LIVE MARKETS-Osram warning drives car stocks down as tariff fears mount

* European shares fall back

* Tech stocks suffer after Asian selloff on trade fears

* H&M recovers after upbeat CEO comments

* Osram plunges on FY guidance cut

* Eyes on EU summit

LONDON, June 28 (Reuters) - 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

OSRAM WARNING DRIVES CAR STOCKS DOWN AS TARIFF FEARS MOUNT (1525 GMT)

Autos suppliers shares are sinking today after a profit warning from Osram triggered renewed

anxiety over car tariffs and their impact. Osram said restrictions on trade and sales as well as

planning risks affecting auto manufacturers have created "noticeable uncertainty", and the stock

is down 21.5 percent as a result.

"The trade tariff pain is clearly starting to come to the fore in companies connected to

autos," writes a trader.

Osram peer Signify is down 5 percent, while other auto suppliers Valeo (LSE: 0RH5.L - news) ,

Schaeffler (IOB: 0RBK.IL - news) , Hella and Plastic Omnium (Swiss: POM.SW - news) are falling 5.6 to 6.1

percent.

Number-crunching by various analysts paints a pretty worrying picture for the sector

which is at its lowest since the start of September.

"We now see a fairly high probability of a second round of U.S. tariffs affecting the auto

industry," say Oxford Economics analysts. They see a 0.1 percent hit to 2020 euro area GDP as

exports and investments dip. For the U.S. the hit would actually be worse, with 100,000 jobs

threatened and a 0.2 percent hit to 2020 GDP.

(Helen Reid)

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THE ROBOTS ARE COMING ... FOR INVESTMENT BANKS' RESEARCH (1410 GMT)

It's not good news for sell-side research - it looks like institutional investors are

planning on using more artificial intelligence, according to a survey conducted by Greenwich

Associates (and commissioned by Thomson Reuters (Dusseldorf: TOC.DU - news) ).

A survey of portfolio managers, CIOs, analysts, and other investment professionals found

that around 70 percent expect MiFID II regulations and other factors to lead to further

unbundling of research from trading around the world.

Richard Johnson, vice president of Greenwich Associates Market Structure and Technology,

says that around half of those investors expect to reduce their reliance on investment banks'

research.

While at the moment only around 17 percent of participants were using AI as part of their

investment process, more than half said they expect to up their level of AI integration.

So watch this space.

(Kit Rees)

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BEWARE, SEXED-UP EBITDA AHEAD! (1319 GMT)

This Moody's note didn't make so much noise but it sure does convey a worrying message:

sexing up earnings to attract investors is growing as a trend!

"Rising leverage and weakening documentation standards are driving issuers to present higher

earnings adjustments to improve the attractiveness of their debt issuance when they go to

market," the ratings agency wrote about speculative-grade non-financial corporates.

It's also not getting any better, quite on the contrary.

"Use of earnings adjustments, which push down leverage, is likely to continue to rise

because average new issuer leverage levels are closing in on the maximum levels set within

recent ECB leverage guidelines," Martin Hallmark, a Moody's senior vice president warned.

Not surprisingly, meeting beefed-up expectations is not easy for peacocking companies.

"Companies will find it increasingly difficult to achieve adjustments, with more than 25

percent of adjustments failing to flow through to higher reported EBITDA in the year after new

debt is issued," Moody's added.

(Julien Ponthus)

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CYCLICALS STILL FAVOURED WHILE BILLIONS SUCKED OUT OF EUROPEAN EQUITIES (1255 GMT)

Europe is the only developed region to have suffered outflows this year, as we've reported

before, and Barclays (LSE: BARC.L - news) has some interesting observations on which sectors are favoured by those

that remain in the market.

Cyclicals are still a favourite area for fund managers despite trade wars, and Barclays (Swiss: BARC.SW - news)

notes European funds' cyclical exposure inched up relative to defensives in May.

Staples (NasdaqGS: SPLS - news) , telecom and utilities all saw declines in average fund exposure while exposure to

consumer discretionary and tech stocks increased (that's gonna hurt on a day like today with the

tech sector down 2.6 percent).

Interestingly, the average European fund - near 52 percent of Barclays' sample - is still

overweight energy, near the highest levels this decade.

