LIVE MARKETS-Ignorance is bliss: Wednesday's case against insider trading

* European stocks rise to 1-week high

* Earnings boost Airbus, Aegon (Swiss: AGN.SW - news) , Ipsen

* Nestle (Swiss: NESN.VX - news) falls on earnings disappointment

Feb 15 - 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

IGNORANCE IS BLISS: WEDNESDAY'S CASE AGAINST INSIDER TRADING (1611 GMT)

Let's be brutally honest, no one saw that one coming! Yesterday's markets

reaction to the U.S. inflation data was a real surprise and a lot of clever

people are still trying to figure out what really happened, how this time a

higher than-expected CPI figure actually triggered a rally and not a slump.

In his morning note, Deutsche Bank (IOB: 0H7D.IL - news) strategist Jim Reid makes a funny point:

a dishonest investor with early knowledge would most likely have lost money.

"Yesterday was one of those days where having the most important data

release ahead of time probably wouldn’t have helped you much. In fact it may

have helped you lose money in risk," he writes.

Here's Reid's takeway:

"The price action yesterday perhaps tells us that the normalisation from

last week’s vol shock is more powerful for markets for now than the data.

"However if this inflation trend holds (as has been and still is our

expectation) we’re in for some real fun and games in markets in 2018 once the

dust settles."

(Julien Ponthus)

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WORRY ABOUT TECH DISRUPTION, NOT BOND YIELDS: NICK TRAIN (1541 GMT)

Rising bond yields have triggered some concerns over the higher-valued parts

of the market, including heavyweight consumer stocks such as Unilever (NYSE: UL - news) ,

Diageo (LSE: DGE.L - news) , and Heineken (LSE: 0O26.L - news) .

These are the top three holdings in UK fund manager Nick Train's portfolio,

and he argues investors shouldn't panic about the rise in yields because there's

far bigger things to worry about: namely, disruptions from a consumer tech

revolution.

"Why are investors debating 'quality versus value' in the second decade of

the 21st century? It's such a 20th century question," Train writes in a letter

to investors. "The more relevant one for 2018 is 'Will my company be a

beneficiary or a victim of digital technology?'"

"We're sure it is far more relevant to worry about this issue than whether

bond yields are set to go up a bit."

And besides, the aforementioned tech revolution could actually keep a lid on

inflation - there are signs of this already.

"There could be years more 'good' deflation to come as technology-driven

price-finding unravels the unjustified price premiums," he says.

(Helen Reid)

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BREXIT: UK ASSETS MISS OUT ON GLOBAL ECONOMY OPTIMISM (1459 GMT)

Investors are increasingly confident in the global economy but are

increasingly prone to ditch UK assets, State Street's latest "Brexometer" survey

shows.

"While a rising tide is supposed to lift all boats, the weight of Brexit

uncertainty is now suppressing, although not yet submerging, attitudes toward UK

Assets", writes Michael Metcalfe, head of global macro strategy.

"More than 54 percent of Brexometer respondents were positive on medium-term

(three to five year) global growth prospects, while 23 percent (up from 18

percent in Q4) suggested they would reduce their holdings of UK assets in the

coming six months," the report reads.

(Julien Ponthus)

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WHY MARKETS LOOK COMPLACENT ABOUT ITALY'S ELECTIONS (1446 GMT)

Several analysts believe that an Italian grand coalition is the best vote

outcome for financial markets. As a grand coalition is also the most likely

scenario, it's no wonder investors appear complacent about political risk in

Italy, even though the anti-establishment 5 Star Movement is the leading party

in opinion polls.

Berenberg estimates a 70 percent probability of an Italian government

supported by a grand coalition of centre-right and centre-left parties.

"A technocrat-led grand coalition should enable the structural reform

process and economic recovery to continue, allowing for stable inflation, a

falling budget deficit and a narrowing of the bond spread with Germany from the

current 130bp," they write in a note published today.

And here's how a London-based hedge fund manager sees it: "I must say people

don't really care about Italy's elections... the 5 Star Movement already last

year hinted around that an exit from the euro was not feasible."

That being said, we must recall that some other hedge funds like Bridgewater

have opened short positions on Italian stocks including banks as the March 4

election date approaches.

(Danilo Masoni)

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EARLY AFTERNOON SNAPSHOT: EUROPE AT 1-WEEK HIGH, VOLATILITY IN CHECK (1341

GMT)

European shares are bouncing for a second day and with futures pointing to a

positive open on Wall Street and volatility under control, the STOXX 600 is

cruising ahead, staying at one-week highs, up 0.7 percent. Here's how we stand

on European equity markets with less than an hour left before U.S. markets open.

