LIVE MARKETS-Earnings: Brace yourself, but there's light at the end of the tunnel

* European shares slip, STOXX -1.8%

* Q1 earnings underline coronavirus hit Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan.

EARNINGS: BRACE YOURSELF, BUT THERE'S LIGHT AT THE END OF THE TUNNEL (0909 GMT)

Q1 results: you better hold on tight, but in H2 there will be a recovery, probably not yet as safe as many investors would like, but it could be something close to the end of the tunnel.

According to IBES estimates, EPS is expected to fall 21% year on year in Europe and 10% in the U.S., and "the final numbers will likely be worse as the global economy has come to a standstill, which might be not be fully factored into consensus," Barclays analysts write in a note.

Then hopes are that "the flattening Covid-19 curve" will make the economy re-open in H2.

Barclays analysts want to be clear that they are not suggesting that earnings will "quickly go back to normal" and even warn investors about a possible second wave of infections.

But central banks and governments provided a backstop that should soften the blow and speed up the recovery.

"We expect earnings news flow to get worse before it gets better, and a potential H2 recovery will likely be bumpy."

Bottom line, cyclical stocks offer attractive medium-term upside, but still face earnings risks and prices are not depressed enough; so you better stick to a balanced allocation versus defensive ones.

(Stefano Rebaudo)

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OPENING SNAPSHOT: CAUTIOUS (0741 GMT)

European stocks opened a tad lower, but much like Monday, defensives are outperforming the broader market while cyclicals are dragging bourses lower -- a reversal in trend from last week.

Investors are cautious as Q1 earnings season is underway and the economic damage assessment from the novel coronavirus has been soaring.

"The start of bank earnings season in the US yesterday spoke to a sector keen not to underestimate the size of the economic tsunami about to hit the US economy, as JP Morgan Chase and Wells Fargo set aside a combined $12bn of provisions in anticipation of multiple loan defaults in the coming weeks," CMC Market UK analyst Michael Hewson says.

Meanwhile, in single stocks, Adidas shares slipped 3% after it received govt backed loan and suspended dividend. easyJet was among the top fallers in Europe as travel & leisure stocks sold off after solid rally last week.

(Thyagaraju Adinaraya)

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ON OUR RADAR: ASML, ADIDAS, ARKEMA (0654 GMT)

European stocks are set to open in the red this morning as investors remain cautious ahead of the busy Q1 earnings season, which will shed light on corporate health.

In the corporate world, Adidas shares are seen slightly higher after it received approval for a syndicated 3 billion-euro ($3.3 billion) government-backed loan to mitigate the coronavirus impact on its business.

Arkema shares seen 3% higher after billionaire Sawiris boosted stake in the French chemical maker to more than 5%, according to traders.

In earnings, ASML reported results below analysts' estimates and did not provide any outlook for the second quarter.

Other market moving headlines: Ferguson cancels dividend, plans vote to move to U.S. listing; Smurfit Kappa reports inline numbers, cuts dividend and capex; Balfour Beatty's JV with Vinci wins HS2 contract

Other key headlines:

Credit Suisse investors should reject pay report after spy affair

TomTom sees negative free cash flow

Global airlines' estimated coronavirus losses rise to $314 bln

(Thyagaraju Adinarayan and Stefano Rebaudo)

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MORNING CALL: SUBDUED (0539 GMT)

European shares are seen opening slightly lower as markets pause for breath after a 24% surge from March 16 lows. Investors are also keenly watching out for outlook from corporates as they begun reporting first quarter results.

Financial spreadbetters IG expect London's FTSE to open 8 points lower at 5,783, Frankfurt's DAX to open 31 points higher at 10,727 and Paris' CAC to open 10 points lower at 4,514.

In corporate news, ASML reported earnings below analysts expectations and said it suffers delivery delays due to the global coronavirus outbreak.

(Thyagaraju Adinarayan)

***** (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)