LIVE MARKETS-A future of automation beckons

* European shares fall after new US tariff threat

* STOXX 600 still set for small weekly gain

* Trump threatens $100 bln more in China tariffs

* Eyes on U.S. jobs report later in the session

April 6 - Welcome to the home for real-time coverage of European equity

markets brought to you by Reuters stocks reporters and anchored today by Danilo

Masoni. Reach him on Messenger to share your thoughts on market moves:

danilo.masoni.thomsonreuters.com@reuters.net

A FUTURE OF AUTOMATION BECKONS (0957 GMT)

Despite the recent negativity around tech stocks, the trends towards

automation and the rise of AI aren't going anywhere. Berenberg's analysts

explore what this could mean for the IT services industry.

Berenberg believes automation will diminish the "relevance" of off-shoring,

and undermine IT vendors which have relied on cheap labour. This is because work

will increasingly be carried out by bots - Berenberg sees the industry business

model moving away from being labour-centric and towards "labour plus IA

(intelligent automation)".

Berenberg also says the reason the rise of automation hasn't led to a

decoupling of revenue and headcount growth in the IT services industry is

because it instead allows workers to be retrained to perform tasks which boost

productivity.

They pick out Accenture (NYSE: ACN - news) , Cognizant and Capgemini as stocks which are set to

benefit, especially as they rely less on the offshore model.

See below a graphic cited by Berenberg, based on a study by Hfs Research and

KPMG showing that companies are planning significant investments in robotic

process automation (RPA) in particular:

(Kit Rees)

*****

EURO ZONE VERSUS UK TRADE IS BECOMING SO 2017 (0850 GMT)

It's still a popular trade but there's a chance it may not survive 2018 as

there seems to be a growing trend of big players ditching their overweight Euro

zone versus UK equities bets.

"While the outlook for Eurozone economic and earnings growth remains

positive, the period of peak acceleration appears to have passed," UBS Wealth

Management's Chief Investment Office says in a note, joining the list of market

watchers who believe the bloc has gone from "Euroboom" to "peak growth".

The Euro zone versus UK trade was a successful one, UBS CIO Mark Haefele

says, explaining that they now "no longer see the catalysts for further

outperformance".

Citi made a similar move yesterday (see our Farewell #Euroboom post

) upgrading the UK to "overweight" and downgrading Euro zone

equities to 'neutral', taking the view that "Europe's macro data is shifting

away from 'boom' territory and growth is no longer accelerating".

On the chart below you can see the difference in returns that an investor

would have enjoyed if he put the same amount of money in dollars in the EURO

STOXX and in the FTSE on June 1 2016, about three weeks before the Brexit vote:

(Julien Ponthus and Helen Reid)

*****

CITI DOWNBEAT ON UK RETAIL (0726 GMT)

Weighing on Marks & Spencer (Frankfurt: 534418 - news) and Next (Frankfurt: 779551 - news) shares today is a Citi note downgrading

both stocks, among other retailers.

Contrasting with the positive tone Deutsche Bank (IOB: 0H7D.IL - news) struck on general retail,

Citi says "we are not yet ready to turn more positive on the UK cyclical names".

In general retail they say "investors should buy online over offline, Europe

over UK and brands over retailers".

Their "most preferred" are Zalando (Swiss: OXZALG.SW - news) , adidas and Inditex (Amsterdam: IT6.AS - news) , and least preferred

are H&M, Kingfisher (Frankfurt: 812861 - news) and Next (EUREX: NXTJ.EX - news) (downgraded to sell).

Citi also downgrades M&S, ASOS (LSE: ASC.L - news) , Pets at Home (Frankfurt: A1XFE7 - news) and B&M to "neutral", while

Halfords gets an upgrade to "buy".

(Helen Reid)

*****

OPENING SNAPSHOT: CYCLICALS TAKE A DIP AGAIN (0717 GMT)

Stocks' sharp swings this week are enough to give you whiplash.

European stocks are trading down 0.5 percent, with the usual cyclical

suspects autos, basic resources and tech stocks the worst-performing after the

latest salvo in an ongoing exchange of tariff threats between the U.S. and

China.

Dufry (IOB: 0QK3.IL - news) meanwhile is leading gains with a 3.6 percent rise as

investors cheer its share buyback programme and dividend.

With (Other OTC: WWTH - news) corporate news very thin on the ground, broker notes are moving some

stocks. Next is down 2.7 percent after a downgrade from Citi to "sell",

while M&S is also suffering, down 2.9 percent after Citi downgraded it

to "neutral".

A few Nordic ex-divs in the mix too: Gjensidige Forsikring (LSE: 0OJC.L - news) , Upm (Taiwan OTC: 4752.TWO - news) -Kymmene, and

Volvo.

(Helen Reid)

*****

WHAT YOU NEED TO KNOW BEFORE EUROPE OPENS (0647 GMT)

European stock futures are trading down 0.3-0.7 percent, giving up only part

of the strong gains seen in the previous session as Trump's new China import

tariff threat does not appear to have changed the prevailing view that a

full-blown trade war is unlikely.

The pan-European STOXX 600 could still end the week with a small gain,

having risen 1.4 percent so far this week.

