LIVE MARKETS-NFPs market reaction: as exciting as the UK local election

* European shares climb

* Euro zone stocks set for 6th week of gains

* SocGen (Paris: FR0000130809 - news) , BNP (Paris: FR0000131104 - news) , HSBC tumble

LONDON, May 4 (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

NFPS MARKET REACTION: AS EXCITING AS THE UK LOCAL ELECTION (1302 GMT)

U.S. job growth increased less than expected in April and the market reaction on our side of

the Atlantic (Shanghai: 600558.SS - news) so far has been pretty much as exciting as yesterday's UK local elections: so not

that exciting to be honest.

The dollar and the euro wobbled a bit, European shares declined about 0.15 percent as the

figures hit our screens but are still in positive territory.

No need to hold the front page it seems.

Here's the story: U.S. job growth rebounds; unemployment rate falls to 3.9 percent

Here's a round-up of yesterday's vote: British PM May avoids London wipeout in local

elections

And here's a headline from The Independent that could pretty much sum up these NFPs and the

elections:

(Julien Ponthus)

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"WE'RE IN THE MONEY": MORE RELEVANT FOR BIG OIL THAN RETAILERS (1203 GMT)

"We’re in the money, the sky is sunny. Let’s lend it, spend it, send it rolling along".

Sainsbury (Amsterdam: SJ6.AS - news) 's CEO Mike Coupe singing the song from the musical 42nd Street on ITV (Frankfurt: A0BLQP - news) after announcing

a mega deal to buy rival supermarket Asda was a great moment of British television this week.

Here's a link to Monday's story:

That was fun but when you think about it, the song seems much better fitted for big oil CEOs

than retailers given how energy group are having a ball on the stock markets thanks to rising

oil prices.

In note this morning, HSBC analyst Gordon Gray takes a look at the big rise in cash flows

which were delivered by most oil majors during the Q1 earnings season.

"With (Other OTC: WWTH - news) average organic free cash breakevens of USD54-55/b this year, the oil majors are

moving into strongly free cash positive territory and we expect this year to show the biggest

aggregate FCF (free cash flow) in the sector for 12 years," Gray writes, adding that "big oil

managements' confidence in the outlook is clearly growing, as illustrated by recent dividend

increases from Chevron (Euronext: CHTEX.NX - news) , Exxon, ENI (LSE: 0N9S.L - news) , Statoil (LSE: 0M2Z.L - news) and Total (LSE: 524773.L - news) ".

So the question for the sector echoes that of a famous magazine: how to spend it?

"Results calls continue to focus on cash distributions, and notably the timing of the start

of buybacks at the likes of Chevron and Shell (LSE: RDSB.L - news) . We think these are coming (and in size)," Gray

says, warning however that investors should be careful to manage their expectations on that

front.

Prospects look good in terms of valuation too as HSBC sees a 9 percent upside to the stocks

it has a "buy" rating on.

"Not huge, but still more to go for after the sector's strength, particularly given

attractive dividend yields".

Have a look at the European oil and gas sector versus retail over the last year and have a

guess who should be singing "we're in the money"!

(Julien Ponthus)

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MIDDAY SNAPSHOT: STOXX SETTLES INTO POSITIVE TERRITORY (1117 GMT)

We're halfway through the session and all seems well for European equities, which are being

led higher by well-received earnings reports and a broad bounce among cyclical sectors.

Over in the U.S., stocks futures are pointing to a muted start for Wall Street ahead of jobs

data due at 1230 GMT.

Here's your snapshot:

(Kit Rees)

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WHAT'S THAT SMELL? IT'S THE 2019 DOWNTURN! (1059 GMT)

No need to panic just now but it does make sense to start worrying about an incoming

downturn - that is, in a nutshell, the key takeaway of a research note by BNP Paribas (LSE: 0HB5.L - news) ' chief

market economist.

"A flatter U.S. curve, wider BBB bond spreads and a grudging response of stocks to very good

profit increases all smell sour," writes Paul Mortimer-Lee for whom "the warnings such as from

the yield curve are about next year".

He takes the view that "shortages of supply are having serious effect on growth in some

sectors in some countries, with global value chains helping to transmit this, turning last

year’s story of synchronized growth into synchronized slowdown."

Mortimer-Lee makes what he calls an out of consensus call, that "2019 will see a significant

slowdown, led by the U.S.," which would already be in a downturn if not for the Trump

administration's massive fiscal stimulus.

