LIVE MARKETS-Never mind macro slowdown, buy cyclicals!

* European shares open higher

* Trump delays tariff hike on Chinese goods

* Autos lead sectoral gainers

Feb 25 - 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

NEVER MIND MACRO SLOWDOWN, BUY CYCLICALS! (1028 GMT)

That's in a nutshell what strategist at UBS led by Joao Toniato say, arguing that valuations

are attractive and weaker European economic growth is largely priced in.

"Hence we are increasing our cyclical exposure," they say, adding that any stabilization in

PMIs and European economic data is likely to bring cyclical outperformance from here.

But how does that play at the sector level?

Well, Toniato and team have upgraded Luxury Goods to Overweight from Underweight at the

expense of the defensive Pharma and Commercial Services, both cut to Neutral.

"Most of the reasons that made us concerned when we downgraded the (Luxury Goods) sector in

August 2018 seem to be reversing. The headwind from the renminbi could be about to turn. EM

relative performance also seems to have changed in favour of EM and this supports the sector

valuations," they say.

Their key buys in are LVMH, Hermes, Ferrari and Moncler

.

Below you can see how the relative discount of cyclical vs defensives has started to rebound

after hitting extreme levels. In the second chart the relative dividend yield.

(Danilo Masoni)

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OPENING SNAPSHOT: RELIEF OVER TRADE LIFTS MARKETS (0832 GMT)

European shares are extending Friday's gains, testing the October highs hit last week as

investors cheer news that the United States will delay implementing more import tariffs on

Chinese goods.

Trade-sensitive DAX is up 0.44 percent boosted by relief over trade tensions while autos and

miners, which are vulnerable to the vagaries of the U.S.-China trade dispute, are leading the

gainers across the pan-European market.

Milan is outperforming the broader market, up 1 percent and hitting its highest since Oct. 5

after rating agency Fitch affirmed Italy's credit rating. Banks are among the top gainers. The

FTSE 100 and 250 are lagging their peers amid deepening uncertainty over Brexit.

Among standout individual moves, Persimmon is down 8.1 percent at the bottom of the STOXX

600 and dragging the UK housebuilders with it after sources said the government is reviewing

Persimmon's practices in the 'help-to-buy' scheme.

Bank of Ireland is down 5.5 percent at January lows after forecasting lower net interest

margin for 2019, while German chemicals firm Covestro is falling after announcing 2019 EBITDA

could drop to as little as half last year's level as competitive pressure rises.

Here's your snapshot:

(Josephine Mason)

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WHAT'S ON THE RADAR FOR THE OPEN (0747 GMT)

Futures for the main European benchmarks jumped on Monday following a strong rally in Asian

shares after U.S. President Trump confirmed a delay in the March 1 tariff deadline after

“productive” talks with China.

Germany’s trade-sensitive DAX will likely lead the way as its industrial and carmaker shares

gained. The FTSE 100 meanwhile is lagging slightly after another delay to a vote on Prime

Minister May’s Brexit deal.

Outside the trade war news, there are company results and dealmaking aplenty to keep traders

active.

German chemicals firm Covestro is expected to fall 3-5 percent after announcing 2019 EBITDA

could drop to as little as half last year's level as competitive pressure rises.

After weak results from Danish container shipping firm Moeller-Maersk sent the shares

reeling on Thursday, Germany’s Hapag-Lloyd sounded a more confident note, reporting a strong

rise in 2018 profit thanks to better freight rates and transport volumes.

Primark owner Associated British Foods is expected to trade flat to 1 percent higher after

it forecast earnings in line with the previous year.

Reports in the Times and Telegraph that the UK government may ban Persimmon from the help to

buy programme could hurt shares in the housebuilder, traders said.

M&A may be a driver with two deals in the pharmaceuticals space: Ipsen agreeing to buy U.S.

peer Clementia Pharmaceuticals, and Roche buying gene therapy specialist Spark for $4.3 billion.

Some traders saw Sweden’s Sobi falling after the Roche acquisition.

(Helen Reid)

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FUTURES JUMP AS INVESTORS CHEER TRADE TARIFF REPRIEVE (0716 GMT)

European stock futures are up 0.1 to 0.5 percent, with the DAX in the lead, as Trump's

confirmation of a delay to the March 1 trade tariff deadline boosts markets across the world.

Delays are also on the menu for the UK with Prime Minister Theresa May telling reporters on

the sidelines of an EU-Arab League summit in Egypt that she would bring a vote on her Brexit

deal back to parliament by March 12 - delaying this week's planned "meaningful vote".

"While Asia markets cheer for the delay in an increase in U.S. tariffs on Chinese goods, in

Europe Brexit is pervading every aspect of UK public life as the scheduled departure date of 29

March heaves into view," write Societe Generale economists.

FTSE 100 futures are lagging European peers, up just 0.1 percent, though it's unclear

whether that is Brexit-related.

(Helen Reid)

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ON THE CORPORATE NEWS FRONT: COVESTRO RESULTS, PHARMA M&A (0648 GMT)

With European shares sure to power through the four-month highs they ended the week at,

there's also a lot of results and company news to keep trading busy.

German chemicals firm Covestro could fall after announcing 2019 EBITDA could drop to as

little as half last year's level as competitive pressure rises.

Meanwhile there's a lot of pharma M&A in the air with both France's Ipsen and Switzerland's

Roche buying smaller companies.

Ipsen agreed to buy U.S. peer Clementia Pharmaceuticals in a deal worth up to $1.31 billion,

in a bid to boost its portfolio of products treating rare diseases. Roche said it will buy gene

therapy specialist Spark Therapeutics in a $4.3 billion deal.

And after poor results from Moeller-Maersk on Thursday, German container shipping firm

Hapag-Lloyd sounds a more confident note, reporting higher 2018 operating profit thanks to

greater transport volumes and freight rates.

Here are your headlines:

Covestro says 2019 EBITDA could halve as competition heats up

Ipsen to buy Clementia Pharmaceuticals in deal worth up to $1.3 bln

Hapag Lloyd lifts 2018 operating profit on volume, freight, synergies

Roche to buy gene therapy specialist Spark in $4.3 bln deal

Netherlands' PostNL plans to buy competitor Sandd

Credit Agricole's CACEIS to buy Netherlands' KAS Bank for 188 mln euros

Fugro's 2018 EBIT turns positive to 13.1 mln euros

Bayer faces second trial over alleged Roundup cancer risk

Novartis licenses rights to RNA-targeting cardio drug from Ionis

Vivendi backs Telecom Italia, Open Fiber network merger under right conditions

(Helen Reid)

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MARCH 1 TARIFF DELAY TO BOOST EUROPE AFTER CHINESE SHARES JUMP (0632 GMT)

European shares will jump this morning after Trump said he would delay the planned March 1

hike in tariffs - with the biggest gain seen for the trade-sensitive DAX.

A surge in Shanghai shares with Chinese blue chips up 3.5 percent led Asia higher on Monday

after U.S. President Donald Trump confirmed he would delay a planned hike in tariffs on Chinese

imports as talks between the two sides made "substantial progress".

President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese

goods thanks to "productive" trade talks and that he and Chinese President Xi Jinping would meet

to seal a deal if progress continued.

Spreadbetters at IG expect London's FTSE to open 9 points higher at 7,188, Frankfurt's DAX

to open 35 points higher at 11,493 and Paris' CAC to open 10 points higher at 5,215.

(Helen Reid)

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(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus)