LIVE MARKETS-M&A: Big deals (not necessarily good ones) ahead!

* European stocks rise

* Merkel settles migration row

* Glencore (Frankfurt: 8GC.F - news) drops after unit gets U.S. subpoena

LONDON, July 3 (Reuters) - Welcome to the home for real-time coverage of European equity

markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach

him on Messenger to share your thoughts on market moves:

julien.ponthus.thomsonreuters.com@reuters.net

M&A: BIG DEALS (NOT NECESSARILY GOOD ONES) AHEAD! (1022 GMT)

According to SocGen (Paris: FR0000130809 - news) 's analysts, we're still at least a year away from a U.S. recession and

at a point in the M&A cycle where big deals happen.

"History suggests that M&A activity tends to accelerate very late in the economic cycle and

that is when the biggest deals are struck," they wrote in a sectoral note making the point that

"at that stage companies have cash, profit margins have recovered and thus organic growth

expectations are decelerating."

Here's their timeline for deals:

A word of caution though: "Late-cycle deals are typically expensive, which is why sellers

are ready to sell, and so they create goodwill but not necessary value. Such deals could also

put balance sheets at risk as the imminent downturn (if not outright recession) pushes gearing

ratios higher".

(Julien Ponthus)

*****

MORNING SNAPSHOT: ROAD TO RECOVERY (1001 GMT)

The rebound is underway this morning with European stocks currently at session highs. A

broad-based rally with financials in the lead has helped the STOXX make back all of yesterday's

losses.

The news that German Chancellor Angela Merkel has settled a row over migration has sure

helped.

"Chancellor Angela Merkel managed to pull Germany back from the brink," Fiona Cincotta,

senior market analyst at City Index, said, adding that there is a "collective sigh of relief"

across European stocks today.

Here's your snapshot:

(Kit Rees)

*****

FUTURES OPEN CAUTIOUSLY UP, NO MERKEL RALLY (0612 GMT)

Futures for European stock indexes have opened in positive territory but there's no Merkel

rally to be seen even if with a 0.5 percent rise, the DAX is likely to outperform peers this

morning.

"News that Merkel is safe and the fragile German coalition will live to see another day has

encouraged traders back into the DAX, which had been suffering at the hands of investor anxiety

about new snap elections", wrote London Capital Group.

(Julien Ponthus)

*****

MORNING CALL: A TEPID REBOUND? (0530 GMT)

European shares are expected to rise only slightly at the open with stock markets in Asia

hit hard again by fears concerning the Trump administration's trade policies.

Chinese stocks went into a tail spin as turbulence gripped equity markets in Asia, which

sank to nine-month lows as investors feared the Sino (Dusseldorf: 1205802.DU - news) -U.S. trade row could derail a rare period

of synchronized global growth

U.S. President Donald Trump also warned the World Trade Organization that "we'll be doing

something" if the United States is not treated properly, just hours after the European Union

said that U.S. automotive tariffs would hurt its own vehicle industry and prompt retaliation.

Financial spreadbetters expect London's FTSE to open 17 points higher and Frankfurt's DAX to

rise 58 points.

On the brighter side of things, German Chancellor Angela Merkel's conservatives settled a

row over migration that threatened to topple her fragile governing coalition late on Monday

evening.

(Julien Ponthus)

*****