LIVE MARKETS-FAANGs still fund managers' favourites

* European shares rise, Italy's FTSE MIB falls 1.1 pct

* U.S., China to hold next round of trade talks in late August

* Atlantia (LSE: 0I2R.L - news) shares down 17 pct on motorway collapse fallout

* Wirecard (IOB: 0O8X.IL - news) jumps 9.4 pct after strong earnings, guidance raised

LONDON, Aug 16 (Reuters) - 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

FAANGS STILL FUND MANAGERS' FAVOURITES (1343 GMT)

Funds are holding on to their FAANGs, Citi's "Top Ten" analysis of favourite stocks shows.

Microsoft (Euronext: MSF.NX - news) was the most widely held stock at mutual funds while Alphabet (Xetra: ABEA.DE - news) was the most widely

held stock at hedge funds, Citi's analysis of the largest 50 actively-managed mutual funds and

largest 50 hedge funds finds.

"Not surprisingly, given the heightened interest in FAANNG, seven of the top ten names that

were owned by hedge funds in Q2 were in the IT sector," they write.

Of course, this was before the sharp declines in Facebook (NasdaqGS: FB - news) and Twitter (Frankfurt: A1W6XZ - news) shares. But BAML's

latest fund manager survey indicates appetite for tech is still (dangerously?) strong, as

investors named the FAANGs and BATs the most crowded trade for the seventh month running.

Relative to its market cap, Netflix (Xetra: 552484 - news) was by far the most owned in mutual and hedge funds

alike.

Sector-wise there was an interesting rotation in Q2 with mutual funds' top ten holdings

shifting away from financials and industrials in favour of healthcare and energy sectors.

Real estate, telecoms and utilities remained the smallest weightings in mutual funds and

hedge funds alike.

Citi also looked at the beta to the market of top holdings, to gauge willingness to take on

risk, and found mutual funds' average beta was ahead of average while that of hedge funds' top

holdings was slightly below average - perhaps indicating greater caution.

(Helen Reid)

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BEWARE PAPER TIGERS! (1320 GMT)

That's the name David Jane, manager of Miton’s multi-asset fund range, has given to assets

which are driven "by weight of money rather than real investment merit led by strong

fundamentals."

Jane says these "paper tigers" have seen their valuations driven up simply because they may

have a large weighting in an index or ETF.

He points to Turkey as a prime example and adds that he thinks we will see more cases like

this in the future, which could be in the Euro zone bond markets and in areas of high yield,

especially as the major economies shift from an era of low interest rates.

(Kit Rees)

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U.S. FUTURES POINT TO A POSITIVE OPEN AS CISCO, WALMART RESULTS IMPRESS (1248 GMT)

While European stocks hover, up around 0.3 percent with Italy lagging, U.S. stock futures

suggest major averages are poised to rally at the open with the Dow Jones leading the way

higher.

This as markets perceive a developing calm around the recent Turkey turmoil.

Additionally, bullish sentiment is underpinned by news that China and the U.S. plan to sit

down later this month and talk trade. That said, the market may be getting ahead of itself given

those talks are to be conducted by low level officials.

Throw into the mix strongly positive reactions to Cisco and Walmart's latest quarterly

reports, and the futures are green ahead of the bell. Cisco and Walmart are both Dow components,

and given their premarket gains, are set to provide about 85 points of upside to the blue-chip

average at the open.

And with metals and crude oil seeing some strength today, materials and energy sectors can

attempt to claw back some of their recent loses.

Meanwhile U.S. cinema chains are trading lower in pre-market on a report that Amazon is in

the running to acquire Landmark Theatres.

In terms of data, initial claims came in at 212k vs. a 215k estimate. Housing starts for

July printed at 1.168 million against a 1.26 million expectation, and the Philly Fed Business

index was 11.9 versus an estimate of 22.00.

Chip stocks will be in focus after the closing bell today with Nvidia (Swiss: NVDA.SW - news) and Applied Materials (NasdaqGS: AMAT - news)

set to release their quarterly reports.

