LIVE MARKETS-Incoming: Brexit headlines!

LONDON, March 7 - Welcome to the home for real-time coverage of European equity markets

brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on

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INCOMING (Other OTC: ICNN - news) : BREXIT HEADLINES! (1134 GMT)

The EU's Tusk is to present the bloc's draft guidelines for a future relationship with

Britain after Brexit at 1215 GMT but the key point has already leaked out: the bloc plans to

offer British-based financial services companies only limited access to the Single Market,

according to a draft document quoted by Bloomberg.

Britain's Hammond will get a chance to answer at 1430 GMT when he announces his Brexit plan

for banks and how he intends to protect the industry from a Brexit hit.

In the meantime, the British banking sector is down 0.1 percent. Notice that

the pound, which rarely trades in the same direction than the FTSE, is losing close to 0.3

percent against the euro. The British blue chip index is down 0.1 percent.

Here are the views of Andreas Koening, head of global FX at Amundi (Berlin: 350155.BE - news) , on sterling:

"I am short on sterling. They were too positive before Brexit negotiations a couple of weeks

ago. There are more frictions in the discussions. I think significant detereoration in Brexit

negotiations is not priced in. They still expect some kind of deal which is the most logical

outcome. But if something negative happens, then we go another 3-5 percent down from current

levels."

(Julien Ponthus and Saikat Chatterjee)

*****

#EUROBOOM LOSING SOME OF ITS SHINE (1113 GMT)

Figures from Eurostat confirm Eurozone GDP expanded by 0.6 percent in Q4 with both domestic

demand and trade boosting growth, but some signs of weakness emerged.

Consumption growth was the weakest in nearly four years, at 0.2 percent, Oxford Economics

lead economist Nicola Nobile writes.

"These latest numbers do take some of the gloss off the #Euroboom," Nobile says, adding the

pick-up in inflation could be the reason why consumers have been more reluctant.

Exports growth has remained strong, however, up by around 2 percent over the quarter.

"This confirms our view that Eurozone companies have taken stock of the acceleration in

world trade and dynamic domestic demand that have increased capacity pressures in industry, by

ramping up investment," he says.

(Helen Reid)

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EUROPE Q4 PROFIT GROWTH STILL SEEN BEATING U.S. (1022 GMT)

The reporting season in Europe is past its mid point and as numbers continue to roll in

earnings expectations confirm their solid momentum and still point to stronger fourth quarter

growth in Europe than in the United States.

Combined fourth-quarter profits of companies in the pan-European STOXX 600

benchmark index are seen rising 19.4 percent, against the 15.1 percent rise expected for the S&P

500, according to Thomson Reuters (Dusseldorf: TOC.DU - news) analyst David Aurelio.

Revenues in Europe are seen rising 2.5 percent, against 8.2 percent for the U.S., indicating

that cost cutting is a key driver for the outperformance.

At the country level, Austria (+117.7 percent) and Italy (+51.5 percent) are leading the

advance, while the UK (+15.4 percent) is below the rate expected for the STOXX.

Here's your Q4 forecast chart:

And here are forecasts for 2018 that show growth slowing to 1.8 percent in the first quarter

and climbing back to a peak of 17 percent in the third quarter:

(Danilo Masoni)

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RETURN OF TRADE WAR: HOW WOULD ESCALATING TARIFFS IMPACT EUROPE? (1018 GMT)

The latest episode in a developing trade spat between the U.S. and the rest of the world has

put a dampener on trading today.

"Markets viewed Cohn as a voice of reason on trade policy," says UBS Chief Economist Paul

Donovan. "The Trump Twitter feed has denied "chaos" in the administration, but senior staff

turnover has been unusually high. This undermines the policy continuity that markets crave."

Tariffs on steel alone would pose no great risk to the Eurozone, UBS (LSE: 0QNR.L - news) analysts argue: the

biggest exporters of steel to the U.S. are Canada, Brazil, South Korea, Mexico and Russia.

But should a fully-blown trade war develop and impact other areas, this would of course be

negative. To assess the potential impact, UBS has collated the biggest sectors exporting to the

U.S. - and therefore most at risk from protectionism (see table below).

