LIVE MARKETS-Emerging markets: what could go well?

* STOXX 600 touches session low as Wall Street opens down

* Trump says he won't meet Xi before trade deadline of March 1

* L'Oreal, Hermes report stronger than expected China demand

* Dometic jumps after results, Rockwool and Skanska (LSE: 0HBT.L - news) fall

Feb 8 - 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: helen.reid.thomsonreuters.com@reuters.net

EMERGING MARKETS: WHAT COULD GO WELL? (1445 GMT)

This week's Flow Show demonstrated that EM is definitely back in style with investors

pumping record high volumes of money into both emerging shares and bonds.

There are quite a few reasons why things could go wrong, notably the intriguing recovery of

the dollar despite the dovish tone of the Fed.

Lukman Otunuga, an analyst at FXTM, says he believes fresh trade war fears and the economic

and political worries in the UK and the euro zone could be the drivers.

Anyhow, in a note published on Wednesday, Vincent Deluard, a strategist for INTL FCStone (Frankfurt: I4F.F - news)

wrote up quite a long list of reasons why EM might a good bet in 2019.

Here's a snapshot of the key points:

Another interesting theme is the concept of "slowbalisation" recently popularised by the

Economist.

Mature economies such as Germany have a greater need to "hack" foreign growth through

exports given their slow demographics and slowing productivity, and hence a slowdown in trade

might affect them most.

Meanwhile there are multiple reserves of growth in EM markets that can be unleashed with far

less capital than in mature economies.

"Raising the literacy rate in India is easier than expanding the supply of STEM grads in

Japan," is how Deluard puts it.

Here's how the MSCI (Frankfurt: 3HM.F - news) index for emerging markets has staged a comeback from last year's low:

(Julien Ponthus)

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ALL BETS ARE OFF FOR UK HORSE RACING (1229 GMT)

British authorities have suspended horse racing until the middle of next week as they rush

to contain an outbreak of equine influenza, disrupting one of the nation's favourite sports and

pressuring bookmakers' shares this morning.

GVC's down 1.6 percent, William Hill (Frankfurt: 633847 - news) 's down 1.9 percent and Paddy Power (EUREX: 27913021.EX - news) is down 0.1 percent.

There's a lot at stake - the gee gees, the second-most attended sport in the country,

account for half of over-the-counter wagers and a quarter of online sports bets in Britain,

according to Numis Securities analyst Richard Stuber.

That equates to up to £4 million per week in revenue for William Hill (0.2 percent of group

revenue) and GVC, he estimates.

And the timing couldn't be worse. A severe outbreak and prolonged shutdown could disrupt

some of the biggest (and lucrative) events in the racing calendar - the prestigious Cheltenham

Festival is just over a month away and the Grand National is on April 6.

Cheltenham has been cancelled only twice, during a foot and mouth disease outbreak in 2001

and during the World War Two.

So what are the chances of a worst-case scenario? Well, who better to ask but the bookmakers

themselves.

According to gambling odds aggregator Oddschecker, the bookies currently have 'before Feb.

18' as their most likely outcome with odds of 1/5, while the possibility of the suspension

lasting until March 1 and beyond is priced at 5/1.

Here's a Reuters photo of the Grand National 2018 - which only 12 horses of 38 starters were

able to finish.

(Josephine Mason)

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BULL, BEAR, OR PIG? CHINA SENDING MIXED SIGNALS (1141 GMT)

As the Chinese year of the pig begins, European investors trying to figure out whether to be

China bulls or bears are not having the easiest time of it.

Despite widespread pessimism about a slowdown in the world's second-biggest economy,

companies such as LVMH, and L'Oreal and Hermes today, are reporting resilient demand for

consumer goods, boosting their shares.

According to BAML, since the start of the earnings season some 22 companies have mentioned

China as a positive factor (not including today's results), while 18 have cited it as a

negative.

That puts China far below Brexit, which 33 companies said had a negative impact, as you can

see below.

Besides the surprisingly positive take on China overall, there's an interesting divergence

in the types of companies reporting China pressure.

The most bearish on China are mostly in Industrials and Materials, while the most bullish

are mostly Consumer Discretionary, Healthcare (Shanghai: 603313.SS - news) and Staples (NasdaqGS: SPLS - news) , BAML strategists say, a trend which

reflects an ongoing structural shift in the Chinese economy.

A consequence of this is that the CAC 40 - where some of Europe's biggest consumer companies

are listed - is doing much better than the industrial and autos-heavy DAX.

