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LIVE MARKETS-Investors flock to gold

* STOXX 600 hits highest in nearly a year, up 0.8% * FTSE 100 driven by JD Sports, "sin" stocks * STOXX food & beverage index hits fresh record high * EU leaders choose France's Lagarde for ECB * S&P 500 futures hit fresh record high July 3 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm:// INVESTORS FLOCK TO GOLD (1149 GMT) Many traders said it this morning: "buy gold" is flavour of the month as investors prepare their portfolios for a lower for (even) longer interest rate environment. Gold is seen as a safe haven to park money in during uncertain times, and at $1,420 an ounce it's near a six-year high. No surprise then that ETF flows show strengthening demand for gold. Gold ETFs brought in their largest monthly inflow in three years in June, according to UBS, with the bulk of the gains coming from U.S.-listed ETFs, while UK-listed ETFs accounted for a third of the inflows. While that indicates growing appetite for gold, especially from retail investors, a missing piece of the puzzle is Chinese investment appetite. "As gold continues to trade well, it will be interesting to see whether the upward momentum ultimately attracts investor attention in China, especially against the backdrop of lingering trade uncertainties," writes UBS strategist Joni Teves. (Helen Reid) ***** AUTO SUPPLIERS: "ENTERING THE WARNING SEASON..." (1009 GMT) Car stocks have done poorly over the last three months and some believe that the Q2 season could bring nasty surprises for the industry which is highly dependent on exports and is often traded as a proxy for trade war risks. Among those with pretty downbeat expectations are analysts at Mainfirst. In their preview on auto suppliers they say the sector is "entering the warning season...". Here are their main takeaways: * NO VISIBILITY: "The global car sales/production trend is dependent on China, as Western Europe might decline and the U.S. could continue to roll over, be it with a richer light-truck mix. After a 6-7% decline in car production in H1-19, a global volume recovery in H2-19 is uncertain. The comps are a lot easier in China and Europe, but will this be enough?" * WARNING SEASON: "H1 has probably been tougher than feared and market participants do not seem to have any visibility on H2: most might officially capitulate on 2019 outlook (Faurecia, Schaeffler) or deplete guidance either in Q2-19/H1-19 (Conti, POM) or in Q3 (Valeo, Stabilus), still assuming from a Summer viewpoint that they can still deliver on demanding targets." * CASH FLOW OR DIVIDEND AT RISK: "Most players should announce (further) cost-cutting should lacklustre production extend into Q3-19 (POM/Valeo/Leoni/Hella) to try and protect cash. Our new Valeo EPS put us 26% below consensus for 2019... We think that Valeo could slash its dividend for this year if profitability does not step up as spending bites". Below you can see share price moves on the STOXX Auto & Parts index over the last three months. Most companies have been underperforming the broader market. (Danilo Masoni) ***** DOVES FLY ON LAGARDE ECB NOMINATION (0821 GMT) The rally in Europe this morning is decidedly defensive with food & beverage, utilities, healthcare and real estate sectors leading the charge. High dividend stocks including AB InBev, British American Tobacco, Diageo, Unilever, and Nestle are among the biggest boosts to the STOXX as investors search for yield, reacting to what's likely to be a lower-for-longer interest rate environment. "There is a high risk the European Parliament rejects the current package of nominations," notes UBS global chief investment officer Mark Haefele. "But whatever the outcome, we continue to expect the ECB to remove the tightening bias from its interest rate forward guidance on July 25, and we see no rate hike next year." This morning's rally seems to suggest the dovish outcome is a boon for Europe, but UBS doesn't agree. "While the IMF chief is considered a qualified candidate, that won't necessarily make Europe a more attractive place to invest over a tactical horizon," Haefele argues. They're still recommending an underweight to euro-zone equities, saying the region isn't cheap - trading at around 13.4 times 12-month forward price/earnings compared to their fair value estimate of 12 times. (Helen Reid) ***** OPENING SNAPSHOT: GAINS IN DEFENSIVES ON DOVISH ECB PICK (0729 GMT) European stocks have opened 0.4% higher, led by strong gains in defensive sectors such as utilities, food & beverage (which hit a fresh all-time high) and real estate. The pan-European STOXX 600 hit a 2-month high, wiping off losses from the trade war escalation in May. Meanwhile the euro zone's banking index is sliding 0.6% after Christine Lagarde was named as the next ECB president, a pick interpreted as dovish and meaning lenders will have to wait even longer for a rate rise. Britain's FTSE 100 is outperforming other European indices, driven by "sin" stocks and a further slide in sterling. PM candidate Boris Johnson's pledge to launch a review into so-called sin taxes on products high in salt, fat and sugar are helping soft drinks makers rise. Drinks makers Britvic and Fevertree are up 0.7-1% while sweetener maker Tate & Lyle is up 1.6%. As expected, Sainsbury's slipped 2% after its first-quarter sales were hit by weak demand for clothing and general merchandise. It's quickly recovered, though, last trading down just 0.3%. Sportswear retailer JD Sports is among top risers on the FSTE 100 after the company said it's confident of meeting profit expectations. (Thyagaraju Adinarayan) ***** ON OUR RADAR: UK RETAIL, CYBERSECURITY FIRMS, CHIPS, BAYER (0641 GMT) European stocks are set to open flat to slightly higher amid general optimism that incoming ECB president Christine Lagarde will maintain the central bank's dovish stance, keeping interest rates lower for longer, while the euphoria following the U.S.