Here is your premarket snapshot:

(Terence Gabriel)

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GLOBAL MARKETS: HEAD IN THE SAND? (1144 GMT)

While emerging markets' entry into bear territory grabbed everyone's attention yesterday

(see), European banks also hit that significant technical level, down more

than 20 percent from their Jan 26 peak.

Mining stocks were a whisker away from entering bear territory with a 19 percent

drop from their peak (as recent as June 6!).

So with some of the world's biggest banks and miners falling so sharply, should investors be

more worried about how fragile this late-cycle market really is?

The chairman of Murray International Trust, managed by Aberdeen Asset Management (Frankfurt: 899502 - news) , certainly

thinks investors still have their heads in the sand.

"For financial markets currently close to record high valuations and increasingly accustomed

to only upward momentum, the likelihood of slower growth and lower corporate profits remains

largely ignored, at least for now," said Kevin Carter in the trust's earnings release this

morning.

Food for thought...

(Helen Reid)

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HIDING OUT IN DEFENSIVE, HIGH-DIVIDEND STOCKS (1021 GMT)

The earnings season is drawing to a close and it's been a mixed bag with very sharp results

reactions and concerns about trade tariffs squeezing margins.

While some are finding reasons to be cheerful about European equities, RBC Wealth

Management's Frederique Carrier had this summary of the earnings season: "I didn't think it was

super strong."

Morgan Stanley (Xetra: 885836 - news) analysts, wary of further falls in European stocks, recommend tilting

portfolios towards high & secure dividend yield stocks - which they define as having a DY of 4

percent or more, where their analysts see an extremely low risk of a dividend cut over the next

few years.

"We see downside to our MSCI Europe price target on a 12-month view, so dividends should

naturally form a larger share of total returns," they write.

The relative importance of dividends has fallen in the past five years, but in the long run

they account for nearly half of European total returns (see below).

And overall equities still make sense from an asset allocation point of view, MS reckons,

noting equities are yielding more than even high-yield corporate bonds.

They see defensive value stocks as particularly attractive, calling them "a Value trade that

likes lower yields and flatter curves".

(Helen Reid)

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OPENING SNAPSHOT: EUROPE EDGES HIGHER (0717 GMT)

European stocks are on the rise in early trading as news of fresh U.S.-China talks set for

later this month soothes markets globally, though volatility in Europe has spiked back to its

highest level since the beginning of July.

While mining stocks prop up the market more broadly, we've also got a few movers at the tail

end of the earnings season, with Kaz Minerals (LSE: KAZ.L - news) and Wirecard among the biggest gainers following

their updates.

Shares (Berlin: DI6.BE - news) in JCDecaux (LSE: 0MGO.L - news) are up 7 percent after an upgrade to "buy" from Berenberg, whose analysts

say Google's interest in the outdoor ad market in Europe could be an opportunity for the

company.

Here's your opening snapshot:

(Kit Rees)

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WHAT'S ON OUR RADAR: MINERS, KINGFISHER (Frankfurt: 812861 - news) , WIRECARD, ATLANTIA (EUREX: 1683373.EX - news) (0645 GMT)

News that Chinese officials will hold trade talks with the U.S. in Washington later this

month was driving European stock futures up in early trading on Thursday, indicating a positive

open for the market which suffered sharp losses in the previous session as emerging markets

stress spread.

Base metals prices also rose on the news of a potential thaw in the trade war, providing

support for mining stocks which had their worst day since the Brexit vote on Wednesday as

emerging markets entered bear territory.

Investors’ focus turned to the last substantial batch of earnings from European companies as

a relatively strong results season drew to a close.

Copper miner Kaz Minerals reported a rise in first-half earnings after production increased,

results which could help the stock claw back from heavy selling suffered after the

Kazakhstan-focused miner bought a copper project in Baimskaya in Russia. Kaz was indicated up 3

to 4 percent.

