LIVE MARKETS-Fresh June 2018 peak as trade-sensitive stocks, Italy rally

* STOXX 600 scales new peaks; up 0.1% * Italy leads gains as Brussels drops disciplinary action over budget * Metso, Osram rally on M&A action 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: thyagaraju.adinarayan.thomsonreuters.com@reuters.net FRESH JUNE 2018 PEAK AS TRADE-SENSITIVE STOCKS, ITALY RALLY (0726 GMT) European stocks hit their highest since mid-June last year buoyed by hopes of rate cuts and as U.S. and China are set to resume trade talks next week while optimism in Italy is injecting extra fuel to this week's stellar rally. The pan-European STOXX 600 is now up 0.1% driven by solid gains in trade-sensitive auto stocks and Italian banks. Export-heavy German blue-chips is up 0.3%. M&A is driving gains in single stocks with Metso jumping 6% after its minerals unit is set to merge with rival Outotec and Osram is rising another 4% after confirming a takeover bid by Bain and Carlyle. French car parts maker Valeo is up 2% after winning a 500 million euro ($564 million) order for its 'Lidar' car sensor products. Italian blue-chips continue to stand out making handy gains (+0.5%) again today after EU Commission's decision yesterday to drop its threat of disciplinary action against Rome. Italian banks have jumped 2.4% on top of yesterday's 5% rise and are set for their best 2-day gain since April 2017. UK housebuilders are under pressure as Britain's second-largest homebuilder Persimmon slides 2% after reporting a slowdown in order intake. British Airways-owner IAG and Coca-Cola HBC are top fallers as they go ex-dividend. (Thyagaraju Adinarayan) ***** MORE GAINS? DEUTSCHE BANK, UK HOUSEBUILDERS, VALEO IN FOCUS (0633 GMT) European stock futures indicate a slightly higher open for all major indices as U.S. and China are set to resume trade talks next week after the euro-zone blue chip index and the STOXX 600 closed at one-year highs yesterday. On the corporate news front, German lighting group Osram is set for more big moves after confirming a takeover approach from private equity firms Bain and Carlyle and confirming its supervisory board would meet soon to review the 3.4 billion euros ($3.8 billion) offer. Shares are up 6.6% in early Frankfurt trade. Deutsche Bank's restructuring continues to make news with the German lender preparing to unveil a multi-billion euro overhaul within days that would see the axe fall heaviest on investment bankers, according to sources. Separately, in less comforting news, German prosecutors are escalating a money laundering inquiry involving the bank. Some good news for the troubled autos sector as French car parts maker Valeo has won 500 million euros ($564 million) worth of orders for its 'Lidar' car sensor products. But airlines continue to struggle: Norwegian Air's June traffic figures have come in below analysts' estimates as the airline continues to be hit by the grounding of 18 Boeing 737 Max planes. UK housebuilders are back in focus after Britain's second-largest housebuilder Persimmon reported lower first-half revenue due to slowdown in order intake. More gains in Italy? Italian blue-chip index touched a two-month peak yesterday, helped by a strong rally in banks, after the European Commission dropped its threat of disciplinary action against the country. Major company news headlines: Valeo announces 500 mln euros of orders for its 'Lidar' sensors Deutsche Bank to axe investment bankers in up to $5.6 bln revamp German prosecutors intensify Deutsche Bank client investigation - source Osram to consider $3.8 bln takeover bid from Bain, Carlyle Sweden's EQT targets Asia Pacific as IPO decision looms Asda boss sees possible stock market listing in 2-3 years Energean to buy Edison's oil and natural gas unit for $750 million Housebuilder Persimmon reports lower revenue amid business revamp (Thyagaraju Adinarayan) ***** A SIX-DAY WINNING STREAK? (0529 GMT) After five straight days of gains, European stocks are seen opening flat as the excitement around interest rate cuts and optimism around U.S.-China is likely to fade. Financial spreadbetters IG expect London's FTSE to open flat at 7,609, Frankfurt's DAX to open 14 points higher at 12,630, and Paris' CAC to open 1 point higher at 5,620. Euro-zone stocks hit the highest in more than year yesterday on hopes ECB chief nominee Christine Lagarde will maintain the central bank's dovish stance. On the U.S.-China trade war front, Trump administration officials said top representatives from both the countries are arranging to resume talks next week. Wall Street, which is closed for Independence Day today, ended at record closing highs on Wednesday. Europe's winning streak: (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)