LIVE MARKETS-A German cure to an Italian hangover

* European shares edge up at the open

* STOXX set for worst week in 3 months

* Eyes on OPEC meeting

* French, German surveys dispel slowdown fears

June 22 - 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

A GERMAN CURE TO AN ITALIAN HANGOVER (1152 GMT)

Italian equities have been world-wide outperformers for over a year but the party ended

abruptly mid-May when investors suddenly realised that a populist government might not be such a

good thing after all.

Now, according to SocGen analysts, the hangover might drag on and for the worst if Moody's

decides to take a negative view on the Italian sovereign debt.

"We think a downgrade is highly probable by the next review date on 7 September, which could

potentially trigger some downgrades for Italian corporates", SocGen - who is underweight on

Italy - writes, noting that a majority of FTSE MIB's constituents are rated BBB.

One way to hedge Italy is to invest in German equities.

"Political turmoil in Italy has been putting pressure on the euro, down by 6% since April

2018, a strong support for the DAX which is full of exporters", SocGen's note reads.

Here's a SocGen chart which shows how the Italian FTSE MIB companies have a way weaker

credit rating than their European peers.

And to illustrate the rise and fall of Milan versus the rest of the world, here's how the

FTSE MIB did against the mighty Nasdaq since December 2016.

(Julien Ponthus)

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TURNING BEARISH ON EURO ZONE STOCKS (1037 GMT)

Even though the dollar has been on a strong run recently, Credit Suisse Wealth Management

sees currency headwinds ahead for euro zone stocks and thus it has downgraded its stance.

"We remain confident in our Eurozone growth forecasts and see two interest rate hikes by the

ECB in 2019. As such, we believe EUR/USD has upside potential," they say.

"But with a stronger currency, Eurozone equities – already quite expensive versus the US –

will likely encounter headwinds over the next 3–6 months, so we move our view to underperform

accordingly," they add.

And macro headlines today appear to support this view, as the euro climbed after stronger

than expected French business activity in June raised hopes that concerns about a widening

slowdown in the eurozone in the second quarter may be slightly overdone.

(Danilo Masoni)

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OPENING SNAPSHOT: STOXX BOUNCES BUT SET FOR WORST WEEK IN 3 MONTHS (0728 GMT)

European shares are rebounding but the STOXX 600 benchmark is firmly on track for

its worst week in three months as trade war worries and political jitters take their toll. In

early trading the pan-European benchmark was up 0.2 percent, still down 2 percent on the week.

The bounce is broad-based but moves across sectors and single stocks are rather muted.

Banks are the biggest gainers, up 0.6 percent and led higher by BPER after insurer

Unipol raised its stake in the Italian lender, while the sell-off in

autos - hammered yesterday by a trade-related profit warning at Daimler - looks to be

filling out with their sectoral index down around 0.1 percent to lead fallers in Europe.

(Danilo Masoni)

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WHAT'S ON THE RADAR BEFORE THE OPEN (0646 GMT)

On a quiet end to the week for corporate news European benchmarks were set for a modest gain

with energy shares likely to support the market as crude prices rise ahead of a highly uncertain

OPEC meeting in Vienna.

The STOXX 600 and its euro zone counterpart were set for their biggest weekly loss in three

months, however, as the realities of rising global protectionism sink in for investors who had

been relatively nonchalant before this week.

The impact of trade war was concentrated in a few key sectors like autos and industrials,

and the pan-European autos sector index was eyeing its worst week since the selloff at the start

of January 2016 as a result.

PMIs for France (0700 GMT), Germany (0730 GMT) and the euro area (0800 GMT) will be a focus

for investors seeking further evidence to shore up the thesis that the euro zone’s weak economic

performance in the winter was merely a transient soft patch.

There's little news on the corporate front but energy stocks are likely to be key drivers as

crude prices rally on uncertainty over what producer cartel OPEC will decide at its meeting

later in Vienna – though the actual outcome may only become clear after market hours. CME Group

said there was more uncertainty about this meeting than any of the previous four.

News that the 35 largest U.S. banks cleared the first stage of the Fed’s annual stress test

could boost financials stocks. The U.S. subsidiaries of Deutsche Bank, Credit Suisse and UBS

publicly released their results for the first time and easily met all the minimum capital

requirements.

Here are some more headlines to watch:

Credit Suisse prevails in lawsuit seeking $300 mln for brokers -U.S. judge

Britain might not play fair with Brexit - Deutsche Boerse chief

SAP aims to double CRM business in two years - sales chief

Italy's Unipol buying further 5.2 pct of BPER, could buy more

Greek utility Public Power gets 6 expressions of interest for coal-fired units

BP seeks to lease LNG tanker for at least 9 months as day-rates rise

Paris ends Autolib electric car sharing contract with Bollore

Largest banks clear U.S. Fed's toughest annual stress tests

(Helen Reid)

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FUTURES POINT UP AS PMIS AWAITED (0607 GMT)

Futures for the main European benchmarks have opened higher, pointing to a small bounce at

the open.

PMIs will also be a focus today, giving a read on how transient the euro zone's winter "soft

patch" actually was.

Euro area figures are out at 0800 GMT, French numbers at 0700 GMT and German PMIs at 0730

GMT. Societe Generale analysts say they expect some stabilisation in the figures for June. "Any

further weakness in the PMIs would put our Q2 euro area GDP forecast of 0.7% quarter-on-quarter

at risk," they write.

Here are some headlines to keep on your radars for the open:

Deutsche Telekom's T-Systems to cut 10,000 jobs - CEO

Airbus says no-deal Brexit would force it to reconsider UK presence

JSW Steel plans bid for ArcelorMittal's Romanian plant

German carmakers join American farmers on front line of U.S.-China trade war

(Helen Reid)

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MORNING CALL: AN END-OF-WEEK BOUNCE, OPEC IN FOCUS (0535 GMT)

European shares are called modestly up at the end of a tumultuous week in which the reality

of higher trade tariffs has suddenly fully sunk in for investors.

The STOXX 600 is on track for its biggest weekly loss in three months.

Overnight Asian shares slid to their lowest in six months on signs U.S. trade battles with

China and many other countries are starting to chip away at corporate profits.

Oil markets are very much the focus today ahead of an OPEC meeting later in Vienna. The

outcome may not become clear until after market hours, and crude prices have been rallying on

uncertainty over whether the cartel will manage to agree a production increase.

Strong crude prices will likely help support energy stocks today, while it'll be interesting

to keep a watch on autos as they might well stay under pressure from tariff fears. The autos

sector is on track for its worst week since January 2016.

Spreadbetters call the FTSE 100 up 14 points at 7,570 the DAX 23 points higher at 12,535

and the CAC 40 13 points higher at 5,329.

(Helen Reid)

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