German payments services firm Wirecard was seen rising 5 percent at the open after reporting

good first-half earnings and upping its 2018 guidance. The stock is likely to oust Commerzbank (LSE: 21170377.L - news)

in the next DAX reshuffle.

Home improvement retailer Kingfisher said a heatwave across Europe had helped drive a

pick-up in sales, but traders indicated the shares would fall 3 to 5 percent on a weaker

performance from its French brand Castorama.

Another stock which could suffer after results was Swiss semiconductor equipment firm Meyer

Burger, seen falling up to 5 percent after it cut its sales forecast. The semiconductor space

has been particularly sensitive this earnings season as doubts over the resilience of the tech

sector build.

Atlantia shares could be under further pressure as anger over the collapsed motorway bridge

in Genoa rose.

Kaz Minerals copper miner declares dividend, H1 earnings rise

Payments firm Wirecard raises outlook as DAX slot beckons

Home improvement retailer Kingfisher enjoys warm weather boost

Royal London says H1 operating profit up 1 pct

Casino operator Rank sets turnaround plan after profit, revenue drop

UK regulator sticks to 14 pounds/shr floor for Sky (Frankfurt: 893517 - news) from Disney

Meyer Burger Technology H1 EBITDA more than quadrupled

(Helen Reid)

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FUTURES RISE ON HOPES OF THAW IN TRADE WAR (0612 GMT)

Futures have opened strongly higher, up 0.4 to 0.8 percent across the board as investors

become more optimistic about trade relations on news of fresh U.S.-China talks.

The potential thaw in the trade war is also pushing base metal prices up, providing support

for Europe's mining stocks which had their worst day since the Brexit vote yesterday.

(Helen Reid)

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EARLY MORNING HEADLINE ROUND-UP: RESULTS BACK IN FOCUS (0545 GMT)

With (Other OTC: WWTH - news) risk appetite set to stage a recovery, investors also have a pretty big batch of

results to get their teeth into.

Carlsberg (LSE: 0AI3.L - news) raised its 2018 outlook and reported sales beat expectations, while German

consumer goods firm Henkel (LSE: 0IZ8.L - news) is seen falling after it trimmed guidance. Wirecard shares are tipped

to gain 5 percent at the open after it raised its full-year earnings guidance.

M&A news for Lagardere (Paris: FR0000130213 - news) could also spice up trading, while anger over Italy's Genoa bridge

collapse could continue to weigh on Atlantia.

And from Russia, an interesting insight into miners' efforts to reduce the role of the U.S.

dollar as they investigate rouble-based payments schemes.

Carlsberg raises 2018 outlook, Q2 sales beat expectations

Henkel trims profit outlook as forex, raw materials costs bite

Dutch insurer NN Group's Q2 profit jumps 25 pct, beats estimates

Swisscom (IOB: 0QKI.IL - news) keeps targets after slight Q2 beat

UK casino operator Rank Group's FY profit falls 40 pct, revenue slips

Air France-KLM (LSE: 0LN7.L - news) unions bristle as Air Canada (Other OTC: AIDIF - news) exec tipped for CEO job

Lagardere agrees to buy U.S. airport food group HBF for $330 mln

Tullow Oil (LSE: TLW.L - news) expects to hit full output capacity at Ghana TEN field by 2020

Anger at Italy bridge operator as hunt for survivors goes on

Russian miners explore payment schemes eschewing dollar

(Helen Reid)

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MORNING CALL: TRADE TALKS OFFER SUPPORT TO MARKETS (0518 GMT)

European shares are called higher this morning as an attempt at a relief rally spreads from

Asian trading after China said it would hold a fresh round of trade talks with the U.S. in

Washington later this month.

Asian shares pulled away from one-year lows Beijing said it would hold the talks, although

Turkey's currency crisis and fears of an economic slowdown in China kept most markets in the

red.

Spreadbetters expect London's FTSE to open 20 points higher at 7,518, Frankfurt's DAX to

open 49 points higher at 12,212 and Paris' CAC to open 14 points higher at 5,319.

(Helen Reid)

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