LIVE MARKETS-A long shot "Macron trade"?

* European shares hold steady

* Worldline to buy SIX Payment Services for $2.75 bln

* Iliad (LSE: 0MGY.L - news) drops after Q1 miss

LONDON, May 15 (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

A LONG SHOT "MACRON TRADE"? (1108 GMT)

Is there such a thing as a "Macron trade"? Sure, France's Emmanuel Macron has been pushing

through his pro-business reform agenda despite stiff resistance since he became president a year

ago but is that enough to bet that French stocks will outperform their European peers in the

long run?

So far, looking at the performance of the CAC 40 and STOXX 50 since his election on May 7

2017, it's clear that the French benchmark has done reasonably well.

In 2017 and year-to-date, the CAC 40 is up 9.3 percent and 4.3 percent versus 6.5 percent

and 1.8 percent for Euro zone blue chips.

One thing that most economists looking back on his first year at the Elysee palace agree on

is that while France as a brand has become more attractive, it's still too early to assess the

impact of his reforms on the economy.

BNP Paribas (LSE: 0HB5.L - news) economist Hélène Baudchon believes that "eventually, we should see an increase

in the potential growth rate and a decline in structural unemployment, although these results

will be long in the making."

Interesting, sure, encouraging maybe, but surely not enough to convince hordes of investors

to go unreservedly overweight on Gallic equities.

To assess whether there could be a case to bet on France during Macron's mandate (2017-2022)

and possibly through a second one, Berenberg's Florian Hense looks at the performance of

Germany, after chancellor Gerhard Schröder's labour market reforms at the beginning of the

century.

"After years of stock market performance similar to that of French shares, German stocks

shifted into a higher gear in 2005 and 2006 – the two years after the introduction of major

labour market reform," he notes.

There could be a case for such a scenario to unfold in France but Macron would have to

overcome resistance, such as the on-going strikes at French railways, in a similar manner to the

UK's Margaret Thatcher in the 80s, or Germany's Schroeder about 15 years ago.

"If Macron implements most of his agenda within the next 12 months, as we expect, he would

raise the economy’s long-run potential," Hense writes adding that "if so, French stocks could

outperform their European peers".

An arguably big "if".

(Julien Ponthus)

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IT'S THE CYCLE, STUPID! CONFUSION REIGNS ON GLOBAL ECONOMY (1011 GMT)

The key issue for equity investors is where we are in the cycle, and how much further there

is to go - but there's considerable divergence in their views on this, according to Credit

Suisse global equity strategists.

The core view of clients they've spoken with is a sharp slowdown in global growth will

materialise in late 2019 or the first half of 2020. Most also agree that U.S. wage growth (which

helped trigger the February market meltdown) is the crucial figure to watch - with around 3.5

percent seen as the "crunch point".

But different economic indicators are showing different pictures, with European and global

PMIs diverging.

"Given this confusion on the cycle, there is inevitably disagreement on cyclicals," note

equity strategist Andrew Garthwaite and team, who think non-financial cyclicals are expensive

(see chart below).

Interestingly, they add that "U.S. investors appear much more worried about European growth

than European investors." CS sees European PMIs rebounding from here while global PMIs fall

slightly.

On the defensive side, clients of the bank are still grappling with the question "what is

defensive?" as many sectors traditionally labelled as such are highly disrupted and leveraged.

This drives investors into other sectors such as tech, CS says.

In other sector preferences, the strategists note there is still widespread scepticism on

the oil sector, but investors are looking at telecoms once again. "Not one we spoke to wanted to

buy tobacco," they say.

(Helen Reid)

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ON THE BRIGHT SIDE, LESS VOLATILITY COULD MEAN MORE IPOS (0657 GMT)

Euronext (Euronext: ENX.LS - news) just published Q1 results and as expected, the volatility spike of the February

sell-off triggered a jump in trading volumes and revenues (average daily volume for cash trading

increased by +21.9 percent to 8.5 billion euros).

With (Other OTC: WWTH - news) volatility falling back in Q2, it's likely we've gone past "peak volume" this year as

UBS (LSE: 0QNR.L - news) predicted in a note last week.

But on the bright side, Euronext said lower volatility could mean that more corporates are

likely to go ahead with their IPO plans after having been put off by the market environment in

Q1.

"Primary market activity was impacted by unfavourable market conditions, as the uptick in

volatility reduced appetite for new listings," the bourse operator said while its CEO noted that

listings could make a come-back this year.

"The current months are marked by sequentially lower volumes as volatility levels are now

waning after the peak observed at the beginning of the year, while the IPO pipeline is building

up," CEO Stéphane Boujnah wrote.

Euronext's listing revenue fell 4.3 percent in Q1.

See below:

(Julien Ponthus)

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WHAT TO WATCH AT THE EUROPEAN OPEN (0648 GMT)

European stock futures are pointing down on Tuesday, following weakness in Asian trading

overnight as investors said markets are taking a breather after a strong run.

