LIVE MARKETS-Italian stocks see some relief

* European stocks edge higher

* Italy's president seeks further consultations as novice put forward as premier

* Autos stocks climb after China says it will cut import duty on cars

LONDON, May 22 (Reuters) - 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

ITALIAN STOCKS SEE SOME RELIEF (1113 GMT)

Italian stocks are actually outperforming the broader market today, with the FTSE MIB

up 0.5 percent as financials bounce back and Italian government bonds also see selling

pressure ease.

But politics are still a worry - here are UBS (LSE: 0QNR.L - news) ' equity strategists with some handy

observations on equities and bonds as Italy's president seeks further consultations over 5-Star

and League's choice for prime minister.

• Correlation of Italian equities to Italian bond spreads is -0.6 percent;

• Div fins, banks and insurance are sectors most negatively correlated to bond spreads;

• Food & beverages/staples, healthcare, pharma and consumer durables are most positively

correlated;

• UniCredit (EUREX: DE000A163206.EX - news) , Intesa, Generali (EUREX: 566030.EX - news) have the biggest negative correlation to spreads;

• Luxottica (Milan: LUX.MI - news) , Eni (LSE: 0N9S.L - news) , Enel (LSE: 0NRE.L - news) offer protection.

And here's UBS' verdict on Italian equities:

"In our view Italy was ripe for some profit-taking on any bad news. Plus profits are lagging

Europe by 50 percent since end 2007. Perhaps Italy needs to pause for breath."

Italy's equity benchmark index is down 3.7 percent so far this month, and is coming

close to surpassing February's losses. Italian banks are down nearly 11 percent this

month, on track for their worst loss in nearly two years.

See below for UBS' chart showing the price performance of individual Italian stocks since

the referendum:

(Kit Rees)

*****

FTSE 100 WITHIN TOUCHING DISTANCE OF 8,000 POINTS (1041 GMT)

British shares are breaking record highs on a daily basis now with a number of analysts and

investors wondering rather 'when' than 'if' the FTSE will hit the 8,000-point level.

"At the rate it's going, we should hit this round number by Thursday, if not earlier," says

IG (Frankfurt: A0EARV - news) 's market analyst Chris Beauchamp who points out this performance comes despite "political

ennui, Brexit turmoil and a deteriorating consumer backdrop".

For most analysts, it's once again the fall in the pound and the rise in the dollar which

explain the upward trend of British stocks.

"As long as the BoE (Shenzhen: 000725.SZ - news) keeps merrily talking down the pound, the FTSE 100 looks to have a rosy

future ahead of it," writes Beauchamp.

Jordan Hiscott, Chief Trader at Ayondo Markets has a similar view: "Going forward, the

upward momentum and weaker currency is likely to continue and I wouldn’t be surprised to reach

8000 before the end of the summer."

Here's the FTSE's steady rise towards 8,000 this quarter:

(Julien Ponthus)

*****

ARE THE CULPRITS OF SPAIN'S UNDERPERFORMANCE BECOMING GOOD BETS? (1011 GMT)

There is something of a Spanish paradox here: the country has had stronger macro

fundamentals than many of its European peers yet the Ibex index has underperformed the Euro

Stoxx in the last three years.

According to UBS analysts, the culprits are Spain's 5 mega-caps: Santander, Inditex (Amsterdam: IT6.AS - news) , BBVA (LSE: 931474.L - news) ,

Iberdrola (Amsterdam: ID6.AS - news) and Telefonica (LSE: 826858.L - news) .

"These five stocks represent 51 percent of the index's total weight, and excluding them

would have resulted in the market outperforming," they write in a note this morning.

Leaving aside Iberdrola, which has been the top performer of the 5 mega-caps, UBS analysts

believe the prospects for the four others are now actually promising.

While Santander is a "high-return bank", BBVA, after a period of underperformance, has

reached an attractive valuation, UBS analysts reckon.

"We believe Inditex should be capable of producing double-digit EPS growth for the

foreseeable future," they add.

For Telefonica, they see "three main value drivers: the reduction in the company's heavy

investment in football content; more rapid disposals and focusing on core assets/markets and

exit non-core, allowing it to deleverage".

Here's UBS' table on the past performance of the "5 mega-caps" and the Ibex, and below a

simple chart showing performance of the Ibex versus the Euro Stoxx since May 1 2015.

(Julien Ponthus)

*****

OPENING SNAPSHOT: EUROPEAN STOCKS RISE, AUTOS SPEED AHEAD (0749 GMT)

European stocks have opened slightly higher, extending yesterday's broad bounce with autos

in the driving seat after Bloomberg reported that China is to cut import duty on cars to

15 percent from 25 percent.

Italian equities are choppy in early trading as banking stocks and utilities come under

pressure after the anti-establishment 5-Star Movement and the far-right League proposed Giuseppe (Shenzhen: 002687.SZ - news)

Conte, a little-known law professor, as prime minister. The Italian president is seeking further

consultations on the matter.

