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LIVE MARKETS-Is this the end of cyclicals' 2-year bull market?

* European stocks inch up, set for weekly gain

* JPMorgan (LSE: JPIU.L - news) , Citi report double digit profit rise

* Wall Street futures steady

LONDON, July 13 (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

IS THIS THE END OF CYCLICALS' 2-YEAR BULL MARKET? (1224 GMT)

Oh no, it looks like it could be coming to an end, according to Morgan Stanley (Xetra: 885836 - news) 's European

equity strategy team.

They point to the relative performance of European cyclicals falling back to its 12-month

average for the first time since 2016 - see their chart below.

"With (Other OTC: WWTH - news) the global economic surprise index now rebounding, we think it possible that cyclicals

will bounce in the very short-term," Morgan Stanley's strategists say.

"However, a wider peaking in year-on-year growth momentum, coupled with high relative

valuations, likely points towards the end of this multi-year period of cyclicals'

outperformance."

Reflation trade, where have you gone?

(Kit Rees)

*****

MIDDAY SNAPSHOT: OFF HIGHS (1125 GMT)

European shares are quietly inching higher with the STOXX 600 a bit off earlier highs, up

0.2 percent, but still on track to score its second weekly gain in a row.

Meanwhile in the U.S., where JP Morgan has just reported an 18 percent rise in quarterly

profit, Wall Street futures were pointing to a steady open following yesterday's

rally when expectations for a bumper second-quarter earnings season keep investors upbeat.

Later on today investors will also be eyeing numbers from Citi and Wells Fargo (Swiss: WFC-USD.SW - news) .

Here's where we stand at the moment on the European stock market.

(Danilo Masoni)

*****

AIRPLANE! WHAT IF OTTO COULD DO THE JOB? (1045 GMT)

Remember 'Airplane!', the 1980 parody movie staring Leslie Nielsen and Otto, the inflatable

doll pilot?

Well artificial intelligence has made quite some progress since then to the point that

single-pilot technologies could become a reality in 5 years, argues UBS (LSE: 0QNR.L - news) in a in-depth research

note where it has studied how this might benefit the industry.

"We estimate moving from two pilots to one in cargo and passenger airplanes implies a $15bn

profit opportunity, with fully pilotless planes a further $20bn," the bank's analyst reckon,

adding that "in our view, the market is not currently pricing in any benefit for airlines or

aerospace companies."

Here's UBS' list of the stocks which are the most likely to benefit most, including from

American Airlines (Frankfurt: A1W97M - news) , Delta Air Lines (NYSE: DAL - news) , IAG, Lufthansa (Xetra: LHAB.DE - news) and United (Shenzhen: 000925.SZ - news) .

Here's a link to a story with anecdotes about Leslie Nielsen and the shooting of

'Aeroplane!': https://reut.rs/2zwGeHo

(Julien Ponthus)

*****

NOT ALL CAPITAL GOODS STOCKS ARE BAD BETS (102 GMT)

Europe's industrial goods index is the best performing today but over the last month it has

lagged the broader market, caught in the crossfire of worries over an economic slowdown and an

escalation of the trade dispute between Washington and Beijing.

Analysts at Goldman Sachs (NYSE: GS-PB - news) have found that the sector's premium to the market has fallen to

16 percent, hitting the lowest is 24 months, and although it's still not time for a broad-based

sectoral bet they see some opportunities emerging.

"We have seen in prior slowdowns (see snapshot below) that within 12-18 months, the sector

premium disappears, which could also be a risk now if the data further decelerates," they say.

The pullback however has made some late-cycle companies interesting again.

"We see attractive entry points for late-cycle names that can still deliver earnings

acceleration (ABB (LSE: 0NX2.L - news) , Andritz (IOB: 0MJZ.IL - news) , FLSmidth, Konecranes (LSE: 0MET.L - news) ) or have self-help opportunities (Melrose (LSE: 136541.L - news) ,

Schindler)," they add.

(Danilo Masoni)

*****

GOLDILOCKS AND THE FOURTH BEAR (0922 GMT)

Remember 2017 and that cosy place nicknamed "Goldilocks"? What happened to that sweet spot

of global synchronised growth and low inflation which provided investors with the ultimate "not

too hot, not too cold" environment?