(Julien Ponthus)

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ART OF THE DEAL: GLOBAL M&A BOOM NOTHING TO WORRY ABOUT, YET (1005 GMT)

While surging M&A is one of the indicators Citi considers in its "bear market checklist",

strategists at the U.S. bank don't see the uptick in dealmaking as a concern just yet.

2018 is on track to be the biggest M&A year in history if we annualise current rates of

dealmaking, notes Citi. The latest Thomson Reuters (Dusseldorf: TOC.DU - news) data shows worldwide M&A totals $1.7 trillion

so far this year, up 64 percent compared to the same period last year.

And the deals are not close to stopping: "Robust global economy, attractive financing

conditions and high CEO confidence should drive further activity," says Citi's global equity

strategy team.

But they're comforted by their measure of six-month trailing M&A which currently sits at 3.2

percent of global market cap, below the 5-6 percent reached in previous bull market peaks.

Citi's Robert Buckland and team say they would be wary if this measure rises above 3.5 percent.

The UK has been the strongest driver of M&A globally so far, with cheap valuations and a

weakened currency offering an opportunity for what they call "overseas predators".

So, with nothing big to worry about yet, investors positioning for dealmaking should be

overweight the UK and U.S., while they should avoid Japan. Sector-wise, healthcare and consumer

discretionary have seen the most activity, Buckland notes.

On the same subject yesterday: M&A in the UK: which stocks are targets?

(Helen Reid)

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HAVE WE REACHED PEAK EARNINGS? (0924 GMT)

While global earnings upgrades still outnumber downgrades, the trend suggests EPS revisions

may have just peaked, and investors are getting less confident about the global profit cycle,

says JP Morgan European equity strategist Khuram Chaudhry and team.

U.S. and Japanese stocks dominate the upgrades while most of the downgrades are coming from

Europe and EM, they note.

"We are increasingly nervous that the global profit backdrop will deteriorate further over

the coming months, based on investors' focus on EPS growth (which lags EPS revisions), a

potential pickup in inventories versus a slowing order book as inflation expectations moderate,

and continued deterioration in money supply growth across the regions," the strategists argue.

On a sector level, they find cyclicals' earnings expectations are peaking while defensives

are hitting a bottom - indicating a turndown in cyclicals could be around the corner.

"The trend in U.S. technology and global material stocks makes us most nervous, but

interestingly utilities appear to be bottoming," they note.

As you can see below, a turn down in European earnings revisions has often accompanied a

fall in cyclicals' performance relative to defensives.

(Helen Reid)

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OPENING SNAPSHOT: BAD DAY FOR FRENCH BANKS, AIR FRANCE TUMBLES (0717 GMT)

Overall it's a strong start for European stocks with Italy's FTSE MIB outperforming, up 0.7

percent.

But results are sending some sharply down. Societe Generale (Swiss: 519928.SW - news) and BNP Paribas are both

suffering at the open, down 6.3 percent and 3.2 percent respectively. Weaker than expected

revenues from SocGen are the culprit, traders say, saying the bank's fixed income, currencies

and commodities (FICC) and equity segments both underperformed peers. The stock has hit a

6-month low.

BNP Paribas meanwhile had a drop in profits and traders also pointed to a "light" capital

ratio.

Air France (Paris: FR0000031122 - news) is also suffering at the hands of investors, falling 5.5 percent after saying it

expects strikes in France to hit 2018 profits.

Meanwhile German materials and chemicals firm Lanxess (IOB: 0H7I.IL - news) is leading the STOXX, up 7.2 percent

after hiking earnings guidance.

Ferrari (Xetra: 30092157.DE - news) is rising 4.2 percent, with traders still citing CEO Marchionne's comment in results

yesterday midday that most of its models were sold out for 2018.

(Helen Reid)

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WHAT YOU NEED TO KNOW BEFORE THE BELL (0650 GMT)

European shares are set to bounce back today following losses in the previous session as

earnings continue to roll in, while the recent strength in the dollar has put the euro zone

STOXX index on track for its sixth straight week of gains - its longest winning streak since

September 2017. Stock index futures on main country indexes were up 0.3-0.6 percent.

It's a heavy day of results for financials with HSBC reporting an unexpected 4 percent drop

in first-quarter pre-tax profit due to a surge in investments, sending the stock down 2 percent

in premarket although the pill may be sweetened by a new share buyback plan of up to $2 billion.

