LIVE MARKETS-Will the FTSE 100 get pounded this time?

* European shares rally on trade relief

* Autos, banks lead gainers

* Euro STOXX 50 set for 10-day winning streak

* FTSE boosted as May remarks on Brexit hit pound

* S&P, Dow hit record highs at the open

Sept 21 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to

share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net

WILL THE FTSE 100 GET POUNDED THIS TIME? (1412 GMT)

Britain's top share index is running towards its best day in more than five months

and the driver, once again, is sterling.

The pound - a barometer of investor expectations on Brexit - has come under fresh selling

pressure today after Theresa May warned EU leaders to come up with new alternatives to her

Brexit proposals if they are to break a deadlock in the talks.

A falling pound has historically boosted the FTSE 100, which makes around 70 percent of

total earnings from overseas. But this time could be different, says Janus Henderson fund

manager Oliver Blackbourn.

"Distinct from much of recent history, UK stocks might fall if the pound declines," he

warns.

"Unlike immediately after the referendum, trading terms for companies may start to change,

potentially dampening the benefits of a weaker currency. Higher barriers to trade have hurt

Chinese companies recently; the same can be expected for UK firms," he adds.

Below average valuations, good earnings growth and an elevated dividend yield, however,

could play in favour of UK stocks. What's sure is that "the ride might be a little bumpy".

(Danilo Masoni)

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WITH TIME, INSURERS GET BOLD (1347 GMT)

Yep, bold, not bald.

One would tend to think that as further we go into the longest ever bull market, investors

would get increasingly cautious and reluctant to add on risk.

Well, according to a BlackRock (Sao Paolo: BLAK34.SA - news) survey of over 370 insurers globally, it's quite the opposite

actually.

"47 percent of insurers plan to increase portfolio risk exposure over the next 1-2 years,

compared to a low of 9 percent in 2017", the report finds.

Even (Taiwan OTC: 6436.TWO - news) more strikingly, only 4 percent are planning to cut risk exposure:

(Julien Ponthus)

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SMALL IS (STILL) BEAUTIFUL FOR EUROPEAN STOCKS (1237 GMT)

We touched a couple of months ago on the outperformance of small-cap stocks in Europe - and

the smaller, better performing stocks are back on analysts' radars as investors seek a way out

of the flat returns of the broader market.

The small-cap call does face some challenges, UBS (LSE: 0QNR.L - news) highlights:

* M&A, usually a key driver of smallcaps, hasn't been that active recently

* European GDP growth is showing signs of slowing

* Risk appetite "may remain muted" with low liquidity and capital market activity

But analysts at the Swiss bank aren't too worried about leverage levels in small-caps, and

see the impact of interest rates as limited - though they increase exposure to financials as

they see opportunities there.

Small-caps are also on the radar for Deutsche Bank (IOB: 0H7D.IL - news) strategists who upgrade them from

benchmark to overweight.

Their rationale is small-caps tend to outperform when the euro is strong relative to EM FX -

due to their high domestic revenue exposure - and they have yet to reflect the recent strength

of the euro.

DB's model thus implies relative upside versus large caps at 5 percent. As you can see

below, small-caps in Europe have returned 4.4 percent over the past 12 months, while just

holding the MSCI Europe over that time would have left you with flat returns.

In terms of stock picks, UBS analysts add Bawag, ConvaTec and Micro Focus to their top 20

small-caps list, removing Autotrader, Bucher and Osram.

(Helen Reid)

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IGNORE FISCAL FOMO AT YOUR OWN PERIL! (1218 GMT)

One interesting thought from the Macro Tourist (East West Investment Management) newsletter

is that it's unlikely the rest of the world will continue to cope with the post-GFC paradigm of

austerity and aggressive monetary expansion while the United States successfully exits that

model.

Strategist Kevin Muir notes (without passing a judgment on the actual merits of this policy)

that the short-term success of massive fiscal stimulus coupled with gradual monetary tightening

has led to "economic outperformance", which simply cannot be ignored by other economic blocs.

"The entire world will look at America’s success and copy them," he writes, adding that more

spending, larger deficits and higher interest rates could lead to "strangely enough, probably a

much stronger global economy".

Interesting to note how this debate is already at the core of euro zone politics with

Italy's populist government seeking to increase spending to above levels the European Union

deems reasonable.

Here's an Italian Northern League supporter holding a banner reading "Flat Tax 15% now"

during a political rally led by Lega leader Matteo Salvini in Milan, on February 24.