The saga of Italy’s government formation continues, after parties 5-Star and League won more

time to decide on a prime minister. Italy’s 10-year bond yields have risen to the highest in

almost two months, and Italian stocks could be under pressure.

Dealmaking continues apace with France’s Worldline acquiring the payments arm of

(unlisted) Swiss stock exchange operator SIX Group for 2.75 billion – the latest in a series of

deals as the payments sector consolidates.

In other M&A developments, China Three Gorges’ bid for EDP was a pre-emptive strike against

rival bidders, sources said after Monday’s close – and the Portuguese utility’s board has said

the bid price is too low.

Germany’s GDP figures showed Europe’s biggest economy slowed slightly more than expected in

the first quarter due to weak trade – adding to a string of weaker macro data from the region.

Investors would also be keenly watching UK wages data expected at 0830 GMT.

On a busy earnings day, Credit Agricole (Swiss: ACA.SW - news) and Commerzbank (Xetra: CBK100 - news) reported slightly disappointing

results. Credit Agricole shares are seen down 2 to 4 percent at the open.

In positive earnings, easyJet is seen rising as much as 5 percent in one pre-market

indication, after it reported a smaller half-year loss and said it expected revenue per seat to

be positive in the second half.

Overall, Morgan Stanley (Xetra: 885836 - news) analysts say telecoms, financials, materials and health care have

delivered the strongest earnings beats. Price reaction to results has been very weak and

negatively skewed, they also note.

(Helen Reid)

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FUTURES DOWN AMID YET MORE DEALMAKING (0611 GMT)

As expected, European stock futures are trading down 0.2 to 0.3 percent, indicating a weaker

open. It's pretty busy on the corporate front however with dealmaking once again in the

spotlight.

Yet more M&A as French payments firm Worldline announces it will buy the payments unit of

Swiss stock exchange operator SIX Group - ending a long period of speculation over who the

acquirer would be, and adding to a flurry of consolidation deals in the payments industry.

Here's the story: French payments firm Worldline to buy SIX Payment Services for $2.75 bln

And in other deal news sources told us, after yesterday's close, that China Three Gorges'

bid for Portugal's EDP was a pre-emptive strike against rival bidders. EDP's board says the CTG

bid price doesn't reflect the energy firm's value. Here's the link:

Earnings reports are flowing in from Pandora (LSE: 0NQC.L - news) , Engie (LSE: 0LD0.L - news) , Nordex (EUREX: 2083267.EX - news) , as well as Europe's largest

copper smelter Aurubis (IOB: 0K7F.IL - news) :

Metro (Dusseldorf: 62M.DU - news) says has taken steps to restore growth in Russia

Sika (IOB: 0QMA.IL - news) to issue 1.5 bln Sfr in bonds to buy own shares from Saint-Gobain

Nordex posts Q1 results below expectations

Jewellery maker Pandora Q1 lags forecast, flags Chinese slowdown

Statoil (LSE: 0M2Z.L - news) to become Equinor, dropping "oil" to attract young talent

Aurubis expects continued strong copper market, confirms outlook

Utility Engie's Q1 earnings rise 3 pct

(Helen Reid)

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EARLY MORNING RESULTS ROUND-UP (0531 GMT)

It's another busy day of earnings with French bank Credit Agricole and German steelmaker

Thyssenkrupp (IOB: 0O1C.IL - news) among those reporting. Here are some of the biggest corporate headlines:

Thyssenkrupp Q2 operating profit up on steel recovery

Merck KGaA Q1 earnings down on liquid crystals, currencies

Car (HKSE: 0699-OL.HK - news) parts group Faurecia (Swiss: EO.SW - news) targets steady rise in sales from 2020

Credit Agricole profit just below estimates on weak retail, capital markets

RWE Q1 profit drops on weaker wholesale prices

Commerzbank first-quarter pretax profit drops on higher costs

Eutelsat (Paris: FR0010221234 - news) says could fall short of full-year revenue target

Allianz Q1 profit up 6.8 percent, better than expected

(Helen Reid)

*****

MORNING CALL: HEADED FOR A WEAKER OPEN (0518 GMT)

European stocks are called to open slightly lower today after a downward turn in Asian

trading overnight, with investors saying the market is taking a breather after the recent surge.

They're still eyeing a range of political and economic risks with U.S.-China trade talks

ongoing.

The biggest developing political story in Europe, Italy's government-forming process,

stalled yesterday as the 5-Star and League parties won more time to put together a government.

On the macro front, UK wages data will be closely watched at 0830 GMT, while German GDP

figures at 0600 GMT should also provide more of a read on the health of the euro zone's

industrial engine.

Spreadbetters expect London's FTSE to open 16 points lower at 7,695, Frankfurt's DAX to open

18 points lower at 12,977.71 and Paris' CAC to open 13 point lower at 5,528.

(Helen Reid)

*****

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