(Danilo Masoni)

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WHY DID THE MARKET SHRUG OFF U.S. INFLATION DATA? (1102 GMT)

After a correction triggered by wage growth numbers indicating inflation was

building, yesterday's U.S. inflation figure was hotly anticipated.

But all the anxiety dissipated rapidly after a sharp dip when inflation came

in higher than expected, and stocks swung back like nothing had happened, and

are rising higher today. Here are a few takes on this mysterious bounceback.

"You would have expected Wednesday's inflation figures to trigger another

really big down day. But it didn't, and for me that's a clear indication that

inflation is not as big a threat as people made it out to be over the past

couple of weeks," says Lukas Daalder, chief investment officer at Robeco.

"One of the key factors that was seen to be pretty risky all of a sudden is

not seen as risky - this is an indication the market wants to go higher and at

the moment the 'buy the dip' force is still very very strong," he added.

"2017 was a very momentum-driven market, and if that's still the case, which

after yesterday it appears to be, then we will probably see new highs before too

long."

Another element driving markets up could be investors feeling more confident

having invested in some insurance against a further sell-off.

"After the carnage the week before, the market has a lot more downside

protection," says a trader. "People would have bought downside options which

means there is not so much urgency to sell."

UBS Wealth Management's CIO today echoes others in the market who've warned

not to take these monthly releases too seriously as they can be warped by

seasonal factors and adjustments. "One-off data releases tend to be 'noisy' and

may not indicate a change in the trend."

(Helen Reid)

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NESTLE'S FALL HIGHLIGHTS PRESSURE ON HIGHLY VALUED COMPANIES (1045 GMT)

Nestle is the biggest negative weight to the STOXX this

morning, its shares down as much as 2.8 percent to a 10-month low. Its update

clearly disappointed but its share price reaction also highlights that highly

valued companies like the Swiss food giant need to deliver more to keep

investors happy in such markets. Anyway here are some more granular views from

the sell-side views on what went wrong.

Baader Helvea: "Weak 4Q organic growth and the bare minimum of strategic

decisions. Overall rather a weak set of figures, in our view. The strategic

transformation looks on track, but those hoping for acceleration in speed might

be disappointed. In a volatile stock market environment this might bring

short-term pressure on the share price".

Zürcher Kantonalbank: "The quality of the margin trend is disappointing,

with savings in marketing and a disappointing trend for the gross profit margin.

Given the stock's higher valuation compared with its peers, we anticipate the

share price will react negatively".

But UBS sees the glass half full: "While we think these results & guidance

are not enough to re-rate the shares, we highlight some positives that should

limit downside: Nestlé expects US tax reform to result in a 200bps reduction in

its tax rate from 2018 onwards; it is reviewing the strategic options for Gerber

Insurance business, signalling more portfolio management to come; and (3) Nestlé

does not intend to increase its L'Oréal stake and will not renew the shareholder

agreement with L'Oréal to keep its options open in the future"

Nestle is trading at a price of 20.1 times its earnings, above its 10-year

average and above the PE multiple of peers Unilever and Danone (LSE: 0KFX.L - news)

, as you see in this chart. https://goo.gl/q9ZyBJ

(Danilo Masoni)

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WANNA BUY CHEAP EUROS? HOW ABOUT SPANISH EQUITIES? (1026 GMT)

Here's the pitch from Intl FCStone (Frankfurt: I4F.F - news) : if you are bullish on the euro, a

cheaper way than bonds or cash to get into that trade is to buy European

equities, in particular Spanish stocks.

"Spain looks particularly interesting because its forward P/E has fallen by

18.5 percent since the index peaked in May. Spanish equities trade for 12.4

times forward earnings, matching the levels observed during most of the

sovereign debt crisis," strategist Vincent Deluard writes.

Here's his chart:

Deluard also points out that while European equities did not underperform

during the recent correction, they did not match their U.S. peers during the

preceding "melt-up".

Have a look at the STOXX versus the S&P 500:

(Julien Ponthus)

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OPENING SNAPSHOT: IT'S ALL ABOUT EARNINGS (0825 GMT)

European shares are on the up in early trading as well-received earnings

updates send shares in Airbus, Ipsen and Aegon to

the top of the STOXX, while a broader bounce in commodities-linked firms and

banks is also adding to gains.

A fall for Nestle is weighing on the Swiss Index, while the

bond proxy-type sectors are all on the backfoot as bond yields continue to march

higher.

Here's your opening snapshot:

(Kit Rees)

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WHAT'S ON THE RADAR FOR THE EUROPEAN OPEN (0741 GMT)

European stocks were set to extend their rally on Wednesday as equity

investors around the world shrugged off a spike in U.S. inflation which had

caused a sharp but short-lived drop in stock markets in the previous session.

Futures indicated gains of 0.5 to 0.8 percent across Europe’s major benchmarks.

