CORRECTED-LIVE MARKETS-No bazooka!

(Correcting to show Germany is euro zone's No. 1 economy, not No. 3, in latest blog) * European stocks erase gains as investors digest ECB * EZ banks briefly rallied on tiered rate hopes, but gains evaporated * German business morale deteriorates * CAC 40 outperforms on solid updates from LVMH, Schneider Electric * Nokia rises 7% after surprise Q2 profit jump * Cobham +35% after Advent agrees to buy for $5 billion Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm://thyagaraju.adinarayan.thomsonreuters.com@reuters.net NO BAZOOKA! (1344 GMT) It took 38 minutes of Mario Draghi's news conference to derail the strong rally we saw after the ECB's policy statement, which signalled rate cuts, more bond buys and opened a possible tiered deposit rate. Germany's DAX slipped into negative territory, the euro-zone STOXX index wiped out all its gains and the banking index sharply cut gains. Oliver Blackbourn, portfolio manager at Janus Henderson Investors, says: "He's doing his best to support the euro zone, but we're reaching the point where they are running out of ammunition and at some point you'll see questions about credibility." Markets had nearly 50-50 hopes for a rate cut today, but the ECB Chief Mario Draghi said in the briefing "there was no discussion of a rate cut today." A trader says the ECB has only created a lot of expectations at this meeting but it will take several weeks to see anything concrete. "The market may find it difficult to wait so long." Blue-chip industrial and auto stocks in Germany are among the top losers in Frankfurt after Draghi's downbeat comments on the euro-zone's No. 1 economy: "This (economic) outlook is getting worse and worse and it is getting worse and worse in manufacturing and getting worse and worse in countries were manufacturing is very important." The chart says it all: (Thyagaraju Adinarayan, Danilo Masoni and Josephine Mason) ***** NOW MARIO, GIVE US THE DETAILS (1237 GMT) It looks that the ECB statement didn't disappoint anyone, sending euro-zone shares shooting higher across the board, as the euro took a turn lower. But now the market will turn its focus to Mario Draghi's news conference, which has just started, for more granularity on the measures. "What we know now is that everything is on the table what the market wants to know in the next hour is the probability of each measure," says Ricardo Garcia, chief economist eurozone at UBS in Zurich. Meanwhile euro zone shares are rising 0.9% with banks rallying 2.5%. "What is also important especially for banks is that they have signalled the intention to look at deposit tearing, which is a measure to mitigate the negative effects of the deposit rate on bank profitability. This is good news for the sector even if we don't think this is game changer. It's good news at the margin," Garcia adds. (Danilo Masoni) ***** MARIO DELIVERS! (1220 GMT) Markets have spiked higher after the ECB kept rates unchanged as expected, but opened the door to future rate cuts and more bond buys, while also providing some respite to the banks with a possible tiered deposit rate. A game changer in the statement was the rewording of the forward guidance - the bank added "or lower levels" when referring to interest rates. Euro STOXX index is now up 0.9%. "The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term," it says. The move sent euro-zone banking index rose sharply (+2.4%) to the highest in more two months as the central bank also discussed tiered deposit rates. At first glance, it's "bullish for risky assets, but we have two more central banks to go," says Jeroen Blokland, senior portfolio manager at Robeco referring to the Fed and Bank of Japan rate decisions next week. "Draghi delivered except for an actual rate cut. Tiering will be discussed, helping bank stocks." A so-called tiered deposit rate would mean banks are exempted in part from paying the ECB's 0.40% annual charge on their excess reserves, boosting their profits as they struggle with an unexpected growth slowdown and ultra-low rates. Deutsche Bank, ING Groep, KBC and Commerzbank were top risers among banks. Another key part of today's ECB statement: "The Governing Council has tasked the relevant Eurosystem Committees with examining options, including ways to reinforce its forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases." Here's a chart of the euro-zone banking index following the news: (Thyagaraju Adinarayan) ***** BIG CHANGES IN ECB STATEMENT (1205 GMT) The markets are rallying on the ECB statement which kept rates unchanges, signalled a readiness to cut rates in future and offered some respite for banks with a possible tiered deposit rate. Here's the ECB statement just released which shows some drastic changes from the last one: (Josephine Mason and Ritvik Carvalho) ***** OVERBAKED: GRIM DATA GIVES MARKET JITTERS AHEAD OF ECB (0921) After months of frenzied speculation about further monetary easing by the ECB, traders say the market may have gotten ahead of itself, leaving plenty of room for markets to be disappointed. Bad data is piling up this week fueling expectations of more stimulus and rate cuts - hot on the heels of dismal euro-zone manufacturing numbers yesterday, this morning's widely watched Ifo institute's survey shows German business morale plunged in July to hit its lowest level in more than six years. Alongside a souring car sector, the data has knocked Frankfurt's blue-chip index off its day highs, a reversal from the market's recent habit of interpreting bad news as positive because it feeds expectations of more