LIVE MARKETS-Nestle's fall highlights pressure on highly valued companies

* European stocks rise

* Earnings boost Airbus, Aegon (Swiss: AGN.SW - news) , Ipsen

* Nestle (Swiss: NESN.VX - news) falls on earnings disappointment

Feb 15 - 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

NESTLE'S FALL HIGHLIGHTS PRESSURE ON HIGHLY VALUED COMPANIES (1045 GMT)

Nestle is the biggest negative weight to the STOXX this

morning, its shares down as much as 2.8 percent to a 10-month low. Its update

clearly disappointed but its share price reaction also highlights that highly

valued companies like the Swiss food giant need to deliver more to keep

investors happy in such markets. Anyway here are some more granular views from

the sell-side views on what went wrong.

Baader Helvea: "Weak 4Q organic growth and the bare minimum of strategic

decisions. Overall rather a weak set of figures, in our view. The strategic

transformation looks on track, but those hoping for acceleration in speed might

be disappointed. In a volatile stock market environment this might bring

short-term pressure on the share price".

Zürcher Kantonalbank: "The quality of the margin trend is disappointing,

with savings in marketing and a disappointing trend for the gross profit margin.

Given the stock's higher valuation compared with its peers, we anticipate the

share price will react negatively".

But UBS sees the glass half full: "While we think these results & guidance

are not enough to re-rate the shares, we highlight some positives that should

limit downside: Nestlé expects US tax reform to result in a 200bps reduction in

its tax rate from 2018 onwards; it is reviewing the strategic options for Gerber

Insurance business, signalling more portfolio management to come; and (3) Nestlé

does not intend to increase its L'Oréal stake and will not renew the shareholder

agreement with L'Oréal to keep its options open in the future"

Nestle is trading at a price of 20.1 times its earnings, above its 10-year

average and above the PE multiple of peers Unilever (NYSE: UL - news) and Danone (LSE: 0KFX.L - news)

, as you see in this chart. https://goo.gl/q9ZyBJ

(Danilo Masoni)

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WANNA BUY CHEAP EUROS? HOW ABOUT SPANISH EQUITIES? (1026 GMT)

Here's the pitch from Intl FCStone (Frankfurt: I4F.F - news) : if you are bullish on the euro, a

cheaper way than bonds or cash to get into that trade is to buy European

equities, in particular Spanish stocks.

"Spain looks particularly interesting because its forward P/E has fallen by

18.5 percent since the index peaked in May. Spanish equities trade for 12.4

times forward earnings, matching the levels observed during most of the

sovereign debt crisis," strategist Vincent Deluard writes.

Here's his chart:

Deluard also points out that while European equities did not underperform

during the recent correction, they did not match their U.S. peers during the

preceding "melt-up".

Have a look at the STOXX versus the S&P 500:

(Julien Ponthus)

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OPENING SNAPSHOT: IT'S ALL ABOUT EARNINGS (0825 GMT)

European shares are on the up in early trading as well-received earnings

updates send shares in Airbus, Ipsen and Aegon to

the top of the STOXX, while a broader bounce in commodities-linked firms and

banks is also adding to gains.

A fall for Nestle is weighing on the Swiss Index, while the

bond proxy-type sectors are all on the backfoot as bond yields continue to march

higher.

Here's your opening snapshot:

(Kit Rees)

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WHAT'S ON THE RADAR FOR THE EUROPEAN OPEN (0741 GMT)

European stocks were set to extend their rally on Wednesday as equity

investors around the world shrugged off a spike in U.S. inflation which had

caused a sharp but short-lived drop in stock markets in the previous session.

Futures indicated gains of 0.5 to 0.8 percent across Europe’s major benchmarks.

A raft of earnings to digest today including heavy hitters Nestle and

Airbus. Nestle said it had no plans to increase its stake in L'Oreal, and a

trader said the comments had triggered speculation Nestle could sell its stake.

The Swiss food giant’s shares were indicated down 1.6 percent in pre-market.

Airbus shares were seen up 3 to 4 percent after profits for Europe’s largest

aerospace group came in higher than expected, although it took a new 1.3 billion

euro hit on its A400M military transport plane.

