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LIVE MARKETS-Is euro-zone positioning too bearish?

* STOXX 600 flat, Germany's DAX +0.4% * Autos rally as Mnuchin says U.S-China trade deal "90% complete" * Thyssenkrupp jumps 8.6% on report Kone eyes co's elevator business * Brenntag slides 4.9% on report of dual-use chemicals sale to Syria * Wall Street futures rise June 26 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm://thyagaraju.adinarayan.thomsonreuters.com@reuters.net IS EURO-ZONE POSITIONING TOO BEARISH? (1106 GMT) European equities remain out of favour as investors shun growth and trade-sensitive plays, while other risky assets like U.S. stocks are now seeing inflows driven by dovish central banks. Economic surprises in the battered region, however, have returned to positive territory for the first time since September 2018 and for Barlays this signals that the "bearish euro-zone positioning is decoupling from fundamentals". "This could prompt investors to reassess their underexposure to the region, which is looking extreme by historical standards," says strategists at the bank led by Emmanuel Cau. That could also provide a bid to value but bond yields need to find a floor, they add. "As bond positioning is crowded, inflation expectations appear to be stabilising and trade negotiations between us and China could remain on track after the G20 summit, the tactical risk-reward to own selected value plays is asymmetric to the upside," they say. As you can see in this chart the euro-zone economic surprises have not only turned positive but they're also rebounding much more than other regions. (Danilo Masoni) ***** HOT NEWS FOR ICELAND (1035 GMT) They'll be Thunderclapping in the streets of Reykjavik this morning. The central bank has just cut interest rates again and, perhaps more importantly, index compiler MSCI announced overnight that it will begin a consultation about upgrading its MSCI Iceland Index to 'Frontier Markets' status. The final result will be announced by November 29 and a thumbs-up would be another step in the rehabilitation of the tiny country -- it only has around 360,000 people -- from its volcanic 2007-2008 banking bust that was described as "the third biggest bankruptcy in the history of mankind". Today's move will be a timely boost too for the 17-consistuent main Iceland bourse which has been struggling a bit of late having leapt 26% between January and mid-May. March's collapse of low-cost airline WOW Air which brought in swathes of the country's tourists means a recession is likely this year. The capelin fishing season which is another key element for the economy wasn't great either. (Marc Jones) ***** STOCKS BOOSTED BY U.S.-CHINA DEAL "90% COMPLETE" COMMENT (1015 GMT) European stocks have reversed early losses to hit a day high after U.S. Treasury Secretary Steve Mnuchin said a U.S.-China trade deal is 90% complete. Trade-exposed auto stocks are now among the top sectoral gainers in Europe now, having opened sharply lower this morning. The surge in autos is helping Germany's DAX outperform other European indices. The index is rising 0.6% while the STOXX 600 and FTSE 100 are up just 0.2%. (Thyagaraju Adinarayan) ***** OPENING SNAPSHOT: CHIPS SHINE, CARS SLIDE (0728 GMT) European stocks are sliding 0.4% with most sectors in the red. Oil and gas is the only sectoral gainer, driven by higher crude prices and as Wood Group shares jump 6% after its first-half results came in better than last year. Renault and Fiat Chrysler are the top fallers in the autos space after a French newspaper reported that no M&A talks are underway between both the companies. Carmakers are also being hit by a study saying they could face hefty penalties if they fail to meet the EU's 2021 emissions targets. As expected, European chipmakers are among the top performers, rising 1-2.5%, after Micron reported better-than-expected results and resumed some shipments to China's Huawei. AMS is up 2.5%, Siltronic is gaining 1.8% and BE Semiconductor is up 1.3%. Thyssenkrupp is jumping 4% on a report Kone is considering buying the German company's elevator business. (Thyagaraju Adinarayan) ***** ON OUR RADAR: CHIPS, ELEVATORS, RETAILERS (0701 GMT) European stocks are sliding in early deals with the pan European STOXX 600 down 0.3%, as the Fed's comments overnight dampen hopes of aggressive interest rate cuts next month. Poor economic data continues to roil Germany with consumer morale falling