LIVE MARKETS-Lira crash drags Milan to more than a year low

* European shares fall

* Tumble takes STOXX 600 into negative for the week

* Deepening Turkish lira selloff hits BBVA (LSE: 931474.L - news) , UniCredit (EUREX: DE000A163206.EX - news) , BNP (Paris: FR0000131104 - news) , ING

* Pound retreats on Brexit fears

Aug 10 (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

LIRA CRASH DRAGS MILAN TO MORE THAN A YEAR LOW (1413 GMT)

The crash of the Lira is taking spectacular proportions with the dollar up 18 percent

against the Turkish currency with a little help from Trump's Twitter (Frankfurt: A1W6XZ - news) account.

While dozens of Istanbul-listed companies have been suspended from trading after declining

over the daily limit, there's also a lot of collateral damage across euro zone stock markets.

Milan is the hardest-hit major European index and is down as much as 3 percent to 20,968

points, its lowest level since July 7 last year.

It's a bit of a double whammy for Milan due to the weight of its banking sector, notably

Turkey-exposed UniCredit, and with STMicro hit by the negative sentiment

spreading through the semiconductor space.

Here's the FTSE MIB over the last two years:

(Julien Ponthus)

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U.S. FUTURES POINT TO LOWER OPEN AS EM WOES SPILL OVER (1246 GMT)

U.S. stock futures are lower ahead of the opening bell. CME E-Mini S&P 500 Futures currently

trading off about 13 points, or 0.46 percent. CBOT E-Mini Dow Jones Futures down about 114

points, while CME E-Mini Nasdaq 100 Futures are off about 40 points.

Spillover from Europe is an issue this morning as their indices tumble amid growing

instability in Turkish markets. Germany's DAX is down close to 2 percent and is

nearing a key support line from its 2009 low (around the 12,000 level).

Indeed, the quiet U.S. market of the past 3 days was ripe to turn more spirited one way or

the other. As of the close Thursday, SPX hourly historical volatility measures had collapsed to

multi-month lows with the 3-day high-to-low range on the SPX just 11.45 points, or 0.4 percent.

That was the narrowest range on this basis since late December.

This as the index was struggling after coming within 0.5 percent of its January peak.

And if premarket action carries forward, it could threaten to end the Nasdaq Composite's

8-day win streak, its longest since a 9-day run in September/October of last year. Of note, 9 of

the 10 of the members of the NYSE FANG+TM Index are trading lower ahead of the open.

On the data front, U.S. core CPI month over month printed at 0.2 percent in-line with the

estimate. The U.S. 10-Year Treasury Yield is down to the 2.90 percent area.

(Terence Gabriel)

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SEMICONDUCTORS SLIDE AS MICROCHIP DISAPPOINTMENT ADDS TO JITTERS (1112 GMT)

Another big loser this session is the tech sector, down 1.6 percent with chipmakers

at the sharp end of selling.

Europe's usual suspects STMicro, Siltronic (IOB: 0R8P.IL - news) , Infineon (Xetra: 623100 - news) , and Ams

are down 3.2 to 4.6 percent as negative sentiment pervades the semiconductor space.

Results from U.S. chipmaker Microchip - seen as a bellwether for the industry -

last night sent shares sliding after-market, and Asian chipmakers' results have also

disappointed, Neil Campling, co-head of the global thematic group at Mirabaud Securities, says.

Part of the reason for the Microchip disappointment was attempts to cut its excess channel

inventory levels weighing on revenue.

"As we have (exhaustively) been saying in recent weeks - the semiconductors don't see it

(channel stuffing/excess inventory in the channel) until it's too late," says Campling.

Tariffs are also a big concern, he adds, with the company unclear whether they can pass on

higher costs to end customers in the U.S.

A gap has opened between Asian and U.S. semiconductor indices since the start of May, as you

can see below, with Asian tech pricing in more of an impact from tariffs.

Morgan Stanley (Xetra: 885836 - news) yesterday turned to "cautious" from "in-line" on U.S. semiconductors, saying

upside to estimates is "difficult to come by".

"So - are you as an investor still willing to pay 25-30x for some of the semiconductor

companies? We wouldn’t be," Campling concludes.

(Helen Reid)

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FALLING IN SYNC AGAIN: A FTSE/STERLING SUMMER ROMANCE? (1038 GMT)

For a brief moment this morning, something quite rare occurred: the pound and the FTSE 100

were falling at roughly the same rate, before diverging slightly again, like two shy lovers

dying to dance the tango (well, sort of).

Right now the magic has faded a bit and the pound is down 0.3 percent while the FTSE is

losing 0.7 percent.

The trend is clear, however: the days when the pound's weakness was British blue chips'

strength seem to be gone, as was flagged yesterday in this story:

Sterling slide no longer a boost for Britain's FTSE 100

This chart (which you can find in higher definition in the story) also shows how we now

might precisely be at a turning point:

If the pound and the FTSE do indeed get into a long-term positive relationship, then UK

equity investors had better be warned: this could hurt.

Prominent Brexit-supporting British hedge fund manager Crispin Odey told Reuters on Thursday

that sterling and UK government bonds will fall further in the run-up to Brexit.

He sees a no-deal Brexit leading to a classic "buy the rumour, sell the news" move with the

pound rebounding.

"All these 'Remainers', they will feel it's the end of the world when we have to go on our

own, but that's when you buy sterling back," Odey said.

One word of caution however for investors shorting the pound on the assumption of a no-deal

Brexit: Goldman Sachs (NYSE: GS-PB - news) isn't buying it

Also of note, it's not all doom and gloom when it comes to Britain's post-referendum

economy: it picked up some speed in Q2 after a "Beast from the East" slowdown but lost momentum

in June, underlining its stuttering performance ahead of Brexit.