With (Other OTC: WWTH - news) the rand hitting three-year highs against the dollar after

President Jacob Zuma resigned, stocks exposed to South Africa could get a boost.

And autos stocks could gain from data showing sales of passenger cars in Europe

rose twice as fast in January as in the whole of 2017.

(Helen Reid)

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HOT EUROPEAN HEADLINES (0736 GMT)

Once more it's set to be a busy day of earnings, with numbers from the likes

of Nestle, Airbus and Schneider Electric (EUREX: SND1.EX - news) to keep traders busy. Below is a

round-up of this morning's key European company and macro headlines.

Nestle disappoints in 2017, no plan to increase L'Oreal stake

Airbus takes 1.3 bln euros charge on A400M military plane

Schneider Electric ends 2017 on high note despite currency

headwinds

Capgemini annual revenue beats on strong Digital and Cloud

business

Norwegian Air reports bigger-than-expected Q4 loss

Aegon reports Q4 earnings above analysts' expectations

Straumann FY revenue hit $1.08 bln on higher sales

Insurer NN Group's Q4 profit jumps on Delta Lloyd (Euronext: DL.NX - news) takeover

Insurer Lancashire warns of tough year ahead, swings to loss

Anglo-Dutch RELX to end dual-company structure, profit rises 6 pct

Britain's ConvaTec 2017 profit down 3.3 percent on supply issues

Lloyds axes $140 bln Standard Life Aberdeen contract

European car sales up 6.8 pct in January, led by French gains

French unemployment falls to lowest level since 2009

Amazon says to create 2,000 jobs in France in 2018

Hedge fund Bridgewater makes $22 bln bet against European firms

ANALYSIS-Sorry, not sorry: Wall Street not quitting 'vol' products

(Kit Rees)

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FUTURES POINT TO STRONG OPEN FOR EUROPEAN STOCKS (0711 GMT)

Stock futures have opened robustly higher - up 0.5 to 0.8 percent - across

the major European benchmarks, indicating yesterday's rally will be extended.

German bund futures have opened lower, however, as yields continue to rise

across markets.

Looks like JP Morgan may have been prescient in its Monday note arguing "The

negative correlation between stock and bond prices is not dead, in our view, it

will quickly reestablish itself and ultimately prove a valuation cushion in case

of further equity weakness."

(Helen Reid)

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ECB POLICYMAKERS, EARNINGS IN FOCUS (0635 GMT)

After yesterday's U.S. inflation data, European investors will be focusing

on, among other things, speeches by ECB policymakers Praet, Mersch and

Lautenschlaeger.

"We think they might signal that the recent market turbulence is not a

source of concern given the strength of the current expansion," write Societe

Generale analysts. "They are also likely to reiterate that the asset purchase

programme will continue until September this year and that what happens beyond

then is entirely data dependent."

A heavy slate of earnings today to keep traders and investors occupied as

well: Airbus announces it's taking a 1.3 billion euros charge on its

A400M military plane, clouding its better-than-expected profits, while budget

airline Norwegian Air reports a bigger than expected Q4 loss. Other big

companies reporting today include Nestle and Capgemini.

In other results:

Schneider Electric ends 2017 on high note despite currency headwinds

Straumann FY revenue hit $1.08 bln on higher sales

Insurer NN Group's Q4 profit jumps on Delta Lloyd takeover

(Helen Reid)

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MORNING CALL: INFLATION? WHAT INFLATION? (0616 GMT)

Good morning and welcome to Live Markets.

European stocks are called to open strongly higher today, following the lead

of Asian markets which gained after Wall Street shrugged off a spike in

inflation many had feared would derail equities once again.

Asian shares rose overnight after U.S. stocks took the inflation data in

their stride, with the Dow Jones up 1 percent and the S&P 500 up 1.3 percent.

Bonds plunged, however, as Treasury yields jumped, in anticipation of more rapid

U.S. interest rate hikes.

Currency movements could colour European trading today, with the euro

hitting a 10-day high against the dollar as the greenback suffered further

losses.

Spreadbetters call the DAX 132 points higher at 12,470.9, the CAC 40 up 50

points at 5,215.2, and the FTSE 100 35 points higher at 7,248.8.

(Helen Reid)

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