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LIVE MARKETS-Quality street: low vol picks

* European shares rise slightly

* STOXX set for fourth week of gains in a row

* Earnings in focus: Ericsson (Hanover: ERCB.HA - news) , Telia, Reckitt

April 20 (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

QUALITY STREET: LOW VOL PICKS (1007 GMT)

Talking of dips, as stock market volatility has now calmed down from February's spike,

strategists at UBS (LSE: 0QNR.L - news) have taken another look at quality stocks with low volatility given that UBS

says the premium for low vol stocks has dropped to a decade low - the fastest fall in 20 years

(see chart below).

"This suggests above average optimism priced in to higher vol stocks. Lagged quality stocks

make sense today in their own right, or additionally, as a hedge against any downward shifts in

sentiment," say UBS' strategists.

So which stocks have made the cut for UBS? At the top of their screen of high quality stocks

which have lagged since July 2016 are buy-rated BT Group (Other OTC: BTGOF - news) , WPP (Frankfurt: A1J2BZ - news) and Pennon Group (Frankfurt: 3PNA.F - news)

, while STMicro, Anglo American (LSE: AAL.L - news) and Faurecia (Swiss: EO.SW - news) top UBS' list of

lower quality stocks that have outperformed.


(Kit Rees)

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THE CASE FOR BUYING THE DIP IN A "PEAK GROWTH" WORLD (0948 GMT)

The important word in "peak growth", is "growth", not "peak", or so Citi analysts seem to

argue in a note where they make the case for buying into dips even if economic activity is

fading from recent highs.

While some strategists, like Deutsche Bank (IOB: 0H7D.IL - news) 's Sebastian Raedler, believe the trend in

economic indicators is key in setting the tone for equity markets, Citi analysts looked at the

issue and came back with a different finding.

Citi makes an important point, however, that when PMIs are above 50 but in a downward trend,

earnings per share continue to grow, but at a higher pace than shares.

"This is what we expect to happen in 2018 – global EPS up 13 percent, global equities up 5

percent," Citi analysts said.

The Macro Tourist newsletter makes a similar point saying that while tax cuts in the U.S.

can help boost EPS, investors can still wake up with a bad surprise if PE ratios retreat at the

same time.

"Even (Taiwan OTC: 6436.TWO - news) though earnings estimates are still ratcheting higher, the price-to-earnings multiple

has been sinking. The 1-yr forward P/E multiple was almost 19 in the days before the tax cut

announcement. That same measure is now sitting below 17", it said about the S&P 500.

"All I can say is don't hold out for peak P/E multiples. They probably hit their high right

before the tax cut", the newsletter argued.

Pushing aside markets, the big picture still seems to be that the world's economy is in good

shape according to this chart from Citi:

(Julien Ponthus)

*****

COMMODITIES SLIDE, TELECOMS GLIDE (0719 GMT)

Basic resources (Frankfurt: W8Z.F - news) stocks have gone from top dog to bottom of the pack today, falling 0.5

percent as metals prices slide back.

That weakness, along with falls in healthcare stocks (notably Shire (Hamburg: 3979575.HM - news) -3.6% after Allergan (Berlin: 28551749.BE - news)

ruled out a bid for the company), is pushing the European benchmark down 0.2 percent, while the

FTSE 100 gains 0.5 percent thanks to a weaker pound.

Telecoms stocks however are enjoying stellar gains. Telia is up 7.2 percent after results,

and Ericsson nabs the top spot on the STOXX, jumping 14.5 percent after its earnings and margin

beat expectations, boosting investors' confidence about its restructuring. Rival Nokia

is also being pushed up by Ericsson's strong performance.

Chipmaker ASM International is losing 9.4 percent after its earnings fell,

weighing on peers STMicro, Infineon (Xetra: 623100 - news) , ams, ASML (Milan: ASML.MI - news) , and BE Semiconductor which were already pretty

poor performers yesterday.

And Reckitt Benckiser is down 4.5 percent, hitting its lowest since August 2015,

after its results.

(Helen Reid)

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BEFORE THE BELL: WHAT YOU NEED TO KNOW (0649 GMT)

European shares are expected to open without clear direction today as investors digest a

flurry of earnings updates, although the FTSE could see extra support after comments from the

Bank of England governor dampened expectations for a rate hike in May.

Futures are trading between a 0.1 percent fall and a rise of 0.3 percent.

