LIVE MARKETS-European stocks in April: market gains, ETF pains

* European stocks little changed

* ZPG hits record after $3 bln takeover deal

* Peers Rightmove, Auto Trader (Frankfurt: 2UA.F - news) also gain

* Sika (IOB: 0QMA.IL - news) jumps after ending dispute with Saint Gobain (LSE: 490580.L - news)

LONDON, May 11 (Reuters) - Welcome to the home for real-time coverage of European equity

markets brought to you by Reuters stocks reporters and anchored today by Kit Rees. Reach her on

Messenger to share your thoughts on market moves: kit.rees.thomsonreuters.com@reuters.net

EUROPEAN STOCKS IN APRIL: MARKET GAINS, ETF PAINS (1331 GMT)

There's been a remarkable mismatch in April between the European stock market's performance

and fund flows.

According to a report on flows into exchange-traded products (ETPs) from the world's biggest

asset manager BlackRock (Sao Paolo: BLAK34.SA - news) , April was the largest month of selling in European equity in more than

three years.

"European equity ETPs have been increasingly unpopular since March, when $2.4 billion flowed

out. A wave of mixed eurozone macro data, combined with stronger earnings expectations for the

U.S. relative to Europe, appear to have reduced investor confidence in European equities,"

BlackRock says in the report.

And here's your chart showing the outflow pain (blue line).

But if you look at this other chart with monthly performance for the pan-European STOXX 600

benchmark, you can see that April saw the index rise nearly 4 percent, its best month since

December 2016.

Who to trust?...

(Danilo Masoni)

*****

HOW TO NAVIGATE A MORE VOLATILE MARKET (1228 GMT)

Volatility has returned to the fore this year. While it has come down slightly recently,

investors are still wary as geopolitical risks multiply and tighter liquidity conditions loom

with central banks cutting their security purchases (see chart below).

So what should investors do to prepare? UBS (LSE: 0QNR.L - news) ' Wealth Management chief investment office has

some suggestions, including:

- add alternative sources of return beyond classic equity and bond indexes (e.g. hedge

funds, smart beta)

- look "beyond the familiar" to various sector and country risks

- consider income sources away from risky credit and excess foreign-exchange exposure (e.g.

dividend investing)

- do not overly rely on passive approaches in traditional markets

- manage downside risks appropriately (e.g. through put options, hedging)

- avoid focusing on day-to-day volatility to measure risk

"Thinking about risk in terms of day-to-day volatility can encourage investors to jump into

low-volatility assets, such as cash, at times of higher equity market uncertainty," says the UBS

Wealth Management team, adding that this can leave portfolios at risk of underperforming

inflation.

Overall they still recommend remaining invested in equities, saying investors risk losing a

lot more if they stay on the sidelines.

(Helen Reid)

*****

SIKA LIBERATED (1129 GMT)

It's very quiet in Europe but not for Sika which is providing the biggest single

lift to the STOXX 600 today, up 8 percent after France's Saint-Gobain agreed a deal

that ends a hostile takeover battle for the Swiss builder that started in 2014.

Here's the story with all the background you need and below some views from the

sell-side on a deal that could finally allow Sika to focus on business and dealmaking, leaving

behind governance distractions.

ZKB: "We assess the liberation for Sika resulting from the agreement as very positive. This

should clear a path for Sika to achieve business growth and enable the company to also focus on

interesting larger acquisitions in the still-strongly fragmented construction chemicals market."

Baader Bank (Xetra: 508810 - news) : "With (Other OTC: WWTH - news) the legal issues now being resolved Sika is confident in the acceleration

of its growth strategy. With now potential bigger M&A targets on the agenda, the effects from

the value enhancing M&A transactions made in 2017 starting to materialize in 2018/2019 and a

very strong underlying growth we believe Sika will accelerate its top-line and margin expansion

even more in the coming years."

Meanwhile gains in Sika are helping Europe's construction & material index hit a

fresh three-month high.

(Danilo Masoni)

******

INVESTORS STILL RELUCTANT TO BUY INTO OIL STOCKS (1007 GMT)

Surging oil prices still don't seem to be enough to tempt investors into oil stocks, Bank of

America Merrill Lynch strategists note in their flows analysis.

Investors remain hesitant to pour their money into the energy sector, as BAML's chart below,

using EPFR data, shows. Flows into energy stocks are pretty timid compared to those into tech

(this week, the figures are $0.2 billion compared with $1.3 billion). Uncertainty over how long

oil prices can stay at these levels, and where they will go from here, is likely to blame (as DB

mentions - see previous post).

The relative performance of U.S. energy stocks to tech stocks, which usually tracks WTI

crude, has been lagging the climb in crude prices, while BAML's oil analyst Francisco Blanch

thinks there's a risk oil could reach $100 a barrel in 2019.

Accordingly BAML strategists advocate investors "buy the secular humiliation" in commodities

whose annualised returns are at historic lows.

Overall they say the market mood has gone "from buy the dip to sell the rip" - and they are

in the latter camp, predicting an "imminent" market peak. The Bull & Bear indicator has fallen

to 4.8, its lowest since January 2017.

(Helen Reid)

*****

FADING EURO/DOLLAR COULD BOOST EUROPEAN EQUITIES (0925 GMT)

What does the U.S. dollar's recent run up against the euro mean for the region's equities?

It's good news, especially for pharmaceuticals stocks, say Deutsche Bank (IOB: 0H7D.IL - news) analysts.

DB's base case is for the euro's weakening to help European equities outperform the U.S.

marginally over the coming months (3 percent relative upside by end-June) but then underperform

again to mid-September.