"Apart from automobiles, pharmaceuticals and machinery equipment rank highly and would thus

be hit hard by U.S. import tariffs," analysts write.

(Helen Reid)

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AD AGENCIES WPP, PUBLICIS HIT BY P&G SPENDING CUT (0906 GMT)

It's the latest bit of bad news for advertising giants WPP (Frankfurt: A1J2BZ - news) and Publicis (Paris: FR0000130577 - news) ,

whose shares are among the notable fallers today.

Procter & Gamble (Swiss: PG-USD.SW - news) is reported to be cutting its spending on ad agencies by $1.25 billion over

the next three years, aiming, according to the Telegraph, to "take back control" (where have we

heard that before?) from the big agencies and invest instead in internal analytics.

Digital disruption of the advertising model has put ad agencies under increasing pressure in

recent years. Below you can see that 2017 was the first year in many that WPP's shares didn't

follow the market higher, as bigger corporate budgets stopped automatically translating into

more ad agency spending.

(Helen Reid)

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OPENING SNAPSHOT: TRADE WOES WEIGH, ROLLS ROYCE SHINES (0821 GMT)

Shares (Berlin: DI6.BE - news) across Europe are falling and nearly all sectors are in the red this morning after

Gary Cohn's resignation reignited concerns over trade wars.

But on the corporate front there are some outstanding performers, particularly among UK

firms, which could be helping the FTSE 100 outperform European peers.

Rolls Royce (LSE: RR.L - news) shares are up 10.6 percent after the engine maker reported strong results

with profit beating expectations.

Smurfit Kappa (Frankfurt: SK3.F - news) is also a top gainer, up another 3.7 percent after having shot up 20

percent on Tuesday. Its suitor International Paper confirmed it had proposed 8 billion

euros for the company.

Meanwhile ad agencies' shares are falling, with traders pointing to an FT report that

Procter & Gamble is to cut ad agency spending by $1.25 billion over the next three years.

Publicis and WPP are both suffering, down 2.4 percent and 1.7 percent.

(Helen Reid)

*****

COMPANY NEWS MORNING HEADLINE ROUND-UP:

They’re back. Trade war fears made a comeback last night when Donald Trump made fresh

comments on tariffs and his economic adviser Gary Cohn, seen as a bulwark against protectionist

forces within the administration, resigned.

European futures are lower, in line with Asian indexes and U.S. futures which are also in

negative territory. Wall Street closed too early to digest the news.

So it’s mainly about politics today but there’s still some corporate news to animate the

session, including International Paper's confirmation of its proposed takeover of Smurfit Kappa:

Telecom Italia (Amsterdam: TI6.AS - news) promises higher investor returns under 3-yr digital push

Rolls-Royce 2017 profit beats, cautious on this year

Smurfit Kappa rejects International Paper's $10 bln bid

SAP (Amsterdam: AP6.AS - news) execs see margin gains beyond 2020 as cloud costs subside

Deutsche Post DHL eyes further profit increase in 2018

RTL sees revenues growing 2.5-5 pct in 2018

Novartis (IOB: 0QLR.IL - news) , U.S. partner plan remote trials to boost participation

UK insurer esure's full-year pretax profit rises 35.6 pct

Italy's Carige says can't meet new investor's board seat request

RBS (LSE: RBS.L - news) reaches $500 mln settlement with New York over mortgage securities

YNAP in line with 5-year plan, core profit margins to rise in 2018 -CEO

(Julien Ponthus and Tom Pfeiffer)

****

EUROPEAN FUTURES OPEN LOWER AS TRADE WAR FEARS SPREAD (0710 GMT)

European futures have opened lower as fears that new U.S. tariffs could ignite a trade war

spread to Europe:

(Julien Ponthus)

*****

MORNING CALL: EUROPE SEEN OPENING LOWER AS TRADE FEARS RETURN (0617 GMT)

Fears of an imminent trade war had eased during the previous session, allowing shares to

recover but the resignation of White House economic adviser Gary Cohn, seen as a bulwark against

protectionist forces within the Trump administration, means we are back where we were.

Financial spreadbetters expect London's FTSE to open 18 points lower, Frankfurt's DAX down

36 points and the Paris CAC down 16 points at the open.

(Julien Ponthus)

****

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