(Julien Ponthus)

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MINING STOCKS IN YOUR ESG PORTFOLIO? REALLY? (1136 GMT)

Miners aren't generally seen as the cornerstone of any good environment, social and

governance (ESG)- friendly investment strategy - but it's the argument Bernstein's mining

analysts set out in a rare defence of the sector.

"We firmly believe that any fund that has pretensions towards an ESG mandate should be

overweight the miners," writes Bernstein's Paul Gait and team.

"Anything other than this seems to us to signal a significant confusion about the nature of

wealth creation and the role of mining in that process."

They go on to argue that most of the UN's Millennium Development Goals will require a

significant amount of natural resource extraction to achieve.

"There seems to be very little point in claiming ESG credentials if not actually committing

capital to the one sector that is genuinely indispensable to the delivery of any of the world's

most pressing development goals," writes Gait.

By Bernstein's estimates, the world will require a 240 percent increase in global average

steel stock to create the wealth the world needs to eliminate poverty.

Similarly, if we are all to drive electric cars someday soon, the copper stock needs to boom

by 248 percent.

"We would expect to see, albeit over the long term, a re-rating of the sector as this

growing awareness is reflected in capital inflows into the industry," Gait and team conclude.

Mining stocks have certainly climbed strongly this week as metals rallied - but they're

still down 4.6 percent on the year so still a long way to go to get back on investors'

favourites list.

And most ESG funds still exclude mining stocks (and oil stocks) by default - it'll take a

big sea change in sentiment on the highly polluting sectors to change that.

(Helen Reid)

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MIDDAY SNAPSHOT: IT'S LOOKING GOOD ON TRIPLE WITCHING DAY (1110 GMT)

Among other things it's triple witching today and that's boosting activity across European

indexes which continue to trade firmly in the black as the trade relief bounce enters its fourth

day.

Here's this week's key milestone and below you can se where we stand in Europe at the

moment.

* EuroSTOXX50 set for 10 straight days of gains - longest streak in three

decades

(Danilo Masoni and Thyagaraju Adinarayan)

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EUROPE LOOKING MORE BANKABLE THAN WALL STREET 5 YEARS AHEAD (1034 GMT)

European shares are expected to provide annualised returns of 6.3 percent over the next five

years, just slightly above their American peers, according to Northern Trust’s Capital Market

Assumptions five-year outlook.

While the theme of a structural gap between a buoyant Wall Street and sluggish European

indexes has grown these last few months, it won't prove to be a trend, the report suggests,

predicting a 5.8 percent figure for the US.

Among the key assumptions behind these "good-but-not-great" forecasts are continuously low

interest rates and inflation.

Asian emerging markets are expected to yield the best returns at 8.8 percent, the worst

coming from Canada with 5.5 percent.

The highest average annualised equity return is forecast for at 8.8%, Canada is lowest at

5.5 percent.

You can find the report here: https://bit.ly/2JmLVbn

(Julien Ponthus)

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INVESTORS SHRUG OFF EASING EURO ZONE BUSINESS GROWTH (1006 GMT)

We just mentioned Deutsche Bank sees euro zone PMIs bottoming out soon, but investors also

seem to be taking the latest data point in their stride despite the survey pointing to business

growth slowing again in September.

"Export orders are stagnating in the eurozone and the coming months will continue to be

bumpy as a deal on Brexit seems far away after Salzburg and the global trade conflict

continues," write ING economists.

But Paul Donovan, chief economist at UBS Wealth Management, reckons the PMI survey measures

aren't the be-all and end-all.

"Normal people, of course, do not fill in surveys as a rule nowadays," he notes.

Since 2010, the French manufacturing production PMI has had a 37 percent correlation with

reality, he says - Italy's has been 17 percent correlated while Germany is 1 percent.

"Some people might get excited about a 1 percent correlation with reality. Economists are

not those people," says Donovan.

Here's your PMI chart:

(Helen Reid)

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GO FOR VALUE! (0930 GMT)

Deutsche Bank has just said investors should stay overweight value vs growth, confirming its

presence in the growing chorus of those who say that betting on inexpensive European stocks is

likely to be a winning strategy.

Andreas Bruckner, Sebastian Raedler and Thomas Pearce at the German bank first made the

recommendation in June but since then value has continued to underperform growth, easing by

another 1 percent.

Nevertheless they believe that the drivers of value outperformance - Euro area PMI momentum

bottoming out and rising U.S. 10-year bond yields - will hold true.