"In our tail-risk scenario of further sharp EUR weakness, Europe could outperform by a

further 10 percent by end-June," they add.

Outperformance would be welcome for investors in the region, who've been suffering from a

broad turn away from European stocks. Deflating enthusiasm in the region has driven money out:

this week marks the 9th straight week of outflows, according to Bank of America Merrill Lynch's

flow show.

Pharmaceuticals, which make the bulk of their sales in the U.S., could also stand to gain

from a strengthening dollar, as could Swiss equities (which have a strong healthcare weighting).

"If the bond yield and USD backdrop for pharma becomes more benign, this would point to upside

for Swiss equities," DB analysts argue.

A stronger dollar isn't great for commodity prices, however. DB remains benchmark on

European energy, citing uncertainty about the near-term oil price, and underweight European

mining.

(Helen Reid)

*****

OPENING SNAPSHOT: ZOOPLA-OWNER ZPG SURGES ON $3 BLN DEAL (0810 GMT)

M&A is the order of the day today, driving some impressive single-stock moves while

benchmarks are rising timidly.

Zoopla-owner ZPG is shooting up 30 percent, top of the FTSE 250, after Silver Lake

agreed a $3 billion takeover of the property ads website, a premium of 31 percent to ZPG's close

on Thursday.

The positive sentiment is driving Zoopla rival Rightmove (LSE: RMV.L - news) up 4.8 percent too, as well

as autos classifieds company Auto Trader.

ZPG's largest shareholder Daily Mail & General Trust, is enjoying an 8 percent

jump.

Swiss specialty chemicals firm Sika, meanwhile, is up 10 percent at the top of the

STOXX after reaching an agreement with Saint-Gobain to end a hostile takeover row.

Healthcare (Shanghai: 603313.SS - news) stocks are the worst performers after a couple of disappointing drug trials.

(Helen Reid)

*****

WHAT YOU NEED TO KNOW BEFORE THE OPEN (0647 GMT)

Friday might see a calmer end to a busy week but the STOXX 600 is set for its seventh week

of gains in a row – its longest winning streak in over three years.

Also of note is that European stocks have very nearly recovered all of their losses from

February’s volatility shock as we head back to levels last seen at the end of January.

As the Q1 earnings season winds down, it’s not been bad in Europe – not as good as the U.S.,

but good enough to keep shares bobbing along. Blended Q1 yoy earnings growth is coming in at 16

percent for MSCI EMU (in dollar terms), compared with 26 percent for the S&P 500, according to

Thomson Reuters I/B/E/S.

Today’s focus in that space will be Italian banks following updates from Mediobanca (Milan: MB.MI - news) , Monte

Paschi (Milan: BMPS.MI - news) and UBI Banca (Amsterdam: UF8.AS - news) . Despite recent weakness on political jitters, the Italian banking sector

has seen a strong 2018 so far, up more than 13 percent.

And finally the M&A train steams along in the UK with Silver Lake agreeing to buy ZPG

, which owns property websites Zoopla and Primelocation, for $3 billion – we’ll be

watching for readacross to other British property stocks.

(Kit Rees)

*****

FUTURES RISE AS STOXX CLOSES IN ON 7TH WEEK OF GAINS (0624 GMT)

European stock futures have opened modestly higher, as the STOXX 600 heads for its seventh

week of gains - its longest winning streak since March 2015. For the FTSE 100, seven weeks will

be its longest weekly winning streak in more than 10 years.

Certainly seems like sentiment among equity investors is improving in Europe.

In further company news, UBI Banca joins the flurry of Italian banks reporting

earnings, and AstraZeneca (NYSE: AZN - news) reports its Galathea phase III trial for pulmonary disease drug

Fasenra "did not meet its primary endpoint".

(Helen Reid

*****

EUROPEAN STOCKS EARLY HEADLINE ROUND-UP (0600 GMT)

In terms of earnings, today is set to be a calmer day, though early on we've had traffic

figures from Air France-KLM (LSE: 0LN7.L - news) and a Q1 update from Portugal's EDP, while it looks like a legal

dispute between Saint-Gobain and Sika has come to an end.

We've also had some figures out from a number of Italian banks, so these will be watched

with interest given the positive reaction to UniCredit (EUREX: DE000A163206.EX - news) 's numbers yesterday and the chunky gains

the sector has seen this year.

Here's a round-up of the early company headlines so far:

Portugal's EDP profit falls on regulatory pressure, forex

Air France-KLM suffers fall in April traffic numbers, blames French strikes

Italy's Mediobanca beats forecasts with Q3 net profit

Monte dei Paschi swings to Q1 net profit of 188 mln euros

ArcelorMittal (LSE: 0NSF.L - news) beats Q1 estimate, bullish on full year

Saint-Gobain to take stake in Sika as construction groups end dispute

(Kit Rees)

*****

MORNING CALL: EUROPEAN SHARES SEEN OPENING HIGHER (0525 GMT)

Good morning. European stocks are seen rising this morning, according to financial

spreadbetters, following on from a broadly positive session in Asia with equities supported by

easing worries over inflation.

Likewise continued efforts between the U.S. and North Korea to calm geopolitical tensions

have also been well-received by the market. Wall Street closed higher, with Apple (NasdaqGS: AAPL - news) heading

towards a $1 trillion stock market value.

In Europe, spreadbetters expect Britain's FTSE to open 14 points higher, Germany's DAX to

gain 19 points and France's CAC to dip 9 points. And the STOXX 600 is on track for its seventh

week of gains in a row!

(Kit Rees)

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