The focus later in the day will turn to the US jobs report for more clues on

the speed of policy normalisation in the U.S., while on the corporate front

there is no big market-moving news.

Traders said possible stock movers include Dufry, seen rising 1

percent after its dividend proposal topped expectations, while cable maker

Prysmian (EUREX: 3056144.EX - news) predicted higher core profit this year despite the negative

impact expected from currency swings.

In tech, concerns that the semiconductor boom is about to end, which hit

Samsung Electronics shares overnight in spite of a surprise Q1 record profit,

could weigh on European peers like Infineon (Xetra: 623100 - news) . Traders also said

Rheinmetall (IOB: 0NI1.IL - news) could be supported by the improving outlook for German

domestic weapons purchases.

(Danilo Masoni)

*****

DB UPGRADES EUROPEAN GENERAL RETAIL STOCKS (0636 GMT)

Strategists at Deutsche Bank have upgraded general retail to overweight and

downgraded food retail to benchmark, citing the positive momentum in sterling.

Europe's general and food retail sectors have more than 25% of sales coming

from the UK, DB says, making them very sensitive to the pound.

"While food retail has been Europe's strongest sector since November,

outperforming the market by 9%, general retail has been the weakest,

underperforming by 11% over the same period," the strategists note.

General retail stocks have thus not yet reflected the strong gains sterling

has been making. Though DB's FX strategists see the pound weakening over the

next six months, they say general retail could still outperform by about 10%

even under this bearish scenario.

(Helen Reid)

*****

EUROPEAN STOCK FUTURES DOWN LESS THAN 1 PERCENT (0618 GMT)

Trump's fresh tariff threat against China is surely going to weigh on

sentiment and European stocks futures are all heading south this morning.

However declines are all less than 1 percent and follow gains of more than 2

percent in the previous session, as investors still see a full-blown trade war

as unlikely.

"US President Trump threatened trade disputes with the rest of the world by

offering to subsidize US farmers. That may prompt talk of retaliation. However,

this is not a trade war. These are threats for the future, not real policies

now," says UBS WM Global Chief Economist Paul Donovan.

Here's your snapshot:

(Danilo Masoni)

*****

EARLY MORNING HEADLINE ROUNDUP (0556 GMT)

It looks there is no big corporate news out of Europe early this morning

that could have impact on single stocks. Anyhow here are the main headlines:

Vivendi (LSE: 0IIF.L - news) presents board candidates for Telecom Italia (Amsterdam: TI6.AS - news) in bid to please

investors

Italy's CDP says will build stake of up to 5 pct in Telecom Italia

Prysmian CFO sees higher 2018 core profit despite forex hit

Dufry proposes dividend, launches share buyback

France expects combat jet announcement at Berlin Air show - report

U.S. State Dept OKs possible $2.5 bln sale of military drones to Germany

Former JPM exec Zames among candidates to replace Deutsche Bank CEO -

Bloomberg

Norsk Hydro (LSE: NHY.L - news) 's Brazil unit sues local prosecutors over spill analysis

Saipem (LSE: 0NWY.L - news) main investors to ask shareholders to reappoint Stefano Cao CEO

Eni (LSE: 0N9S.L - news) , Qatar Petroleum are said to hold talks for deal on giant Mexico field-

Bloomberg

Saudi Aramco, Total (LSE: 524773.L - news) to sign refinery expansion deal next week - sources

Miners insist on rewrite of Congo mining code to protect exemptions

Enbridge (Dusseldorf: EN3.DU - news) said to seek partial sale of German wind farm stake - Bloomberg

Moody's places UBS (LSE: 0QNR.L - news) ratings on review for upgrade, maintains stable outlook

on Credit Suisse (IOB: 0QP5.IL - news)

(Danilo Masoni)

*****

EUROPE SEEN LOWER BUT NO SHOCK AFTER NEW TRUMP TARIFFS (0527 GMT)

After Wall Street closed yesterday, U.S. President Donald Trump threatened

tariffs on $100 billion more of Chinese imports.

The news, which sent U.S. stock futures back in the red, is going to weigh

on the European open this morning, although it looks investors are getting

somewhat used to the rhetoric.

"Trump has consistently taken a harder line than his advisers, so this might

not entirely shock the markets but it will certainly weigh on sentiment. Markets

will now watch both the rhetoric from Trump’s cabinet members and China’s

response to assess whether risk of a trade war is materially higher," said

Credit Suisse in its investment daily.

"We continue to see a trade war as unlikely," it added.

Financial spreadbetters expect London's FTSE to open 38 points lower at

7,161 (-0.5%), Frankfurt's DAX to open 99 points lower at 12,206 (-0.8%) and

Paris' CAC to open 35 points lower at 5,242 (-0.7%).

Later in the session the focus will turn to the U.S. non-farm payrolls

report, which could give more clues on the speed at which the Federal Reserve

will raise interest rates.

The U.S. March employment report is expected to show non-farm payroll growth

of 193,000 jobs versus 313,000 in the prior month, according to the latest

Thomson Reuters (Dusseldorf: TOC.DU - news) poll of economists.

(Danilo Masoni)

*****