They also note cash levels continue to rise and are now close to the highest levels seen in

the last five years.

As you can see below, cyclicals' relative performance has been hurt by trade war fears

recently - but it looks like investors are still wary of betting on a return of defensives

strength.

(Helen Reid)

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MIDDAY SNAPSHOT: FEELING A BIT LOW (1120 GMT)

European stocks have extended losses and are now down at session lows as tech stocks slide

to their lowest level since early May and a stronger euro puts pressure on exporters.

Interestingly, U.S. futures are pointing to an upbeat start for Wall Street, perhaps buoyed

by a seemingly softer tone from U.S. President Trump.

Here's your snapshot:

(Kit Rees)

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SPANISH BANKS, FRENCH TELCOS ON MENU FOR MORE M&A (1042 GMT)

Europe's love affair with M&A shows no signs of ending with Goldman Sachs (NYSE: GS-PB - news) analysts saying

that 2018 is on track to hit 2015's record M&A volumes.

For the first time in 12 years the average premium for targets in both North America and

Western Europe have converged, they note.

Here are the key points and changes GS have made in the semi-annual rebalance of their

basket of Western European M&A targets. Inclusion in the basket means they reckon the stock has

a 15% plus probability of being acquired.

- One-third of the basket is UK-domiciled (we have previously highlighted the increase in UK

M&A!)

- The basket is overweight industrials and consumer discretionary sectors, and underweight

financials

- They add Unicaja Banco and Banco Sabadell as they see a second leg of consolidation for

Spain's banking sector

- Among tech stocks, Ingenico (Paris: FR0000125346 - news) and Micro Focus were both added with an M&A rank of 2 (15-30

percent likelihood of acquisition)

- They also add Altice (Other OTC: ATSVF - news) and Iliad (LSE: 0MGY.L - news) on increased expectation of French telco consolidation;

- Their utilities team sees European utilities entering a new cycle of M&A, and they add Gas

Natural (pointing to private equity firms now being big shareholders), EDP and EDP Renovaveis (EUREX: EDRF.EX - news) .

(Kit Rees)

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EVIL CONTRARIAN BETS AGAINST ENGLAND (1011 GMT)

Nope, this is not about the pound falling to its lowest level since last November ahead of

today's EU summit or about Theresa May's attempts to sell Brexit to her European peers.

This is about the World Cup and how "Evil Knievil", a veteran British financial trader, is

going against the flow and bookmakers' odds and betting that Belgium will prevail over England

this evening.

"I will have 10,000 pounds ($13,080) on Belgium to win," Simon Cawkwell, who won the

nickname with successful bets on the communications firm of late tycoon Robert Maxwell, the

failed British bank Northern Rock and Brexit, just told us.

England's 6-1 win over Panama, its biggest ever World Cup victory, sparked a surge in hopes

for the team, but Cawkwell cautioned against getting carried away.

Cawkwell has made a reputation as one of the City of London (LSE: CIN.L - news) 's more successful

"short-betting" traders - namely those able to predict negative market performances.

Here's food for thought:

No, after you: Why England and Belgium may want to be second [https://reut.rs/2KeR0ae]

Even (Taiwan OTC: 6436.TWO - news) though France isn't involved this evening, here's a photo of May and Macron at the

stadium. Doubtless they'll be enjoying themselves just as much at today's Summit:

(Sudip Kar-Gupta with Julien Ponthus)

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OPENING SNAPSHOT: EUROPEAN STOCKS DIP (0722 GMT)

Yesterday's rebound was short-lived as European stocks open lower, weighed down by a fall

among banks as risk-off becomes the flavour du jour ahead of the EU summit.

A slide in the South African rand to a seven-month low is also dragging on stocks exposed to

the country, with Investec (LSE: INVP.L - news) and Old Mutual (Other OTC: ODMUF - news) among the biggest fallers on the STOXX.

A weak quarterly performance isn't sitting well with H&M investors as shares in the fashion

retailer slide more than 3 percent.

And among risers, shares in Shire (Xetra: S7E.DE - news) are the biggest gainers after a proposal from a group of

Takeda shareholders who are trying to gain support to block the Shire deal failed to get passed

at Takeda's AGM.

