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LIVE MARKETS-European banks are killing it

* European shares hit record highs: STOXX +0.2%

* China cuts rate to soften coronavirus hit

* U.S. raises tariffs on European aircraft in ongoing dispute

* Wall Street closed for Washington's Birthday 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 (, Joice Alves (, Julien Ponthus ( in London and Danilo Masoni ( in Milan.


So far a big chunk of European corporates have reported their fourth quarter results, including 80% of the banks and it looks that the rate-sensitive sector is killing it!

A revival in bond trading income has helped offset some pressures from the negative interest rate environment.

And UBS notes that diversified financials, "perhaps surprisingly", had the best revenue beats of the quarter with banks also comfortably beating.

This fits with the earnings momentum data (see graph below): Banks have the second best earnings momentum of the 29 sectors over the last month.

Morgan Stanley also suggests that "income-oriented investors... may find the 6% dividend yield on offer from the European banks too good to refuse".

Meantime, here is an sectoral breakdown on how far through the earnings reporting season we are:

(Joice Alves)



UBS has a point: Chinese people won't be the only consumers shying away from luxury shops because of the spreading coronavirus, investors should also take into account slowing demand for high-end brands in other countries.

"While the short-term lost sales in China seem well understood by the market we believe that the negative impact on overall global luxury goods consumption could pose a further short-term downside risk to estimates," analysts at the Swiss bank say, adding that it may be difficult to predict the global size of the sales drop.

Meantime, here is the Chinese exposure for luxury stocks under UBS's coverage: Swatch (~50% of sales), Richemont (~45%), Burberry (~40%), Kering, Moncler & Prada (~35%), LVMH (~30%), Ferragamo, Tod's and Hermès (~30%).

(Danilo Masoni)



After failing four times to break above the 400-points threshold over the last 20 years, the STOXX 600 has finally made it and by a decent margin! The question now is whether the pan-European benchmark can sustain the breakout.

JPMorgan strategists led by Mislav Matejka are upbeat.

"There is a potential for short-term coronavirus induced disruption in Q1 dataflow, but we remain bullish on the global cycle, continuing to argue that US recession is unlikely ahead of the presidential elections," they say.

Matejka and team note that the breadth of the breakout could easily widen with only 4 out of the 16 countries that make up the index having recorded new highs so far in 2020.

(Danilo Masoni)



It's risk-on at the open in Europe with the STOXX 600 and DAX rapidly climbing to new record highs in early following a rate cut in China to soften damage from the spreading coronavirus.

News that Washington will lift tariffs on aircraft imported from the Europe to 15% from 10% in a long-running dispute appeared to weigh only on Airbus, which hit a one-month low.

Meanwhile, autos rose 2% to lead sectoral gainers, likely helped by China stimulus prospects, while basic resources, which have big China exposure too, rose 1%.

Defensives and tech were underperforming.

In single stocks, Jupiter Fund Management soared to the top of the STOXX, up 8.7% after it agreed to buy Merian Global Investors for an initial 370 million pounds.

An upbeat earnings update boosted French car parts maker Faurecia up 5.1%, while top loser was Tullow Oil after it found no oil in an offshore Peru well.

Alstom was also having a good time, up 2% as it confirmed talks over a possible acquisition of the train business of Canadian company Bombardier

Here's your opening snapshot:

(Danilo Masoni)



European shares are set to open near their recent all-time peak as investors take comfort from another interest rate cut in China even though the number of new confirmed coronavirus infections in the world's no.2 economy grew on Sunday.

Futures on main equity benchmarks were up around 0.2-0.4% with DAX futures hitting fresh record highs.

In corporate news, eyes on Airbus after the U.S. said on Friday it would lift tariffs on aircraft imported from the EU to 15% from 10% in a long-running dispute over aircraft subsidies. Washington however announced only minor modifications to 25% tariffs on non-aircraft products and did not increase the rates on those goods as it had suggested it might do last year.

Elsewhere, Bayer and BASF will be in focus after a U.S. jury awarded $265 million to a peach grower in his lawsuit against the herbicide providers. Bayer shares were down 3.5% in early trade and BASF down 1.5%.

In earnings, Faurecia sounded upbeat as the French car parts group reported a rise in profits and sales, and added it was targeting further growth for 2020 even though market conditions would be challenging this year. One trader sees the stock rising 2% at the open.

In M&A, Jupiter Fund Management has agreed to buy Merian Global Investors for an initial 370 million pounds in shares, in a deal that will make it Britain's second-largest retail funds provider. Jupiter shares seen up 3%, per one trader. A source said Alstom SA is close to clinching a deal to buy Bombardier's train business which will give the unit an enterprise value of $7 billion,

Other stock movers: Regulators should allow RTL and ProSieben to merge - Rabe; Investec pushes on with listing of asset management arm Ninety; Corestate Buys Micro Living Properties In Poland; NMC Health founder and co-chair Shetty resigns

(Danilo Masoni)



European shares are expected to edge up at the open, staying just below record highs, following an interest rate cut in China to support its virus-hit economy that helped shares in Asia move back into positive territory overnight.

Spreadbetters at IG expect London's FTSE to open 16 points higher at 7,425, Frankfurt's DAX to open 48 points higher at 13,792, and Paris' CAC to open 21 points higher at 6,090.

Meanwhile, the Euro STOXX 50 futures are up 0.26%.

Wall Street will be closed today for the Washington's Birthday holiday, likely curbing activity, while in corporate news, it's quiet so far after last week's big earnings releases.

(Danilo Masoni)


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