LIVE MARKETS-Keeping a second wave out of the equation

* European indexes run out of steam

* Banks in negative territory

* Crude oil prices jump

* ECB keeps some dry powder Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan.

KEEPING A SECOND WAVE OUT OF THE EQUATION (1305 GMT)

The strength of this bear rally beggars belief given the horrendous macro data and the recession triggered by the coronavirus.

One explanation to the optimistic view taken by the market is the absence of a second wave of the virus later this year which would force new lockdowns and another brutal stop to the economy.

DWS just published its CIO view in which it sees among other indexes, the STOXX 600 continue its recovery from 340 points today to 370 points in March 2021.

"We would stress that additional waves of the pandemic, followed by renewed shutdowns, constitute a material risk not captured in our forecasts", the DWS note read.

That echoes yesterday's UBS Europe Daily which said investors expected the coronavirus to end by the end of 2020 and that a second wave wasn't being considered at the moment.

Here's DWS equity forecast:

(Julien Ponthus)

*****

ECB STATEMENT: WHAT A DIFFERENCE A MONTH MAKES (1216 GMT)

Remember the times of before the coronavirus crisis when ECB statements barely changed every month? Well, not anymore! Have a look at today's statement covered in red (changes):

(Ritvik Carvalho and Julien Ponthus)

*****

EURO ZONE BANKS DIP FURTHER AFTER ECB ANNOUNCEMENT (1207 GMT)

Already battered by this morning's disappointing results, Euro zone banks accelerated their losses and touched a session low after the ECB kept much of its remaining policy powder dry as it prepared for a long fight against the coronavirus's fallout.

Shares in the bloc's lenders are now down 5.8%, that's 2.8% more than they were trading at prior to the announcement.

(Julien Ponthus)

*****

HOW COULD THE WORLD LOOK LIKE AFTER COVID-19? (1132 GMT)

With some countries starting to open up slightly, you may be wondering what will stay and what will change after this coronavirus crisis' surreal experience.

Here are the predictions of Deutsche Bank analysts:

- Investors will have to accept lower yields for longer

- Corporate earnings are likely to fall further than consensus estimates

- The supply chain reorganisation may impair corporate profitability

- In the immediate future, expect more volatility

- Doubts on longterm sustainability and debt defaults will remain

- Inflation seems unlikely to change the investment landscape in the short term

- Social distancing and associated measures could be seen as a deep intervention into civil rights. "We need reassurance that such constraints are temporary"

- Involuntary state ownership of industry as governments could be forced to step into some "systemically relevant" (e.g. airlines, utilities, infrastructure, health, housing)

- Changes in standard intellectual property work as data usage and related cybersecurity issues make handling of knowledge more important.

(Joice Alves) *****

APRIL: WHEN Q4 EXPECTATIONS TURNED NEGATIVE (1030 GMT)

So it's settled, April 2020 has been a great month for stocks, but there's a flip side: it's also when analysts realized that the V-shaped recovery that investors were hoping for coult just not happen.

STOXX 600 earnings expectations for the fourth quarter of 2020 turned negative during the middle of the month and have quickly fallen to -8.8% year-on-year according to the latest data from Refinitiv.

See, on their chart below, the yellow (Q4) line has been the last to go below zero when analysts the profit plunge would last longer than initially thought:

You can see below when expectations for Q1, Q2, Q3 and Q4 respectively turned negative and how it took quite some time for analysts to give up growth hopes for the last three months of 2020.

See also:

Expectations for European corporate profits fall further

(Julien Ponthus)

*****

EUROPEAN STOCKS SET FOR THEIR BEST MONTH SINCE 2009 (0901 GMT)

The STOXX 600 is set to end April on its best monthly performance since July 2009 with a rise of over 8%.

Of course, this comes just after the pan-European index had its worst performance since the crash of 1987.

And let's not forget the old continent is just following a global trend: world stocks have set for their best month ever and the S&P 500 is looks likely to post its best monthly gain since 1974.

Have a look below:

(Julien Ponthus)

*****

SHELL: THERE IS ALWAYS A FIRST TIME (0835 GMT)

Shell's first dividend cut in nearly a century has drawn mixed views among analysts, ranging from 'this was coming', to 'issues were building up in the oil major for a while' or 'we were expecting a cut later on this year".

