LIVE MARKETS-Flybe vibe!

* European rally proved short-lived * STOXX down 0.9%, FTSE down 1.3% * S&P 500 futures are falling * Capita drops 18% 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 (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London. FLYBE VIBE! (1018 GMT) British regional airline Flybe's collapse raises coronavirus alarm bells further in a sector threatened by rising travel restrictions. As one trader rightly described: "the impacts from the coronavirus on travel demand proved the last straw for the beleaguered airline (Flybe)." With the scale of the damage to the industry estimated at up to $113 billion by IATA, this ain't a temporary problem, it could snowball into a major issue. The logical question here is wouldn't falling oil prices be a cushion? IATA says the big drop in crude prices is likely to lessen the blow only by $28 billion in 2020. "The turn of events as a result of COVID-19 is almost without precedent. In little over two months, the industry's prospects in much of the world have taken a dramatic turn for the worse," The International Air Transport Association says. It is increasingly clear with the price moves in airlines stocks: (Thyagaraju Adinarayan) ***** WHEN UTILITIES RULE THE ROOST (0954 GMT) Yes, there was a rally last night in the U.S., a massive one, indeed but the sentiment is still risk-off with utilities and other bond-proxy sectors at the center of this rally. It doesn't look like it's just in the U.S., this chart below shows that utilities are in demand globally. (Thyagaraju Adinarayan) ***** STOXX FAILS TO KEEP AFLOAT AS U.S. FUTURES WEIGH (0939 GMT) European shares defied negative U.S. futures at the open with a tentative rise. It was brave but it sure didn't last long. There was understandably quite a lot of FOMO in Europe after Wall Street jumped on a Biden's surge but sometimes life is unfair and it just wasn't meant to be. So no catch up for the STOXX 600, which has abandoned its gains and is down 0.6% while the S&P 500 futures are falling 1.6%. Anyhow, it's quite unusual to have European cash markets rising while Wall Street heads for a risk-off session, so in a way, the capitulation isn't that surprising. "U.S. futures are down due to fears the situation could worsen after California declared a state-wide emergency", Stephane Ekolo from TFS Derivatives just told us, adding that "European stocks are now catching up with the downward trend, dragged by a wave of profit warnings". This early morning's unusual move is however another example of how equity markets seem to be episodically misbehaving in this coronavirus crisis. Remember yesterday? European futures were clearly pointing to a positive open but that didn't prevent bourses to open in the red. And for a good while in morning trading, futures and cash markets were trading in opposite direction. See: Market oddities (Julien Ponthus) ***** OPENING SNAPSHOT: EX-DIVS, CAPITA AND ITV (0845 GMT) Some of the top movers today are Evraz, Rio Tinto, Persimmon, BHP, RSA and Standard Chart BK, which all went ex dividend. Outsourcing group Capita is down as much as 17% after it reported a sharp rise in net debt in its FY results and said it will have to invest more than initially thought in its ongoing restructuring. The pan European index is flat, while the FTSE 100 is down 0.4%. Here is your snapshot of the main European bourses: (Joice Alves) ***** ON OUR RADAR: FLYBE, HUGO BOSS AND PROSIEBEN (0757 GMT) Futures point to a high open for European bourses as investors found some relief in US multi billion funding bill to combat the spread of the coronavirus. Italy is also likely to increase to 5 billion euros ($5.6 billion) the value of measures to help the economy withstand the outbreak. Meantime, airlines continue to be under massive pressure. Flybe entered into administration, as the already struggling UK company failed to withstand the plunge in travel demand caused by the virus outspread. The luxury retail space is also feeling the heat with German fashion house Hugo Boss' Q1 profit warning, with sales falling particularly in Asia. Britain's biggest supermarket group, Tesco, will start price matching German-owned competitor Aldi on hundreds of everyday items, in its fight to stem the market share gains of its rival. In the M&A front, ProSiebenSat Media said its e-commerce arm NuCom will buy U.S. dating app developer Meet Group Inc. Staying in the media space, ITV reported better-than-expected 2019 earnings, but said ad demand was hit by coronavirus. Other two German stocks are seen gaining ground: Vonovia, which confirmed its 2020 guidance, and Merck KGaA, which said adjusted core earnings will see "strong" growth. (Joice Alves) ***** STIMULUS TO COMBAT CORONAVIRUS: YES OR NO (0645 GMT) There isn't a clear direction for the European bourses this morning as London's FTSE is seen lower after Britain pointed it is not certain yet if it will cut interests rates, while other main stock exchanges are seen open in the black mirroring Wall Street. While the BoE's next governor Andrew Bailey said the UK central bank should wait until it has more clarity about the economic hit from the coronavirus outbreak before making any decision to cut interest rates, Wall Street found some relief in the strong performance of Biden in the Democratic nomination campaign and in an approved $8.3 billion funding bill to combat the spread of the virus. Financial spreadbetters at IG expect London's FTSE to open 4 points lower at 6,811, Frankfurt's DAX to open 33 points higher at 12,161 and Paris' CAC to open 24 points higher at 5,489. (Joice Alves) ***** (Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)