The 10-year Treasury yield is hovering at four-month highs, topping 3 percent, while the

latest PMI survey today has shown euro zone business growth eased again this month but optimism

picked up a tad from August's 23-month low.

Deutsche Bank says value could outperform growth by 7 percent by early November and also

flags some picks: Allianz (Swiss: ALV-EUR.SW - news) , BNP Paribas (LSE: 0HB5.L - news) , Daimler (IOB: 0NXX.IL - news) and Glencore (Amsterdam: GX8.AS - news)

. Value sectors like autos and banks are leading sectoral gainers today.

(Danilo Masoni)

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OPENING SNAPSHOT: EUROPE EXTENDS RALLY, FOOD DELIVERY STOCKS TUMBLE (0716 GMT)

European stocks are rising further with the STOXX50E up 0.6 percent, Germany's DAX up 0.8

percent and the STOXX 600 up 0.5 percent. Autos, miners and banks are again the top gainers.

Just Eat (Frankfurt: A1100K - news) is the top faller this morning, down 7.5 percent after a report Uber is in early

talks to buy Deliveroo. While some traders saw the stock - and peers Delivery Hero and Takeaway

- rising on the news of dealmaking in the sector, it seems like, as one put it, "the competitive

threat outweighs M&A valuations".

Just Eat may be the top victim as Uber seems to have picked rival Deliveroo over it.

Takeaway is down just 0.2 percent and Delivery Hero is falling 1.3 percent.

Shares (Berlin: DI6.BE - news) in British industrial technology firm Smiths are also falling 7 percent after its

full-year profit missed analysts' estimates.

(Helen Reid)

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ON THE RADAR: A ONCE IN 30-YEARS PERFORMANCE? (0649 GMT)

European blue chips seem to be heading straight into a 10th day of gains in a row as the

trade war relief rally shows it has legs even if its substance is still anyone’s guess.

According to a first glimpse into our record, there haven't been 10 straight sessions of

gains since 1997! Even if European indexes, unlike Wall Street, are not on record highs, it does

still show something!

Futures are firmly up and barring a disaster in French, German and euro zone sentiment

indicators later this morning, the upward trend seems solid enough. In the meantime, there is

also enough corporate news to animate morning trading.

Reports that Uber is in early talks to buy food delivery company Deliveroo could fuel

excitement in the industry and for companies such as Just Eat. Similarly talks and denials of a

tie-up between state-owned Emirates and Etihad could also trigger more speculation in the

airlines sector.

In the news-sensitive Italian banking sector, Carige's top investor secured a majority of

seats on the beleaguered Italian bank's new board on Thursday, after falling out with a third

chief executive in three years.

Comcast (Swiss: CMCSA.SW - news) and Twenty-First Century Fox will also settle their takeover battle for Sky (Frankfurt: 893517 - news) in a

weekend auction run by British regulators, setting up a dramatic climax to a 21-month sale

process that has pitted some of the world's biggest media giants against each other.

Still in the world of M&A, France’s Tikehau Capital said it had entered into exclusive

negotiations to acquire Sofidy which has 14.8 billion euros of assets under management.

Belgium’s Nyrstar (LSE: 0RH8.L - news) might be under pressure this morning after warning adverse market

conditions would impact its third quarter earnings.

Negative news report for Deutsche Post (IOB: 0H3Q.IL - news) with business daily Handelsblatt reporting slower

progress than expected to turn around the group's struggling letters and parcels unit. Alstom (EUREX: 2229080.EX - news)

announced a deal worth up to 1.3 billion euros for the Paris region.

(Julien Ponthus and Helen Reid)

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FUTURES RISE: A 10TH DAY OF GAINS FOR EURO ZONE BLUE CHIPS? (0617 GMT)

It's been quite straightforwardly positive so far this morning and the futures now also

point towards a rosy open for European stocks.

The session could be lead to a spectacular performance for euro zone blue chips

which could score ten straight sessions of gains.

The last time it did nine straight positive sessions was in June 2010.

(Julien Ponthus and Marc Angrand)

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EUROPE TO RISE AT THE OPEN, TRADE RALLY HAS LEGS (0520 GMT)

Good morning and welcome to Live Markets!

European shares are seen rising at the open as the relief rally prompted by fading trade war

worries shows investors it has legs.

After new records and Wall Street last night, Asian stocks have extended gains. Now

financial spreadbetters expect London's FTSE to open 21 points higher, Frankfurt's DAX to rise

45 points and and Paris' CAC to add 13 points.

(Julien Ponthus)

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