Here's a quick view from the Street on Shell's dividend cut:

** Credit Suisse: "We felt that such a decision may come with a lag (i.e., by 2Q20), once the near and long term may be better understood than what we know today, and may not be as large a cut, considering that decisions on dividends are not taken lightly by the Super Majors."

** Bernstein: "Prudence wins over prowess and as such the Great Disease has caused the only cut since the Great Depression in 1929."

** Citi: "While it is tempting to see today’s decision to cut the dividend as historic – RDS refer to WWII as being the last – and a reflection of the severity of the CV19 crisis, the problems have been building for a while. All roads lead back to the high price paid for BG and the burden that this acquisition put on the company’s financial structure."

** Berenberg: "While it gives management breathing room and may allow a reset for a more sustainable dividend policy over time, we believe that yield was the main attraction for investors in the stock."

** JPM: "Unshackled: 66% divi cut a necessary evil"

(Thyagaraju Adinarayan)

*****

OPENING SNAPSHOT: SHELL SHOCKED (0735 GMT)

Sentiment is cautious.

Stocks ran out of steam after opening higher as Shell's first dividend cut in 80 years and a set of dire earnings updates from European banks weighed. The boost from an experimental treatment against Covid-19 showing good promise ran out.

Banks, insurers and oil & gas were the top sectoral losers. Banks are in negative territory after as billions of euros in bad loans provisions and falling profits hit earnings at BBVA , SocGen, among others.

Shell's 65% divi cut to 16 cents per share was enough to keep the oil sector in red.

The travel and leisure index, a fear and greed gauge of stock markets at coronavirus times, is up 1.5% ahead of lockdown easing measures across Europe. Airbus is the best performer on the pan-European STOXX 600 after its CEO said the company was in talks with the French state regarding possible aid for the company.

Among the winners, Safran is up 5.5% after saying it has enough liquidity; Reckitt Benckiser surges 4% after posting record sales on disinfectant boom.

(Stefano Rebaudo)

*****

ON THE RADAR: SHELL'S BIG DIVI CUT, MORE BANK EARNINGS (0635 GMT)

European stock futures point to more gains as investor optimism in this bounce back rally was further boosted by Gilead's announcement that its experimental drug is showing promise as an effective COVID-19 treatment.

But it's all about earnings in Europe today with tons of Q1 numbers coming out.

Shell's first dividend cut in 80 years comfortably steals the show. Like rest of the sector it is hit by the collapse in global oil demand due to the coronavirus pandemic and traders expect the oil major's shares to slide 4% this morning.

The banking sector continued to set aside billions of euros to cover for expected bad loans: SocGen, Caixabank, BBVA and Lloyds were some of the big names reporting steep losses and recording provisions.

Asset manager Amundi reported a 7.6% drop in assets under management but said it was confident in the "robustness" of its results in 2020.

In other earnings-related news, telecom equipment maker Nokia's Q1 profit and revenues miss consensus, Safran reported an 8.8% drop in like-for-like first-quarter revenue, but said it had "sufficient liquidity" on March 31.

The defensive telco names Orange and KPN meanwhile reported in-line to slightly better than expected results.

Riding on the increased demand for disinfectants Reckitt Benckiser reported record sales and upped its 2020 outlook.

In other news, Volkswagen will have to delay indefinitely the resumption of production in the U.S., at its Tennessee assembly plant.

The European Commission approved a 5 billion euro loan guarantee to Renault to mitigate the impact of the coronavirus crisis.

(Stefano Rebaudo)

*****

MORNING CALL: COVID-19 TREATMENT HOPES TO LIFT STOCKS (0635 GMT)

European futures are trading convincingly in the black and the same goes for their U.S. peers as new hopes we could soon be out of the coronavirus crisis are supporting market sentiment.

Good results of an experimental Covid-19 treatment have been boosting stock markets across the globe since yesterday afternoon.

Oil prices jumped again extending previous gains, also benefiting from better than expected inventories data.

(Stefano Rebaudo)

*****

(Reporting by Thyagaraju Adinarayan, Joice Alves, Julien Ponthus in London and Stefano Rebaudo in Milan)