for the second month in a row heading into July as the slowdown weighing on Europe's largest economy darkened income expectations among shoppers, a survey showed. The news comes two days after a survey showed the country's business morale fell to its lowest level since November 2014. In corporate news, EU chipmakers are back in focus after Micron reported better-than-expected results. The news could fuel a relief rally in Infineon, Siltronic, STMicro, Dialog Semi and AMS which fell after warnings about damage from the U.S. ban on Huawei from Broadcom and Siltronic earlier this month. Bus and rail operator Stagecoach reported higher annual profit even as it is set to lose three important rail franchises that could wipe off 1 billion pounds ($1.27 billion) from the company's books going forward. Thyssenkrupp shares are seen rising 1.7% on report of possible takeover offer by Kone for the German company's elevator business. European apparel retailers continue to report weak results: Sweden's Kappahl has reported a sharp drop in third quarter profits and UK's Bonmarche warned of challenges in the clothing market, exacerbated by unseasonal weather in the UK, and recommended a takeover offer from Philip Day. Bonmarche is seen falling 20-40%, per traders. UK tobacco companies British American Tobacco and Imperial Brands are expected to open 1% lower after San Francisco voted on Tuesday to ban sales of e-cigarettes. Some index news: MSCI, the world's largest index provider, said it is considering adding the MSCI Iceland Index to Frontier Markets status, which is effectively a promotion for the small index because it's not currenctly included in any other broader indices. More UK headlines: Stagecoach annual profit rises, faces UK rail hurdles TDR Capital to buy car auctioneer BCA Marketplace for $2.4 bln BRIEF-RPS Sees FY Results Materially Below Management, Market View Bonmarche recommends Philip Day's Offer For Co After Poor Q1, Uncertainty (Thyagaraju Adinarayan) ***** EU CHIPMAKERS, CARS IN FOCUS (0558 GMT) Micron's better-than-expected results overnight could provide some temporary relief to the battered European semiconductor companies. The U.S. memory-chipmaker also said it had resumed some shipments to China's Huawei and expected demand for its chips to recover later this year, sending its shares 10% higher. European chipmakers Infineon, Siltronic, Dialog Semi and AMS could rise this morning. More bad news for autos? Volkswagen and Fiat Chrysler could face penalties of up to 1.8 billion euros and 746 million euros respectively, if they fail to meet the EU's 2021 emissions targets, according to a study by consulting firm AlixPartners shows. Meanwhile, VW's sports-car brand Porsche has to recall almost 340,000 Cayenne and Panamera vehicles due to problems with their automatic transmission. Spain's struggling supermarket chain DIA reached a new deal with its creditors and said it would propose raising the planned capital increase from 500 million euros ($569 million) to 600 million euros at its upcoming annual general meeting. Corporate headlines: DSV extends offer period for Panalpina by 15 days Spain's DIA announces new financing plan with creditors BRIEF-Evotec Places First 250 Mln Euro Promissory Note Large carmakers including VW, FCA could face 2021 EU emissions fines - study Porsche recalls 340,000 cars due to parking problem BRIEF-Schneider Electric Reaffirming Medium-Term Ambition BRIEF-Yara Mulls IPO Of Industrial Nitrogen Businesses (Thyagaraju Adinarayan) ***** EUROPEAN SHARES SEEN LOWER AGAIN AS FED COMMENTS WEIGH (0530 GMT) European shares are expected to open slightly lower after Fed Chair Jerome Powell said the central bank is "insulated from short-term political pressures", pushing back on pressure from President Donald Trump to cut interest rates. St. Louis Federal Reserve Bank President James Bullard said he did not view a 50 basis point cut at the U.S. central bank's July meeting as warranted, dampening hopes of aggressive rate cuts. The pan-European STOXX 600 index is set for a 4-day losing streak, steadily retreating from 1-1/2 month highs it hit last week after the ECB and Fed indicated rate cuts. Financial spreadbetters IG expect London's FTSE to open 17 points lower at 7,405, Frankfurt's DAX to open 29 points down at 12,199, and Paris' CAC to open 8 points lower at 5,507. (Thyagaraju Adinarayan) ***** ($1 = 0.7894 pounds) (Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)