"I am quite encouraged to see that consumer companies are doing OK in China," says Manish

Kabra, head of European equity and quant strategy at BAML. "That's really the crux at the

moment. If China has really shifted its outlook and they want more consumption-oriented growth,

then French stocks are your place to be within European stocks."

Indeed, it's not only today that the CAC 40 is outperforming the DAX. The French index's

relative performance over Germany is at its highest in nearly three years, as you can see below,

as industrials and autos are hit by growth fears while consumer stocks are more resilient.

(Helen Reid)

*****

OPENING SNAPSHOT: BECAUSE YOU'RE WORTH IT (0851 GMT)

The power of skincare and handbags is on display this morning, with upbeat results and

outlooks on China from Hermes and L'Oreal helping lift French luxury stocks from LVMH to Hermes

and Gucci owner Kering (LSE: 0IIH.L - news) , and the broader Paris bourse.

That's helping dispel some of the lingering worries about slowing middle-class spending on

designer handbags and accessories in China as the world's No. 2 economy slows. L'Oreal's gains

didn't last long though as investors took profits after the skincare company's Q4 sales beat.

The shares hit record highs this week.

They're helping give the broader European market a boost. European markets opened lower, as

expected, but managed a swift turnaround into positive territory. For now, they're helping

offset worries about the U.S.-China trade tensions that sapped investor confidence overnight.

Milan is up 0.5 pct, with BPER Banca leading the gains as investors welcome news the company

will buy Unipol (Dusseldorf: 18319160.DU - news) 's banking unit for 220 million euros in cash.

In contrast to the upbeat tone among luxury goods companies though, a warning about slumping

sales in China, the world's top car market, from Jaguar Land Rover's owner Tata Motors (BSE: TATAMOTORS.BO - news) served as

a reminder that things are not all rosy in the Middle Kingdom. The sector is down 0.7 percent.

Among individual moves, Swedish builder Skanska is down 7.8 percent after its Q4 results

missed expectations and the company proposed cutting its dividend, Rockwool is the biggest STOXX

600 faller after its weaker-than-expected results and Umicore (Hamburg: 3771399.HM - news) is down 4.8 percent after the

cobalt refiner warning of slowing 2019 earnings growth due to subdued car and consumer

electronics demand. Dometic Group (LSE: 0RCO.L - news) is rallying 15 percent after its Q4 results.

(Josephine Mason)

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WHAT'S ON THE RADAR: L'OREAL, HERMES, UMICORE, AND EARTHPORT BIDDING WAR (0744 GMT)

After European stocks’ worst day in six weeks, the market is set for a faltering start with

futures down 0.1-0.2 percent for the FTSE 100, DAX and Eurostoxx 50 while CAC 40 futures inched

up 0.1 percent.

Earnings will drive the day with strong numbers from L’Oreal, Ceconomy, Hermes, and Aker (Stockholm: AKERO.ST - news)

Solutions, while Umicore gave a weak outlook and SSE (LSE: SSE.L - news) cut its profit outlook.

Cosmetics giant L'Oreal is expected to rise 1-2 percent after it said strong demand for

luxury skin creams helped it beat Q4 sales forecasts - another company reporting better than

feared demand from China after LVMH last week.

Luxury handbag maker Hermes also said sales momentum in its Chinese stores stayed strong,

boosting its shares up 1-2 percent in premarket too.

Strong results from Ceconomy are boosting the shares up 5.9 percent in early Frankfurt

trade.

In other good numbers, Norwegian oil services firm Aker Solutions (Stockholm: AKSOO.ST - news) delivered better than

expected order intake.

On the flipside, Belgian's Umicore, a battery producer which has been a favourite of

investors looking to play the electric vehicle trade, said it expected 2019 growth to be hit by

subdued demand in the car and consumer electronics sectors, and R&D costs.

More negative news for autos from Tata Motors’ results, warning that Jaguar Land Rover which

brings in most of its revenue would swing to a loss due to weak sales. That could drag European

autos stocks further down after the sector suffered its worst day since the Brexit aftermath on

Thursday.

In the UK, Visa (Xetra: A0NC7B - news) sweetened its offer to $320 million in an ongoing bidding war for UK payment

company Earthport (Frankfurt: EAPA.F - news) , topping rival Mastercard’s bid.

Healthcare facilities provider Caretech could get a boost after the UK regulator approved

its acquisition of Cambian.