stimulus. The index is now down 0.1%, having earlier rising 0.4%. That's the first signal that investors are starting to exit some of those bullish positions built up during the market rally. It also suggests creeping worries that the central bank's measures may not even go far enough soon enough to shore up the euro zone's largest economy. "We still think that the ECB will wait until September to cut interest rates, by which time Q2 GDP data will have been published and it will have a new set of economic forecasts," says Capital Economics senior Europe economist Jack Allen-Reynolds. "But the chance of a rate cut this afternoon has risen." Here's a chart of Ifo and stocks: (Josephine Mason and Danilo Masoni) ***** BOJO AT DOWNING STREET: WILL UTILITIES SUFFER MORE? (0846 GMT) As a heavily regulated industry, utilities tend to be quite sensitive to policy changes. That's true globally and with the UK being no exception, it's worth having a look a possible implications for the sector now that Boris Johnson is settling in at Downing Street. JP Morgan has taken up the task to conclude that even though Brexit will dominate politics for the foreseeable future the sector is unlikely to suffer more than it has under May. They see upside potential for energy retail and mixed signals on climate policy. "While premature removal of the SVT cap might not be politically viable, we doubt many consumers have even heard of the small-supplier exemptions: Big 6 lobbying efforts will have already been launched. Combined with license changes slated for next year, removal of the exemptions would in our view put the industry on a much more even keel," they say. Looking at share price performance, UK utilities have lagged eurozone peers - partly due to worries over nationalisation policies pursued by Labour Party leader Jeremy Corbyn. In the UK's fractious Brexit politics, a general election in 2019 is a scenario that many do not rule out. (Danilo Masoni) ***** NISSAN DOUSES CAR RALLY (0827 GMT) News that Nissan will cut output and axe 12,500 jobs as Japan's No. 2 automaker reported a plunge in profits and struggles with sluggish sales has brought this morning's rally in cars and auto suppliers to a screeching halt. Dealers said the headlines were enough to trigger profit taking from the pretty decent gains seen over the last few days. The cars and auto parts supplier index hit its highest in more than two months in early deals and is now down 0.3%. The news also provided a reality check to the market's ebullient reception to the VW results - after the market had initially shrugged off Ford's weaker-than-expected profits overnight that sent its shares sharply lower after hours. The drop is due to "profit taking after 2 good days. Segment has its problems (Nissan) and nothing in business changed to the better so far," says one dealer. Reinforcing the bleak outlook flagged almost on a daily basis from auto-related companies in recent weeks, German supplier Hella proposed a special dividend but gave a 2019/2020 forecast for adjusted group sales of 6.5-7.0 billion euros, which fell short of market expectations. It shares are down 4.6%. "I think probably some faster money (is) happy to take profit into the squeeze," says another dealer. Carmakers Daimler, BMW, VW have all gone into reverse and so have parts suppliers, like Valeo which is now suffering even after it confirmed its outlook. (Josephine Mason and Danilo Masoni) ***** OPENING SNAPSHOT: MARKETS ARE ON A ROLL (0728 GMT) European stocks are just shy of hitting more than one-year highs driven by some solid earnings updates from companies and expectations that the ECB will further ease monetary policy later today. The pan European STOXX 600 is now up 0.4%. France's CAC 40 rose as much as 0.9% in early trades, easily outperforming rest of Europe after LVMH's Q2 sales beat and Schneider Electric's outlook lift pushed the index to a whisker away from December 2007 highs. It's been trading at May 2018 highs in recent days. Cobham has soared 34% and is the top performer across Europe after Advent International agreed to buy the British company known for pioneering air-to-air refuelling technology for $5 billion, the latest U.S. private equity firm to swoop on a European company potentially spotting a bargain buy. Nokia is stealing the show in the earnings onslaught with their shares rising as much as 9% after the Finnish telecom equipment maker reported a surprise jump in second-quarter profit. AstraZeneca shares have hit record highs after raising its sales outlook. European autos index took a sharp U-turn after hitting early-May highs after downbeat Nissan news with Valeo being the only stock with decent gains. The car parts maker confirmed its FY goals amid a global auto slowdown. Ford's warning overnight, which sent carmaker's shares down 7% post-close in the U.S., could be weighing on the sector. (Thyagaraju Adinarayan) ***** ON OUR RADAR: BEER TO PHARMA, CARS TO YOGURTS, PERFUMES TO CHIPS (0657 GMT) European stocks are seen rising this morning ahead of the ECB meeting, where Mario Draghi is expected to set the stage for a September rate cut and give details on potential stimulus measures. On the corporate news front, we have a slew of earnings reports this morning and unsurprisingly there are mixed signals from companies in sectors ranging from spirits to pharma, perfumes to chemicals, cars to yogurts, you name it. Shares in Nokia are seen rising as much as 7% after reporting a surprise rise in second-quarter profit, citing higher demand -- it may have likely benefited from U.S. restrictions