(Julien Ponthus and Helen Reid)

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DOES TURKEY MATTER FOR THE EURO ZONE? (0916 GMT)

The Turkish lira's sell-off has been too fast to absorb in a composed way and while that has

caused a wide risk-off move, the focus on the European equity market is rightly on banks with a

relatively big exposure to the country.

These include BBVA, UniCredit and BNP Paribas (LSE: 0HB5.L - news) , whose shares are falling around 3 percent,

among the top fallers here in Europe. An FT report said the ECB is increasingly concerned about

exposure to Turkey among these banks in particular.

The prospect of Turkey going bust raises the question of how much the euro zone's economy

would be affected and what are the contagion risks of a Turkish banking crisis.

Berenberg economist Carsten Hesse does not appear to be that worried.

Here's his take on the economy:

"The impact on Eurozone GDP growth would be small. Even (Taiwan OTC: 6436.TWO - news) if Eurozone goods exports to Turkey

were to fall by, say, 20%, this would subtract no more than 0.1ppt from growth in the big

Eurozone".

And here's his view on bank contagion:

"A full blown Turkish banking crisis would have some negative repercussions on Eurozone

banks that have large credit exposure to Turkey or own Turkish banks. But overall, the Eurozone

banking exposure seems too small to cause a significant Eurozone crisis. But even if we are

wrong... bank supervisors would have sufficient tools at their disposal to contain the damage."

(Danilo Masoni)

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OPENING SNAPSHOT: TURKEY CONCERNS DRAG DOWN EUROPEAN BANKS (0736 GMT)

It's all about Turkey this morning with banks sensitive to the country all falling 2.5 to

nearly 4 percent at the open after the lira sank to a fresh record low and President Erdogan

dismissed investors' fears about the economy.

A report in the FT saying the ECB is worried about European banks' exposure to Turkey is

also weighing. The ECB declined to comment on the article.

BBVA, Unicredit, BNP Paribas and ING - all known to have relatively large exposure to Turkey

- are all down 2.4 to 3.5 percent.

Germany's DAX is down 0.8 percent while Italy's FTSE MIB and Spain's IBEX - both heavy in

banks - are down 1 percent.

The fall has taken the STOXX 600 into the negative for the week.

Here's the Turkish lira's trajectory over the past 12 months - to as low as 6.3 to the U.S.

dollar.

(Helen Reid)

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WHAT'S ON OUR RADAR: TURKEY JITTERS SET TO WEIGH (0647 GMT)

European shares are set to open lower today with futures pointing to losses of 0.4-0.7

percent, failing to get a lift from a heavy early morning losses in the euro, as fresh trade

tensions and a deepening crisis in Turkey sour the mood.

"Markets are undoubtedly quiet at the moment but there are some big moves still in Turkey

and Russia that are preventing everyone from enjoying the summer," say Deutsche Bank (IOB: 0H7D.IL - news) strategists

Jim Reid and Jeff Cai in their morning note.

Doing the rounds is an article in the Financial Times saying the ECB has become concerned

about the exposure of some of the euro area's biggest lenders to Turkey — chiefly BBVA,

UniCredit and BNP Paribas — in light of the lira's dramatic fall. It does not yet view the

situation as critical, the FT added.

A trader said a 10 percent move in EURTRY corresponds to a 2 basis points impact on the CET1

capital adequacy ratio of BBVA and UniCredit. Shares (Berlin: DI6.BE - news) in BNP, BBVA and UniCredit were seen

falling by as much as 2 percent at the open on Turkey jitters.

Berenberg sees Turkish troubles having little impact on the euro zone economy. It calculates

that a 20 percent drop in Eurozone exports to Turkey would subtract no more than 0.1 percentage

points from growth.

Elsewhere the focus is some corporate updates from Germany with Innogy posting a first-half

profit drop linked to higher commodity prices, while K+S (Swiss: SDF-EUR.SW - news) is seen falling 5 to 10 percent after

it warned 2018 profit may miss market expectations.

Eyes also on Ryanair which is bracing for its biggest-ever one-day strike today that is

forcing the cancellation of about one in six of its daily flights at the height of the holiday

season.

(Danilo Masoni)

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EARLY MORNING HEADLINES ROUND UP: GERMAN RESULTS AND ECB'S TURKISH CONCERNS (0555 GMT)

Here are the main headlines that caught our attention this morning.

We have a couple of earnings updates from Germany that do not look very inspiring (K+S and

Innogy) while doing the rounds is also an FT article saying the ECB has become concerned about

the exposure of some of the euro area's top lenders to Turkey — chiefly BBVA,

UniCredit and BNP Paribas — in light of the lira’s dramatic fall. https://goo.gl/WaegDQ

ECB concerns grow over EU banks' Turkey exposure as lira slides-FT

Innogy posts H1 profit drop on higher commodity prices

K+S says 2018 profit may miss market expectations

Ryanair braces for biggest ever one-day strike

BHP says Brazil court approves Samarco settlement

TIM Brazil COO to step down amid management reshuffle -sources

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN DOWN FRACTIONALLY (0532 GMT)

European shares are set to open down fractionally following timid gains in the previous

low-volume session when worries over China-U.S. trade tensions and new sanctions against Russia

partly offset strong corporate earnings from consumer stocks.

The STOXX is up just 0.2 percent so far this week.

Financial spreadbetters expect London's FTSE to open 4 points lower at 7,738, Frankfurt's

DAX to open 17 points lower at 12,660 and Paris' CAC to open 11 points down at 5,491

Over in Asia, stock markets fell despite signs of greater government support for firms in

China, with global trade tensions clouding the outlook for demand.

(Danilo Masoni)

*****