Energy utility SSE was expected to fall 2-3 percent after it cut its profit outlook, hurt by

the suspension of payments from a back-up power scheme to energy suppliers.

Amid the fallout from Renault’s Ghosn scandal, France's finance ministry denied on Thursday

a Nikkei report that the French government had informed Tokyo it was open to considering

reducing Renault (LSE: 0NQF.L - news) 's stake in Nissan Motor.

And Europe’s chipmaker stocks might be hit by weaker results from U.S. semiconductor maker

Qorvo (Frankfurt: 2QO.F - news) , traders say.

(Helen Reid)

*****

FUTURES POINT TO TEPID START TO TRADING (0714 GMT)

It's a tepid open for futures with the trade-sensitive DAX seeing the biggest falls, down

0.2 percent, while CAC 40 futures are up 0.2 percent.

Things could, of course, deteriorate during the day as they did yesterday.

But meanwhile individual stocks are likely to drive the session. A rundown of European

earnings is in the previous blog.

From the UK, we've got bellwether mortgage lender Nationwide Building Society (LSE: NBS.L - news) reporting

profits fell 21 percent after ramping up investment in digital banking, and energy utility SSE (Amsterdam: UW8.AS - news)

cutting its full-year profit forecast.

Nationwide profits fall 21 pct on further digital spend

SSE cuts annual profit outlook

(Helen Reid)

*****

STRONG RESULTS FROM L'OREAL, CECONOMY, WHILE UMICORE WARNS OF AUTO SLOWDOWN (0657 GMT)

While the lack of positive progress towards a U.S.-China trade deal is likely to keep

European markets tepid today, earnings on the whole look slightly healthier than yesterday.

Cosmetics giant L'Oreal said strong demand for luxury skin creams helped it beat Q4 sales

forecasts - another company reporting better than feared demand from China after LVMH last week.

Results from Ceconomy, Europe's biggest consumer electronics retailer, should deliver some

relief to the retail sector: the company's sales beat expectations thanks to Black Friday

discounts, and it maintained its profit guidance.

In other strong results, Norwegian oil services firm Aker Solutions delivered better than

expected order intake.

On the flipside, Belgian's Umicore, a battery producer which has been a favourite of

investors looking to play the electric vehicle trade, said it expected 2019 growth to be hit by

subdued demand in the car and consumer electronics sectors, and R&D costs.

Swedish builder Skanska reported a Q4 profit which lagged expectations.

In M&A news, Italian insurer Unipol agreed to sell its banking unit to BPER Banca for 220

million euros.

Here are the headlines so far:

Chinese demand boosts L'Oreal cosmetics sales

Belgium's Umicore expects subdued auto demand, startup costs to weigh on 2019 earnings

Aker Solutions eyes oil service recovery as order intake beats forecast

Ceconomy maintains profit guidance after better first quarter

Skanska Q4 operating profit, 2018 dividend lag expectations

Fiat Chrysler paid $77 mln in U.S. fuel economy penalties in 2018

Italy's Unipol to sell banking unit to BPER Banca for 220 mln euros

Air France KLM January passenger numbers rise 1.5 pct on year

France probes Danske Bank (LSE: 0NVC.L - news) over money laundering allegations

Swiss raise 380 mln Sfr from 5G mobile spectrum auction

(Helen Reid)

*****

EUROPEAN STOCKS TO FALTER AFTER WORST DAY IN SIX WEEKS (0629 GMT)

Yesterday's selloff is expected to extend into the end of the trading week with

spreadbetters pointing to slight falls for the DAX and CAC.

The sharp drop yesterday in the STOXX - its worst day in six weeks - came after European

shares reached 12-week highs, and was likely driven by some profit-taking as well as the angst

triggered by U.S. President Trump saying he was not likely to meet China's Xi before a March 1

tariff deadline, dousing markets' hopes of an imminent trade deal.

Downgrades to euro area and UK growth certainly didn't help either.

Asian stocks lost ground on Friday as investors worried about a broadening global economic

slowdown, with sentiment not helped by the absence of any positive signs for a resolution in the

U.S.-China trade row.

Financial spreadbetters at IG (Frankfurt: A0EARV - news) expect London's FTSE to open 6 points higher at 7,100,

Frankfurt's DAX to open 9 points lower at 11,013 and Paris' CAC to open 2 points lower at 4,984.

(Helen Reid)

*****

(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus, and Josephine Mason)