on Chinese rival Huawei. In chips, STMicro is seen 2% down after it cut its revenue outlook, while its rivals Aixtron and Siltronic are seen higher after they kept their guidance unchanged. In cars, Volkswagen shares are seen rising 1%-3% in Frankfurt after reporting a 30% jump in Q2 operating profit driven by its higher-margin sports utility vehicle sales. Valeo seen rising 3-4% after it confirmed its FY goals. Those positive updates could help European auto sector dust off Ford's warning which dented sent the carmaker's shares down 7% post-close in the U.S. In Paris, where stock futures are rallying 0.9%, blue-chips Danone and Total are seen rising after reporting results. Total is also boosted by its asset sale plan. Over to liquor, AB InBev, which makes Budweiser, Corona and Stella Artois, is set to rise 2% after it reported a Q2 beat as beer sales grew at their fastest pace in five years. AB InBev took a hit earlier this month after cancelling its Asia IPO. In hard liquor we have Diageo, the world's largest spirits company, reported higher profits helped by growth across all its markets. Cobham could rise as much as 30% after U.S. buyout group Adevnt offered to buy the British engineer for 4 billion pounds. In pharma, Switzerland's Roche shares are seen rising 2% after it raised full-year sales outlook as newer drugs fuelled first-half results. In London, we've got consumer goods giant Unilever reporting a slightly weaker-than-expected quarterly underlying sales growth hit by wet weather in Europe and North America. (Thyagaraju Adinarayan) ***** FUTURES RALLY ON DRAGHI EFFECT, ONSLAUGHT OF EARNINGS (0635 GMT) European stock futures indicate a solid open for all major indices with gains ranging from 0.4% to 0.8%. Eurostoxx futures have hit their highest since May last year and the Paris futures have rallied 0.9% to their loftiest since December 2007 Markets are cheered by hopes that Mario Draghi will signal a September rate cut and give details on potential stimulus measures amid an onslaught of earnings with about 60 companies reporting their earnings today. Cars to chemicals, pharma to beer, chips to perfumes, you name it. Paris futures are clearly outperforming rest of Europe driven by heavyweights LVMH and Danone's solid results and Total's plan to sell assets worth $5 billion. In cars, Volkswagen shares are up 1.2% in early dealings after its first-half operating profit rose 10% as VW, Porsche and Skoda cars helped to offset a drop in Audi sales, but that's while Swiss engineering group ABB blamed slowing auto sector for a drastic fall in second-quarter profit. In the U.S., Ford gave weaker-than-expected forecast, sending shares down as much as 7% in after hours trading. That could dent sentiment in the sector in Europe. Although on a more positive note, Valeo confirmed its FY goals after H1 profit slump. In pharma, Switzerland's Roche shares are seen rising 2% after it raised full-year sales outlook as newer drugs fuelled first-half results. Shares in AB InBev, which makes Budweiser, Corona and Stella Artois, could get a boost from Q2 beat as beer sales grew at their fastest pace in five years. AB InBev took a hit earlier this month after cancelling its Asia IPO. Over to some hard liquor now, Diageo, the world's largest spirits company, reported higher profits helped by growth across all its markets. In the ever-hot chips sector, STMicro has lowered its full-year revenue target, while Siltronic and Aixtron have confirmed their outlook. German chemicals giant BASF, which earlier this month issued a profit warning, says a slump at its basic petrochemicals businesses accounted for most of the weakness in the second quarter. Earnings aside, we have some dealmaking news with U.S. buyout group offering 4 billion pounds for British engineer Cobham. Key headlines: VW H1 operating profit up 10% on higher VW, Porsche sales BASF says basic chemicals accounted for most of the slump in Q2 ABB quarterly profit plunges on automotive slowdown, solar business charge AB InBev beats earnings expectations as beer sales spike Nokia Q2 beats forecasts on rising demand Retailer Casino scraps 2020 dividend as it pursues debt-cutting plans Clariant, SABIC halt talks to form chemicals venture France's Schneider Electric H1 results top estimates; raises outlook Food group Danone's Q2 sales accelerate as China baby food arm improves Orange Q2 revenue stabilises in France on improving market conditions STMicroelectronics Lowers FY Net Revenue Target To Around $9.35-9.65 Bln Siltronic confirms outlook after slide in Q2 earnings Aixtron Confirms 2019 Guidance For Sales And Orders After Q2 Vuitton, Moncler set high bar for luxury goods peers Unilever second-quarter sales growth falls short of estimates Anglo American returns cash to shareholders, reports multiple fatal incidents Advent Intl agree to buy UK engineer Cobham for $5 bln (Thyagaraju Adinarayan) ***** EUROPEAN STOCKS WARM-UP TO ECB; BUSY EARNINGS DAY (0534 GMT) European stocks are seen opening higher ahead of the ECB's monetary policy meeting, where Mario Draghi is widely expected to signal a September rate cut. Its also one of the busiest day of the earnings season with a slew of reports pouring in. Swiss drugmaker Roche lifted its full-year sales outlook and AB InBev Q2 beats expectations after beer sales grew at their fastest pace in five years. Financial spreadbetters IG expect London's FTSE to open 17 points higher at 7,519, Frankfurt's DAX to open 51 points up at 12,574, and Paris' CAC to open 24 points higher at 5,630. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)