A raft of earnings to digest today including heavy hitters Nestle and

Airbus. Nestle said it had no plans to increase its stake in L'Oreal, and a

trader said the comments had triggered speculation Nestle could sell its stake.

The Swiss food giant’s shares were indicated down 1.6 percent in pre-market.

Airbus shares were seen up 3 to 4 percent after profits for Europe’s largest

aerospace group came in higher than expected, although it took a new 1.3 billion

euro hit on its A400M military transport plane.

With (Other OTC: WWTH - news) the rand hitting three-year highs against the dollar after

President Jacob Zuma resigned, stocks exposed to South Africa could get a boost.

And autos stocks could gain from data showing sales of passenger cars in Europe

rose twice as fast in January as in the whole of 2017.

(Helen Reid)

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HOT EUROPEAN HEADLINES (0736 GMT)

Once more it's set to be a busy day of earnings, with numbers from the likes

of Nestle, Airbus and Schneider Electric (EUREX: SND1.EX - news) to keep traders busy. Below is a

round-up of this morning's key European company and macro headlines.

Nestle disappoints in 2017, no plan to increase L'Oreal stake

Airbus takes 1.3 bln euros charge on A400M military plane

Schneider Electric ends 2017 on high note despite currency

headwinds

Capgemini annual revenue beats on strong Digital and Cloud

business

Norwegian Air reports bigger-than-expected Q4 loss

Aegon reports Q4 earnings above analysts' expectations

Straumann FY revenue hit $1.08 bln on higher sales

Insurer NN Group's Q4 profit jumps on Delta Lloyd (Euronext: DL.NX - news) takeover

Insurer Lancashire warns of tough year ahead, swings to loss

Anglo-Dutch RELX to end dual-company structure, profit rises 6 pct

Britain's ConvaTec 2017 profit down 3.3 percent on supply issues

Lloyds axes $140 bln Standard Life Aberdeen contract

European car sales up 6.8 pct in January, led by French gains

French unemployment falls to lowest level since 2009

Amazon says to create 2,000 jobs in France in 2018

Hedge fund Bridgewater makes $22 bln bet against European firms

ANALYSIS-Sorry, not sorry: Wall Street not quitting 'vol' products

(Kit Rees)

*****

FUTURES POINT TO STRONG OPEN FOR EUROPEAN STOCKS (0711 GMT)

Stock futures have opened robustly higher - up 0.5 to 0.8 percent - across

the major European benchmarks, indicating yesterday's rally will be extended.

German bund futures have opened lower, however, as yields continue to rise

across markets.

Looks like JP Morgan may have been prescient in its Monday note arguing "The

negative correlation between stock and bond prices is not dead, in our view, it

will quickly reestablish itself and ultimately prove a valuation cushion in case

of further equity weakness."

(Helen Reid)

*****

ECB POLICYMAKERS, EARNINGS IN FOCUS (0635 GMT)

After yesterday's U.S. inflation data, European investors will be focusing

on, among other things, speeches by ECB policymakers Praet, Mersch and

Lautenschlaeger.

"We think they might signal that the recent market turbulence is not a

source of concern given the strength of the current expansion," write Societe

Generale analysts. "They are also likely to reiterate that the asset purchase

programme will continue until September this year and that what happens beyond

then is entirely data dependent."

A heavy slate of earnings today to keep traders and investors occupied as

well: Airbus announces it's taking a 1.3 billion euros charge on its

A400M military plane, clouding its better-than-expected profits, while budget

airline Norwegian Air reports a bigger than expected Q4 loss. Other big

companies reporting today include Nestle and Capgemini.

In other results:

Schneider Electric ends 2017 on high note despite currency headwinds

Straumann FY revenue hit $1.08 bln on higher sales

Insurer NN Group's Q4 profit jumps on Delta Lloyd takeover

(Helen Reid)

*****

MORNING CALL: INFLATION? WHAT INFLATION? (0616 GMT)

Good morning and welcome to Live Markets.

European stocks are called to open strongly higher today, following the lead

of Asian markets which gained after Wall Street shrugged off a spike in

inflation many had feared would derail equities once again.

Asian shares rose overnight after U.S. stocks took the inflation data in

their stride, with the Dow Jones up 1 percent and the S&P 500 up 1.3 percent.

Bonds plunged, however, as Treasury yields jumped, in anticipation of more rapid

U.S. interest rate hikes.

Currency movements could colour European trading today, with the euro

hitting a 10-day high against the dollar as the greenback suffered further

losses.

Spreadbetters call the DAX 132 points higher at 12,470.9, the CAC 40 up 50

points at 5,215.2, and the FTSE 100 35 points higher at 7,248.8.

(Helen Reid)

*****