The rally in commodity prices has softened and that will likely lead to some profit-taking

among mining stocks, seen down 0.5 percent in pre-market, although their spectacular gains this

week have put the pan-European STOXX 600 index on course for its fourth straight week of gains.

Results released this morning could give some support to the broader market with a smaller

than expected loss at Ericsson seen pushing its shares up as much as 10 percent at the open,

while in the battered telecoms sector, Telia is seen rising after it announced a welcome share

buyback plan as Q1 core earnings slightly topped market expectations.

Another disappointing update from Reckitt Benckiser (Xetra: A0M1W6 - news) is seen driving its shares down 1-2

percent after its quarterly sales growth missed estimates, further stressing gloomy prospects

for consumer goods makers.

(Danilo Masoni)

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EARNINGS THE "CIRCUIT BREAKER"? (0636 GMT)

It's going to be another results-dominated trading day today, and looking more broadly than

the individual stock level this earnings season is certainly expected by many brokers to bring

greater certainty to a stock market which has been faltering.

As Deutsche Bank puts it, "we see the recent correction as overdone, and the first quarter

earnings season could act as the needed circuit breaker." Remains to be seen if earnings will be

strong enough to do so.

Here are a few more headlines:

Britain's Reckitt Q1 sales growth misses estimates (shares seen down 1-2%)

British regulators to fine Barclays CEO, monitor whistleblowing programme

Royal Mail CEO Moya Greene to retire; Rico Back to take over

Ceva Logistics aiming for May 4 floatation

(Helen Reid)

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FTSE FUTURES UP AS CARNEY WEAKENS POUND (0602)

European stock index futures have opened little changed, although futures on the

internationally-exposed FTSE were edging up, by 0.3 percent, supported by weakness in

the pound.

In Asian trading, the British currency flirted with two-week lows against the dollar

following comments from the Bank of England Governor Mark Carney dampened widespread

expectations for an interest rate hike in May.

"Dovish comments by governor Carney in an interview published after yesterday's close throw

some serious doubts on the prospect of a BoE May hike," ING rate strategists say.

Here's your futures snapshot:

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUND-UP (0548 GMT)

It's again a quite heavy day for earning updates with number of companies ranging from

Ericsson to Telia having already released their results. Here are some of the headlines that

have caught our attention:

Ericsson posts smaller Q1 loss than expected

SSAB Q1 profit lags forecast after production problems

Auto parts group Faurecia posts higher Q1 sales

Telia Q1 core profit just beats forecast

Southwest challenged engine maker over speed of safety checks

Steag expects more deals in Germany after RWE (IOB: 0FUZ.IL - news) -E.ON swap

Italy's Pop Bari sets aggressive bad loan target -sources

Greece accepts Snam (Amsterdam: QE6.AS - news) -led consortium's offer for gas grid DESFA

Air France (Paris: FR0000031122 - news) unions to continue strikes into May despite pay offer

Germany's Talanx (IOB: 0QA8.IL - news) to raise stake in Vietnam insurer PVI Holdings

And here are our main market stories so far:

Asia tech shares spooked by phone warning, oil near highs

Tobacco and tech drag on Wall St; yields boost banks

Nikkei flat as tech sector losses offset financials rally

Bump in long-dated yields ends two weeks of curve flattening

Pound on backfoot as doubts rise of BoE (Shenzhen: 000725.SZ - news) rate hike in May

Gold slips as U.S. rate rise hopes, easing global tensions weigh

London aluminium, nickel slide as sanctions rally fades

Oil close to late-2014 highs on supply cuts, strong demand

(Danilo Masoni)

*****

MORNING CALL: EUROPEAN SHARES SEEN LITTLE CHANGED (0519 GMT)

European shares are seen opening little changed this morning although the rally in commodity

prices may allow the STOXX 600 index score its fourth straight week of gains. The

pan-European benchmark is up 0.7 percent so far this week.


Financial spreadbetters expect London's FTSE to open 21 points higher at 7,350, Frankfurt's

DAX to open 7 points lower at 12,561 and Paris' CAC to open 3 points higher at 5,395.

Over in Asia, shares slipped as a warning on smartphone demand from the world's largest

contract chipmaker slugged the tech sector, while high oil prices stirred inflation fears and

undermined sovereign bonds.

(Danilo Masoni)

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