Here's your opening snapshot:

(Kit Rees)

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WHAT'S ON THE RADAR FOR THE EUROPEAN OPEN (0646 GMT)

As a tense EU summit kicks off the region’s stock markets are set for a fall after a valiant

attempt at a rebound in the previous session as U.S. President Trump’s tone on trade seemed to

soften.

An extended selloff in Asian stocks after a lower close in Wall Street set the tone for a

weaker session in Europe, with benchmark futures down 0.1 to 0.2 percent as investors await a

divisive summit with leaders locking horns over immigration.

Oil stocks, the best-performing in Europe this year, are likely to support the market after

crude prices hit 3 ½ year highs.

On the corporate front H&M shares are seen falling around 5 percent after the world’s

second-biggest fashion retailer reported its second-quarter profit shrank slightly more than

expected, and flagged higher markdown levels in the third quarter. One trader calls it “the

short that keeps on giving”.

UK pub operator Greene King (Frankfurt: A0F66P - news) said weaker consumer spending and bad weather dented its

full-year profit by 11.2 percent, in line with its expectations, while strong second-half

guidance from oil services firm Wood Group was the latest sign of companies in the sector

reaping the rewards of higher oil prices.

(Helen Reid)

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FUTURES GAP DOWN AS INVESTORS AWAIT TENSE EU SUMMIT (0615 GMT)

Futures have opened lower as trade tensions linger and European investors await a divisive

EU summit which may yield few answers for investors to the pressing questions facing the bloc.

"We do not expect a significant breakthrough on EU and Euro area governance reform at this

week's EU summit," say Goldman Sachs analysts.

"While progress is being made on the reform agenda – with the Franco-German proposals agreed

by Chancellor Merkel and President Macron in the form of the Meseburg accord representing an

important contribution – the political context looks set to further delay and water down what

are already quite modest proposals."

Trade tensions and Brexit negotiations are likely to distract leaders from

consensus-building.

(Helen Reid)

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EARLY MORNING HEADLINE ROUND-UP (0541 GMT)

Company news is still relatively thin on the ground but there's lots to focus on today in

trade and politics.

Although Trump moved to a softer approach than imposing China-specific investment

restrictions, instead using the Committee on Foreign Investment in the U.S., Wall Street closed

lower yesterday after White House economic adviser Larry Kudlow told Fox that the CFIUS decision

did not represent a more conciliatory approach to China trade issues.

In Europe of course it's all eyes on the EU Summit which kicks off today. The top issue is

immigration, and here are Five things to expect from the summit:

In other headlines to watch:

Deutsche Bank (IOB: 0H7D.IL - news) 's U.S. brokerage fined $1.4 mln for reporting problems

High fees make up bulk of UK banks' retail account profits - watchdog says

Ticketmaster UK says customer data may have been stolen in hack

Spain's Repsol (Amsterdam: RP6.AS - news) invests $869 million in electricity assets

Vestas, Maersk unit team up to tackle costs of ever bigger wind turbines

Thyssenkrupp (IOB: 0O1C.IL - news) nears JV compromise deal with Tata Steel (BSE: TATASTEEL.BO - news) -sources

Under pressure from populists, EU doubles down on curbing migration

EXCLUSIVE-Bahrain Steel says Anglo declared force majeure on contract after spills

BoE (Shenzhen: 000725.SZ - news) 's Cunliffe keeps cards close on rates outlook - BBC

Trump to use U.S. security review panel to curb China tech investments

(Helen Reid)

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MORNING CALL: EUROPEAN STOCKS SET FOR FRESH FALLS(0519 GMT)

European stocks are called lower this morning as yesterday's rebound fizzles out, with Asian

trading revealing a pervasive pessimism from investors over the mounting threat of

protectionism.

Meanwhile crude prices at 3-1/2 year highs are likely to support oil stocks further after

strong gains in the previous session.

Asian stocks slumped to nine-month lows on growing worries the U.S. administration's

approach to trade is harming global economic growth even as it appeared to be softening its aims

to curb Chinese investments in U.S. technology firms.

Spreadbetters expect the FTSE to open 33 points lower at 7,589, the DAX to open 19 points

lower at 12,329, and Paris' CAC 40 to open 11 points lower at 5,317.

(Helen Reid)

*****

(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus and Kit Rees)