LIVE MARKETS-What happens after peak margins?

* European shares fall 0.3 percent

* Weak China PMIs sap risk appetite

* Zalando surges up 18 pct, Altran gains 12 pct

* Howden Joinery tumbles after results

* Eyes on U.S. GDP estimate

Feb 28 - 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

WHAT HAPPENS AFTER PEAK MARGINS? (0954 GMT)

An interesting quirk of this cycle is that margins have been the main driver of earnings

growth, contributing more than 60 percent of EPS both in the U.S. and Europe, according to

Goldman Sachs.

That's in contrast with previous cycles during which revenue growth - largely a function of

GDP growth - was responsible for over 70 percent of the rise in profits.

European margins are now at a record high of 7.6 percent, meaning from here the only way is

down. Margins tend to come under pressure when economic growth slows (as we've seen in several

company results) and restructuring is politically more difficult in a downturn, GS says.

"We think margins are unlikely to expand further, depriving EPS growth of its main driver,"

strategists at the U.S. bank write, cutting their 2019 EPS growth forecast from 4 percent to 2

percent.

The sectors they see as likely to struggle most to expand margins are food & beverages,

utilities, telecoms, and autos.

Another damning piece of data from Goldman Sachs' analysis: in terms of post-crisis

recovery, European margins are lagging far behind the U.S..

U.S. margins are about 280 basis points above their pre-crisis peak, against just 40 basis

points for European margins.

(Helen Reid)

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OPENING SNAPSHOT: ZALANDO, ALTRAN, VIVENDI SHINE WHILE SUNRISE, HOWDEN SLIDE (0826 GMT)

European shares are sliding across the board today with the STOXX and DAX both down 0.5

percent and mining stocks the worst-performing.

"Sentiment is on the weaker side after China’s soft PMIs," says Deutsche Bank strategist Jim

Reid.

The spotlight is really on results, though, with some superb gains for Zalando and Altran

while Sunrise and Howden are being punished by investors.

Europe's biggest online-only fashion retailer is leading the pack today with a steep 16.7

percent gain after it said sales rebounded in the fourth quarter and it won 1.3 million new

customers, its biggest quarterly increase in five years.

French engineering consultancy Altran Technologies is gaining 12 percent after free cash

flow beat expectations.

M&A is also driving some moves.

Vivendi, meanwhile, is top of the CAC 40 after a Reuters report, citing sources, said KKR

and China's Tencent are preparing bids for a stake in Universal Music Group.

Switzerland's Sunrise Communications is sinking 11 percent after it agreed to buy Liberty

Global's Swiss unit in a 6.3 billion Swiss francs deal to create a bigger challenger to

Switzerland's dominant mobile and internet provider Swisscom.

Another big faller is British kitchen cabinet and equipment company Howden Joinery, down 8

percent. Traders and analysts say its results missed expectations and show ongoing margin

pressure.

(Helen Reid)

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WHAT YOU NEED TO KNOW BEFORE THE OPEN (0757 GMT)

European shares are set for a weaker start as they consolidate further from over

fourth-month highs hit earlier this week with investors turning less upbeat about a Sino-U.S.

trade deal and after a disappointing reading from Chinese official PMI. Futures were down

0.2-0.5 percent.

On the corporate front there are a number of earnings updates to digest with some

good-looking numbers from heavyweights that could help limit losses.

AB InBev shares could rise after the world's largest beer maker forecast strong revenue and

profit growth in 2019, while Swiss engineering company ABB also reported better-than-expected

earnings.

In the UK, British American Tobacco, the second-biggest international tobacco company,

reported higher full-year sales, helped by growth in vaping devices. Shares in AB InBev, ABB,

and BAT are all seen up in pre-market trade.

M&A also seems to be heating up. Sunrise agreed to buy Liberty Global's Swiss unit in a 6.3

billion Swiss francs deal to create a bigger challenger to Swisscom, while sources told Reuters

that KKR and Tencent Music are exploring rival bids for up to half of Vivendi's Universal Music

division, a deal potentially worth up to 20 billion euros.

Also seen rising after results are shares in BA owner IAG and Rolls-Royce after

forecast-beating numbers, while shares in Zalando and Duerr were also set to rise.

For more headlines check out the previous post.

(Danilo Masoni)

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FUTURES SLIP, EARNINGS IN FOCUS, M&A HEATS UP (0715 GMT)

While European stock futures have opened slightly in the red, down 0.2-0.5 percent,

confirming earlier indications from spreadbetters, on the corporate front there are some

good-looking updates that could limit losses.

ABB and AB InBev both reported forecast-beating profits, while in France

Carrefour said its turnaround plan was well on track and raised its savings goals.

On a more downbeat note, staffing group Adecco posted a fourth quarter loss and

said hiring in Europe continued to slow at the start of this year.

M&A also appears to be heating up.

Sunrise agreed to buy Liberty Global's Swiss unit in a 6.3 billion Swiss francs

deal to create a bigger challenger to Swisscom, while sources said KKR and Tencent

Music Entertainment are exploring rival bids for up to half of Vivendi's Universal

Music division, a deal potentially worth up to 20 billion euros.

Here's your futures snapshot and below your headlines roundup.

ABB reports forecast-beating Q4 profit as robotics shines

AB InBev profit beats forecasts, sees strong growth in 2019

Adecco sees hiring slow further after German business spoils Q4

Retailer Carrefour raises cost savings goal under overhaul plan

Panalpina FY profit lifted by ocean freight recovery

Sunrise challenges Swisscom with $6.29 bln deal for Liberty Global assets

KKR, China's Tencent eyeing bids for Universal Music - sources

Saipem sees higher sales this year after beating guidance

Zalando targets more growth after strong end to 2018

Erste Group sees 2019 operating profit increase

Shell, PetroChina JV Arrow wins leases for big Australian gas project

(Danilo Masoni)

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CONSOLIDATION SET TO CONTINUE IN EUROPE (0636 GMT)

European shares are expected to open a tad lower this morning, as they consolidate further

from the more than 4 months peak reached earlier this week.

Financial spreadbetters at IG expect London's FTSE to open 12 points lower at 7,096,

Frankfurt's DAX to open 1 point lower at 11,487 and Paris' CAC to open 4 points lower at 5,221.

Over in Asia, stocks struggled for traction after cautious comments from U.S. Trade

Representative Robert Lighthizer deflated some optimism that China and the United States were

closing in on a trade deal. MSCI's broadest index of Asia-Pacific shares outside Japan slipped

in and out of the red and was last down 0.5 percent.

The session in Europe may be livened up by several companies reporting their earning updates

with the reporting season drawing to its close.

On the macro front all eyes are on the first estimates of the U.S. GDP, while in China data

has shown that factory activity contracted to a three-year low in February, highlighting

deepening cracks in its economy.

(Danilo Masoni)

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