LIVE MARKETS-Germany, like die Mannschaft, has a lot to prove

* European shares recover some losses

* STOXX set for third straight week down

* Deutsche downplays idea of Commerzbank (Xetra: CBK100 - news) deal

* BT CEO to step down, shares up

* Kering (LSE: 0IIH.L - news) recovers as analysts lift targets

June 8 (Reuters) - 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

GERMANY, LIKE DIE MANNSCHAFT, HAS A LOT TO PROVE (1221 GMT)

Germany disappointed again this morning with weak industrial output and exports which are

weighing on the euro.

The data could very well signal that the euro zone's current "soft patch" is not that

temporary and lead the way to slower than expected growth.

Germany is supposed to be the powerhouse of the Euro zone but so far this year, it hasn't

much to show for it, ING argues.

"The German economy shows increasing parallels with the national football team, which

although entering the World Cup in Russia next week as defending champion, has not won a single

match this year," the bank's analysts write.

Another interesting read on the poor German statistics was from Oxford Economics for which

the word 'ouch' is becoming closely associated with German data. "This ('ouch') has become the

default reaction to the release of German high frequency business cycle data as a series of

gloomy data points since the end of last year."

Barclays (LSE: BARC.L - news) revised its Q2 growth expectations from 0.6 percent to 0.4 percent and gave a

bleaker outlook.

"With (Other OTC: WWTH - news) risks of trade protectionism crystallizing and fiscal stimulus slightly delayed, we

also change our H2 forecasts... these changes imply annual real GDP growth in Germany of 2% in

2018 and 2.1% in 2019, down from 2.3% and 2.4%".

Time (Frankfurt: A11312 - news) for German fans to manage expectations?

(Julien Ponthus)

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LUNCHTIME SNAPSHOT: OFF LOWS (1156 GMT)

It looks like some appetite for risky assets has returned with the STOXX 600 last

trading down just 0.1 percent, having fallen as much as 0.8 percent in morning trading.

In the snapshot you can the stocks that are contributing most points to the pan-European

index. Leading them is Kering, up as several price target upgrades helped shares in

the luxury group recover from a heavy drop suffered yesterday on worries that margins and growth

in the sector may have peaked.

(Danilo Masoni)

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BOND PROXIES VS BANKS: TIME TO SWITCH? (1106 GMT)

Next (Frankfurt: 779551 - news) week's ECB meeting is going to be a "live" one but whether policymakers will indeed

deliver a hawkish surprise on their massive bond buying programme cannot be taken for granted.

What looks certain instead is that the European Central Bank is keeping its options open as

its moves towards policy normalisation. And that may well prompt some investors to start

reconsider their sectoral allocations.

Much in focus will be sectors highly sensitive to the direction of interest rates - bond

proxies and banks.

Over the last four months, utilities and real estate, which tend to benefit from lower bond

yields, have clearly outperformed banks, which instead benefit when rates increase.

For Deutsche Bank strategists, however, the days of this outperformance may be numbered and

say it's time to position for higher bund yields. Here's what they recommend:

* Upgrade banks to small overweight from benchmark

* Downgrade real estate to underweight from overweight

(Danilo Masoni)

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OPENING SNAPSHOT: IN THE RED (0721 GMT)

The market is selling off pretty sharply this morning with the DAX and FTSE MIB both falling

as much as 1.2 percent at the open, and the STOXX down 0.5 percent.

Every stock on the German index is in the red, and overall it's financials that are taking

the brunt of the selling. Meanwhile German Bund yields are falling as investors turn back to

safer assets.

Looks like there is more than just a bit of anxiety in markets ahead of the G7 leaders'

summit which starts today. Here's our latest on the build-up to that:

"I am going for a big sell-off," says one trader. "Way too much complacency."

France's Eutelsat (Paris: FR0010221234 - news) and SES are some of the only silver linings, up 6 and

3.6 percent after the U.S. Federal Communications Commission expanded market access for SES' O3b

satellite constellation.

Ingenico (Paris: FR0000125346 - news) is also getting a boost from Barclays' upgrade to "overweight".

(Helen Reid)

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WHAT YOU NEED TO KNOW BEFORE EUROPE OPENS (0650 GMT)

European shares are expected to open lower today with futures pointing to declines of

0.6-1.1 percent. The STOXX 600 regional benchmark is on track for its third weekly loss in a row

as expectations of tighter monetary conditions, renewed strength in the euro and growing

political worries take their toll.

Expectations the ECB could signal plans to wind down its bond buying programme as early as

next week could continue to support banking stocks, as well as fresh reports about possible

dealmaking in the sector.

Shares (Berlin: DI6.BE - news) in Deutsche Bank (IOB: 0H7D.IL - news) and Commerzbank are seen rising as much as 2 percent after Bloomberg

reported that top shareholders had been consulted about a potential tie-up between the two

German lenders.

Other stock movers: BT's CEO Gavin Patterson to step down (+1% pre-mkt); Hermes to replace

LafargeHolcim (LSE: 0QKY.L - news) in France's CAC 40 stock index from June 18 (+1% pre-mkt); Thyssenkrupp (IOB: 0O1C.IL - news) examines

sale of naval vessels business - source (+0.5% pre-mkt); Sports betting passes New Jersey

legislature, moves to governor; Novo Nordisk (LSE: 0QIU.L - news) considers laying-off up to 3,000 staff - Danish

paper Borsen; Lloyds sells Standard Life Aberdeen stake

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUNDUP (0554 GMT)

Deutsche Bank sounds out investors about Commerzbank deal-Bloomberg

Deutsche Bank says chairman sees no need to bring up Commerzbank deal [nL5N1T96HL

Novo Nordisk considers laying-off up to 3,000 staff - Danish paper Borsen

Hermes to replace LafargeHolcim in France's CAC 40 stock index from June 18

Sports betting passes New Jersey legislature, moves to governor

RBS CEO says wants to buy bank's shares back from UK government

Lloyds sells Standard Life Aberdeen stake

Thyssenkrupp examines sale of naval vessels business - source

Bosch (BSE: BOSCHLTD.BO - news) might sell packaging technology unit - FAZ

BPER CEO says fighting pressure to cut bad debt with collection unit sale

Julius Baer (LSE: 0QO6.L - news) looks to fixed price system to bolster returns

MEDIA-SocGen (Paris: FR0000130809 - news) executives ordered Libor rigging, US prosecutors believed- FT

BP complains to Canada regulator about Enbridge (Dusseldorf: EN3.DU - news) oil pipeline actions

Ex-Volkswagen CEO summoned to testify in emissions lawsuit-Bild

Geordie Greig named as neweditor of Daily Mail

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN LOWER (0524 GMT)

European shares are expected to start the session in the red with financial spreadbetters

expecting London's FTSE to open 24 points lower at 7,680. Frankfurt's DAX is set to open 98

points lower at 12,713 and Paris' CAC to open 30 points lower at 5,418.

Over in Asia, shares stepped back from a 2-1/2 month high as risk appetite soured on bets

that Europe's massive monetary stimulus was nearing an end, compounded by uncertainty over trade

relations ahead of a key meeting of global leaders.

(Danilo Masoni)

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