LIVE MARKETS-Italy? "We expect increased volatility"

March 5 (Reuters) - 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

ITALY? "WE EXPECT INCREASED VOLATILITY" (0649 GMT)

Europe may open slightly up today as it recovers from a bad week but the Italian vote will

likely keep the Milan bourse under pressure with IG (Frankfurt: A0EARV - news) analyst Vincenzo Longo calling the FTSE MIB

index down more than 1 percent at the open today.

The vote is set to result in a hung Parliament with very uncertain government prospects, as

anti establishment parties M5S and Lega delivered a stronger than expected results.

Chief Investment Officer UBS WM Italy Matteo Ramenghi believes an alliance between M5S and

Lega looked unlikely, although warns of a volatile period ahead for Italian assets.

"We expect lengthy negotiations after these elections, which may lead to increased

volatility of Italian assets," he says.

"A broad grand coalition would be well received by markets as it could result in political

stability and fiscal discipline. Repeat elections could prolong uncertainty and weigh on Italian

assets. The Italian equity market has not priced in electoral uncertainty, but current yields on

government bonds suggest they have incorporate some political risk," he adds.

"An anti-establishment alliance of M5S and Lega, the worst case scenario for markets, looks

unlikely due to different programs," he also says.

(Danilo Masoni)

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Morning call: Europe set to recover despite Italy uncertainty (0624 GMT)

Good morning. European shares are expected to open higher today, as markets recover from a

sell-off last week when investors were spooked by worries over a global trade war.

Italian voters delivered a hung parliament on Sunday, flocking to anti-establishment and

far-right parties in record numbers and casting the euro zone's third-largest economy into a

political gridlock that could take months to clear.

That put the euro in choppy waters in Asian trading. The single currency however found

support after Germany's Social Democrat party decisively backed the renewal of an alliance with

Chancellor Angela Merkel's conservatives, allowing her to form a new government more than five

months since the country's inconclusive election.

Here your morning calls, courtesy of CMC (BSE: CMC.BO - news) .

FTSE100 is expected to open 33 points higher at 7,103

DAX is expected to open 37 points higher at 11,950

CAC40 is expected to open 16 points higher at 5,152

(Danilo Masoni)

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