French bank BNP Paribas (down 1-2 percent premarket) posted a 17 percent fall in quarterly

net profit on revenues falling short of expectations, weighed down by a weaker dollar and

sluggish fixed income trading. Shares (Berlin: DI6.BE - news) in Societe Generale could also fall with one trader saying

its quarterly profit was below consensus and its capital ratio slightly light.

Numbers from insurance heavyweights Swiss Re (LSE: 0QL6.L - news) and Generali (EUREX: 566030.EX - news) showed better than expected

profits, while a stronger euro impacted the value of sales at France's biggest insurer AXA (Paris: FR0000120628 - news) .

Elsewhere, forex headwinds were also blamed by German luxury carmaker BMW (EUREX: BMWE.EX - news) for its 3 percent

drop in quarterly operating profit.

Eyes also on Telecom Italia (Amsterdam: TI6.AS - news) on the day when its top two investors - Vivendi (LSE: 0IIF.L - news) and activist

fund Elliott - will face off for the first time as they put their battle over board seats at the

Italian phone group to a shareholder vote.

News that Bayer (IOB: 0P6S.IL - news) sold a further Covestro (IOB: 0RBE.IL - news) stake for 2.2 bln euros may also be welcome as it

could reduce the cash call the company will need to fund its takeover of Monsanto (Hamburg: 1132157.HM - news) .

(Danilo Masoni)

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FUTURES POINT UP AS BUSY EARNINGS WEEK DRAWS TO A CLOSE (0630 GMT)

Futures have opened higher, indicating gains for the main European benchmarks on a busy

earnings day at the end of the second heaviest week of results. Futures are trading up 0.2 to

0.5 percent.

All eyes today are on non-farm payrolls, which Goldman Sachs (NYSE: GS-PB - news) expects to come in at a 180k

increase for April, a little below consensus estimates for a gain of 190k.

Some more headlines to watch as UK results start coming in. British Airways owner IAG is

keeping quiet on its potential takeover of Norwegian Air, and publisher Pearson (Xetra: 858266 - news) could see relief

after results suggested it's on track with its turnaround.

Pearson on track after first quarter revenue rises 1 pct

Hotelier IHG posts 3.5 pct rise in first-qtr global room revenue

National Grid CFO Bonfield steps down

British Airways-owner IAG profit jumps, silent on Norwegian

Smurfit Kappa Q1 earnings up 22 pct, FY seen materially better

(Helen Reid)

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EARLY MORNING HEADLINE ROUNDUP (0549 GMT)

HSBC Q1 profit misses estimate, unveils $2 bln new share buyback

BNP Paribas Q1 profit falls on back of trading weakness in Europe

Swiss Re Q1 net profit down 30 pct on year but beats expectations

Generali gets non-life lift in Q1 to top forecasts

Insurer AXA's Q1 revenues dip 2.7 pct

Air France-KLM (LSE: 0LN7.L - news) reins in profit and growth expectations amidst strikes

Bayer sells further Covestro stake for 2.2 bln euros

BASF Q1 operating profit gains slightly on basic chemicals, oil

Lanxess hikes guidance as specialty chemicals demand boosts Q1

Boardroom showdown could alter Telecom Italia's future

Norway oil firms, workers agree 2.8 pct wage rise

Ex-Volkswagen CEO Winterkorn charged in U.S. over diesel scandal

Vonovia (Milan: VNA.MI - news) launches capital increase to fund Victoria Park (LSE: 0QIC.L - news) buy

Sweden's Vattenfall boosts its EV charging market with Volvo Cars deal

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN BOUNCING BACK (0527 GMT)

Following losses in the previous session, European shares are seen bouncing as earning

updates continue to flow, while the recent surge in the dollar has put the the euro zone STOXX

benchmark on course for its sixth straight week of gains, the longest winning streak

since September 2017.

"The rise in the US dollar is starting to exert some downward pressure on US stock markets,

while European markets, despite a negative session yesterday look set for their sixth

consecutive positive weekly finish," says Michael Hewson, analyst at CMC Markets (LSE: CMCX.L - news) .

Financial spreadbetters expect London's FTSE to open 29 points higher at 7,532, Frankfurt's

DAX to open 53 points higher at 12, 744 and Paris' CAC to open 19 points higher at 5,521.

Over in Asia, shares stepped back while the dollar ran into some profit-taking after a

strong week of gains as financial markets turned their attention to looming U.S. payrolls data

for fresh catalysts.

(Danilo Masoni)

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