-China trade talks fade. U.S. President Trump's appointments for Fed announced overnight are also considered dovish. Her appointment may pressure banks though. Banks, retail, chipmakers and cybersecurity firms are making headlines this morning. UK-based grocer Sainsbury's shares are seen under pressure after reporting a third straight quarter of declining underlying sales, while JD Sports is being called 2% higher after the sportswear retailer said it saw "encouraging" like-for-like sales growth and is confident of profit meeting expectations. Traders expect UK cybersecurity companies Avast and Sophos to rise 3% on Broadcom's plans to buy Symantec. Chip stocks are back in focus amid confusion over the easing of the U.S. ban on Huawei. A senior U.S. official told the Commerce Department's enforcement staff that China's Huawei should still be treated as blacklisted, a marked difference from Trump's statement over the weekend. A pledge by Boris Johnson to launch a review into the so-called sin taxes on products high in salt, fat and sugar if he wins the contest for leader are likely to boost shares in UK drinks makers, ABFoods, Fevertree, AG Barr and Britvic. Some dealers see the shares rising as he would look into whether or not the levies "unfairly hit those on lower incomes" even amid pressure to put taxes on high salt and fat content. More headlines: JD Sports says confident of profit meeting expectations U.S. judge to slash $80 million Roundup jury verdict-court hearing CBRE Group to buy Telford Homes for 267.4 million pounds Serco agrees to 19 mln pound fine over electronic tagging fraud (Thyagaraju Adinarayan) ***** LAGARDE'S APPOINTMENT, HUAWEI DRAMA, DEUTSCHE BANK (0628 GMT) European stock futures are rising marginally, but the big news today is Christine Lagarde's nomination as the next ECB chief. We're looking out for reactions in European banking stocks. "Lagarde is a dovish pick and likely to continue in the footsteps of Mario Draghi in her willingness to use the tools at the ECB's disposal to further monetary goals," JPM economists write. "As a seasoned crisis-fighter, Lagarde will share Draghi’s taste for aggressive and innovative monetary policy, especially as her appointment means the more hawkish Bundesbank President Weidmann misses out.... lower for longer, NIRP, coordinated easing = buy gold," writes a trader. The rally in chip stocks so far this week could come to a grinding halt as a senior U.S. official told the Commerce Department's enforcement staff that China's Huawei should still be treated as blacklisted, a marked difference from Trump's statement over the weekend. Otherwise, it's been dull on the corporate news front. Deutsche Bank shares are sliding 0.8% premarket on a Wall Street Journal report the troubled German lender held talks with Citigroup, BNP Paribas and others over the possible sale of parts of its equities business. British supermarket group Sainsbury's reports the third straight quarter of declining underlying sales, particularly hurt by weak clothing and general merchandise markets. And Purplebricks Group says it will pull out of the U.S. market in the latest setback for the struggling British online estate agent which is already preparing to exit Australia. Key headlines: DB held talks with Citi, BNP on shedding chunk of equities business -WSJ Sales at UK's Sainsbury's fall for third straight quarter Purplebricks says to pull out of U.S. business Vivendi urges Mediaset to revoke loyalty share scheme Amazon to add over 2,000 jobs in Britain this year U.S. govt staff told to treat Huawei as blacklisted Roche says one-dose Xofluza flu drug as good as older Tamiflu in kids (Thyagaraju Adinarayan) ***** EUROPE STOCKS SEEN OPENING FLAT TO SLIGHTLY HIGHER (0520 GMT) European stocks are set to open flat to slightly higher as the euphoria from U.S.-China trade truce fades. The pan-European STOXX 600 index has risen 1.8% over the last three days. Financial spreadbetters IG expect London's FTSE to open 9 points higher at 7,568, Frankfurt's DAX to open 7 points higher at 12,534, and Paris' CAC to open 2 points lower at 5,575. Big news from last evening: France's Christine Lagarde was nominated to replace Mario Draghi as the new head of the European Central Bank. "The nomination of Lagarde as head of the ECB should provide some relief given that Jens Weidmann (hawkish) will not be replacing Mario Draghi," Credit Suisse analysts say. Let's see how the European banking stocks react to the news. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)