(Kit Rees)

*****

WHAT'S ON OUR RADAR FOR THE EUROPEAN OPEN (0646 GMT)

European stock futures are pointing to a slightly weaker open on Tuesday after Asian shares

were hit by a rising dollar and surging oil, stoking investors’ fears of inflation.

Germany’s DAX is likely to rise after it missed out on gains due to a bank holiday on

Monday. Switzerland and Norway will also rejoin European trading after a day off, bringing

trading volumes back to normal.

Italy will likely remain a focus after President Mattarella sought further consultations

over 5Star and League’s candidate for Prime Minister, a political novice – potentially stalling

the formation of an anti-establishment government whose spending plans have spooked investors.

Barclays (LSE: BARC.L - news) analysts say they expect the president to “take centre stage to make sure Italy remains

strongly committed to its European and Atlantic (Shanghai: 600558.SS - news) ties."

Airbus shares could rise today after the planemaker said it would set out measures that will

bring it into line with a WTO ruling on subsidies for its A350 and A380 jets. The French firm’s

shares were hit last week by the international trade body’s ruling.

Results were still coming through with Britain’s Halfords indicated to fall after a profit

warning – the latest in a series of British retailers to disappoint investors and downgrade

expectations. There were signs of strain also from French supermarket chain Carrefour (LSE: 0NPH.L - news) which said

it may have to close 227 stores it bought from DIA (EUREX: 13086668.EX - news) as it had not found a buyer for them.

A few extra stories to keep an eye on today:

Airbus says will obey WTO ruling on aircraft subsidies

UK's Halfords warns profit to be flat in 2018-19

Volatile markets lift profit at Britain's NEX Group

Fund firm ICG (LSE: 138026.L - news) gets full-year pretax profit boost as assets rise

Galliford Try (Stuttgart: 0GF.SG - news) says charges from Aberdeen project to increase

Pets at Home (Frankfurt: A1XFE7 - news) full year profit falls 12 percent

British lender Nationwide annual profit falls 7 pct

(Helen Reid)

*****

FUTURES POINT TO WEAKER OPEN FOR EUROPE (0614 GMT)

Looks like we're set for a hesitant open: European stock futures have opened marginally

lower, with the DAX the notable outlier with a 0.5 percent rise as the index catches up with

yesterday's gains when the German market was closed.

With UK company news coming through, here are a few potential market-movers:

Greencore reiterates guidance for full-year EPS

Homeserve (LSE: HSV.L - news) says CEO of UK unit to leave in 2018

Balfour Beatty (Other OTC: BAFBF - news) trading in line, on track for margin target

Halfords names former BA CEO Keith Williams as new chairman

(Helen Reid)

*****

EARLY MORNING HEADLINE ROUND-UP (0544 GMT)

With (Other OTC: WWTH - news) results season winding down in Europe, there are fewer company updates for investors to

get their teeth into, but here is today's harvest so far, including some regulatory and M&A

news, while Swiss hearing aid maker Sonova reports earnings. Of course the dollar and oil prices

will also be ones to watch:

Sonova boosts full-year profit, helped by EMEA region

British court dismisses charges against Barclays over 2008 Qatar deal

Britain unlikely to investigate Comcast (Swiss: CMCSA.SW - news) bid for Sky (Frankfurt: 893517 - news) , says minister

Carrefour could close 227 DIA stores in France after June 4

Italian president hesitates as novice put forward as premier

Dialog Semiconductor (LSE: 0OLN.L - news) gets new Apple (NasdaqGS: AAPL - news) orders - Euro am Sonntag

Zurich Insurance (IOB: 0QP2.IL - news) says completes share buyback programme

Oil prices edge up on Venezuela, Iran supply worries

(Helen Reid)

*****

EUROPEAN STOCKS SET FOR A MUTED START AS ASIA SKIDS (0526 GMT)

Worries over a strong dollar and rising oil prices are likely to drag on European trading,

after they weighed on Asia overnight.

Italy will remain in the spotlight, after the country's president Sergio Mattarella sought

further consultations over the appointment of political novice Giuseppe Conte as prime minister

of the 5-Star and League coalition government.

"A very last minute failure cannot be rule out, in our view, but a government between 5SM

and L seems very likely at this stage," wrote Barclays analysts late yesterday. "We expect

President Mattarella to take centre stage to make sure Italy remains strongly committed to its

European and Atlantic ties," they added.

Asian shares skidded on Tuesday as a strong dollar sapped demand for emerging market assets

while surging oil prices stoked concerns about a flare-up in inflation and faster U.S. interest

rate increases.

Germany's DAX is catching up with European benchmarks after a holiday yesterday, and set for

a strong rise.

Spreadbetters call the DAX 74 points higher at 13,152, while the CAC 40 is called down 2

points at 5,636, and the FTSE 100 4 points lower at 7,855.

(Helen Reid)

*****

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