Well, three bears came along, argues Dominick DeAlto, chief investment officer for fixed

income at BNP Paribas Asset Management.

The bears' names are "signs of diverging growth across major economies, a stronger US dollar

and material risks of a broadening trade war", DeAlto wrote in an outlook note.

"These 'three bears' are likely to make for a much more challenging environment for risk

assets going forward", he argues noting that "absent in the fable, but very real in today's

story, would be a 'fourth bear', which is inflation".

"This fourth bear may be dormant for the time being, but the state of the business cycle and

accommodative monetary policy suggests this may not last indefinitely", DeAlto adds.

Here's how BNP (Paris: FR0000131104 - news) sums up what changed in the last six months:

(Julien Ponthus)

*****

OPENING SNAPSHOT: EUROPEAN SHARES BOUNCE (0713 GMT)

European shares have opened higher as the market focus shifts from the U.S.-China trade

dispute to the second quarter earnings season, as big banks over in the U.S. are set to give

updates later in the day.

The early bounce is pretty broad in Europe, with sectors such as tech, autos and industrials

leading the way.

Company updates are spurring moderate moves in insurer Storebrand (LSE: 0NO0.L - news) , recruiter Hays

and DCC (Frankfurt: DCC.F - news) , which are all up between 2.3 to 3.6 percent, while insurer Gjensidige

and GAM are the biggest fallers.

Here's your opening snapshot:

(Kit Rees)

*****

MORNING HEADLINES: ANTITRUST, FROM M&A TO DIPLOMACY (0559 GMT)

There is no shortage of M&A related news this morning, surely enough to keep merger

arbitrage funds quite busy particularly with the U.S. Justice Department trying to undo AT&T (Swiss: T-USD.SW - news)

Inc's $85.4 billion acquisition of Time Warner (Frankfurt: A0RGAY - news) a month after the deal closed.

The media sector is buoyant as ever, also on our side of the Atlantic (Shanghai: 600558.SS - news) with the ongoing

takeover battle for Sky (Frankfurt: 893517 - news) .

On the antitrust front, EU regulators have approved Ryanair's planned acquisition of

LaudaMotion without conditions and sources told Reuters Linde and Praxair

will win approval regulatory clearance for their planned $83 billion merger after

pledging to sell Praxair (NYSE: PX - news) 's assets to boost a Japanese rival in Europe.

Still on the regulatory front, Goldman Sachs and the world's biggest cablemaker Prysmian (EUREX: 3056144.EX - news)

, Nexans (EUREX: NXSG.EX - news) and eight other cable companies lost their challenge against a 302 million

euros EU cartel fine.

Speaking of antitrust, it's tempting to make a link with U.S. President Donald Trump's visit

to the UK and blasting Theresa May's Brexit plans by saying a free trade deal with Britain might

be impossible.

The fact Trump told The Sun that former Foreign Secretary Boris Johnson "would be a great

Prime Minister" after he resigned in protest at May's Brexit plans makes the U.S./UK

relationship as "special" as ever.

"Trump’s declaration that this softer version of Brexit would mean that a trade deal with

the US was “probably” off the table, was a blow to both host Theresa May and the pound, sending

sterling tumbling overnight", commented Jasper Lawler, head of research at LCG.

On the stocks front, European futures are up as expected, between up 0.2 percent for the

IBEX and 0.53 percent for the DAX and the FTSE.

(Julien Ponthus)

*****

MORNING CALL: EUROPEAN SHARES SEEN RISING AT THE OPEN (0519 GMT)

European shares are expected to follow the optimistic trend set in Asia and on Wall Street

and open this session in positive territory.

Expectations of a strong earnings season in the United States are supporting shares and

trade war fears are currently kept in check even with China reporting a trade surplus with the

United States of $28.97 billion in June, the highest on record.

Financial spreadbetters expect London's FTSE to open 41 points higher, Frankfurt's DAX up

57 points higher and Paris' CAC to rise 25 points.

(Julien Ponthus)

*****

(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus and Kit Rees)