition, and of course the Italian general election on

Sunday.

In the meantime, the earnings season may have passed its peak but there is still some good

old fashioned M&A to keep traders busy today as futures show that European markets seem set to

follow the pace of their Asian peers and open about 0.5 percent up.

Deutsche Bank will definitely be one of the session’s most-watched stocks after it announced

that it will list its asset management unit, a move which must sadden a lot of rivals and M&A

bankers who could have benefited from a sale.

Still in M&A and still in Germany, Daimler (IOB: 0NXX.IL - news) will also be in the spotlight after the chairman

of Geely Automobile Holdings said he had built a $9 billion stake in the German group.

In Italy, the project to create a joint venture between Telecom Italia (Amsterdam: TI6.AS - news) and the pay-TV arm of

its biggest shareholder, French media group Vivendi (LSE: 0IIF.L - news) , is an "uphill struggle" but the project is

not dead, a source familiar with the matter said.

In terms of earnings, PostNL (Swiss: PN6.SW - news) seems set to fall at the open after its results and Bank of

Ireland, the most exposed Irish lender to the British property market, restored its dividend and

its profit in line with year ago.

The Steinhoff saga continues with South Africa's Independent Regulatory Board for Auditors

saying it would pursue further lines of investigation.

(Julien Ponthus)

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LOOKING FOR "SUNKEN TREASURE" AMONG CONSUMER STAPLES (0743 GMT)

Analysts at Jefferies are taking stock of "the most volatile earnings seasons in Euro

staples in recent memory", given that it's a sector which has been under pressure from the rise

in bond yields.

Jefferies say that earnings misses have been punished "severely", and single out British

American Tobacco, Diageo (LSE: DGE.L - news) , Heineken (LSE: 0O26.L - news) and Unilever (NYSE: UL - news) as their key

picks.

Sluggish growth on the topline and negative fx guidance surprises are some of the issues

Jefferies identify staples have faced, pointing to an average 3 percent decline for every 1

percent EPS downgrade, though the sector remains at a premium to the Eurostoxx.

"We have identified a number of names within consumer staples that have structural topline

growth opportunities, visibility on margin improvement, strong FCF generation, balance sheet

strength and reasonable dividend yields," analysts at Jefferies say in a note.

(Kit Rees)

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EUROPE'S EARLY MORNING HEADLINE ROUND-UP (0724 GMT)

Daimler in $2 bln China investment with BAIC as Geely swoops

Deutsche Bank announces listing of asset management arm DWS

Carmaker PSA, Malaysia's Naza sign deal to produce PSA cars for Asia

VW's profitability may take a hit from electric vehicle shift

Britain vows to cap "rip off" energy prices for millions with new law

UK's Bunzl (LSE: BNZL.L - news) 's 2017 profit jumps on help from deals, growth in America

Fiat Chrysler will ditch diesel from its cars by 2022 - FT

Primark-owner AB Foods first-half profit held back by sugar​

Underwriter Hiscox's FY profit slumps

Zurich Insurance (IOB: 0QP2.IL - news) buys QBE's Latam business for $409 mln

Nokia CEO sees big 5G rollouts nearly a year ahead of schedule

Geox (LSE: 0KHH.L - news) to keep up the pace in 2018 after return to profit growth

(Tom Pfeiffer)

*****

UP IT IS, FUTURES SHOW (0709 GMT)

Futures are confirming earlier indications from financial spreadbetters: European markets

are set to open in positive territory this morning:

(Julien Ponthus)

*****

MORNING CALL: EUROPE SEEN OPENING HIGHER (0628 GMT)

European shares look set to rise at the open on Monday after ending a second week in

positive territory following the 6 month-low hit in the wake of the heavy sell-off early

February.

In Asia shares made guarded gains as investors braced for an event-packed week headlined by

U.S. inflation data and the first House testimony by the new head of the Federal Reserve.

Financial spreadbetters expect London's FTSE to open 32 points higher at 7276.8 points,

Frankfurt's DAX 81 points higher at 12564.9 points and Paris' CAC 23 points higher at 5339.9

points.

****

(Julien Ponthus)