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LIVE MARKETS-"The de-rating of 2018 provides some cushion"

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters

stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your

thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net

"THE DE-RATING OF 2018 PROVIDES SOME CUSHION" (1111 GMT)

The earnings season is getting into gear and unlike the last quarter it seems that

disappointments aren't provoking dramatic share price falls.

Why's that? Well, we must thank the big sell-off that turned 2018 into the worst year for

European shares in a decade, crashing valuations to levels that some investors deem attractive.

"Soft Q4 results may not be a shock to the market as the de-rating of 2018 provides some

cushion to equities," says Barclays (LSE: BARC.L - news) strategist Emmanuel Cau and team.

"FY2019 estimates still look too high, but global economic surprises may be close to bottom

and trade newsflow is turning more constructive," they add.

Royal London Asset Management Chief Investment Officer, Piers Hillier, agrees the Q4

sell-off has taken a bit of hot air out of the market and provided some opportunities for a

targeted bargain hunt.

"I was cautious in September last year, but I feel a bit better coming into this year

because of that correction," he said. "When you get 20-percent correction in a market, it gives

you a chance as a stock picker to buy better business models at lower prices."

That being said, Barclays strategists expect cyclicals to see more downgrades ahead, but

valuations and positioning have improved, possibly reviving investors' interest.

In sectors, they believe it's time for some tweaks, moving tech to marketweight from

underweight at the expense of staples, which are now at underweight. Materials remain their

preferred beta play, while industrials still warrant caution.


(Danilo Masoni and Josephine Mason)

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OPENING SNAPSHOT: BANKS DRIVE EUROPEAN SHARES LOWER (0822 GMT)

European shares have opened lower this morning with banks being the biggest drag following a

disappointing update from Swiss investment bank and wealth manager UBS (LSE: 0QNR.L - news) . The news is weighing

across the sector, as investors digested a flurry of other corporate updates.

UBS was down more than 4 percent after it reported fourth-quarter pretax profit below

expectations and said tepid investor mood would continue dampening first-quarter results. Other

bank heavyweights such as HSBC, BNP Paribas (LSE: 0HB5.L - news) and Santander were down between 0.9 and 1.5 percent.

Top faller on the STOXX was IG Group, down 8.8 percent as stricter regulation contributed to

a 17-percent slump in first-half profits, while some well-received updates from the likes of

Hugo Boss (IOB: 0Q8F.IL - news) and Logitech, helped limit the losses.

The STOXX was down around 0.3 percent, while other regional benchmarks were also posting

slight declines.

(Danilo Masoni)

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ON THE RADAR: UBS, HUGO BOSS, LOGITECH AND SO MUCH MORE! (0750 GMT)

Same gloom, day 2.

Global growth pessimism is the dominant narrative at the moment but that doesn't mean

there's any kind of shortage of corporate news to animate the session:

Today’s big earnings, UBS, is seen as a disappointment and is expected to open down at least

2 percent, dragging Credit Suisse (IOB: 0QP5.IL - news) with it.

Still in Switzerland, SGS (LSE: 0QMI.L - news) is seen losing some ground as it reports Q4. In the financial

sector, IG Group profits are hit by regulatory clampdown which would also weigh on competitors.

Among positive earnings: Hugo Boss, Logitech and Dixons Carphone (Frankfurt: CWB.F - news) .

The drone saga at Gatwick has a price tag on it for easyJet but pre-market indication don’t

point to a fall.

In M&A, France's Bonduelle (LSE: 0N75.L - news) is in talks to buy U.S. plant from Seneca Foods and private

equity firm Apollo is wooing RPC (NYSE: RES - news) with advanced talks for a potential takeover worth more than

$3.8 billion, according to WSJ. The packaging firm's shares are seen jumping as much as 10

percent at the open.

In executive moves: Kier and Jupiter CEO Will Stand Down Immediately

Also a big question mark raised for Orange (LSE: 0OQV.L - news) which could retreat after a report on a possible

big fine.

Here's some key headlines:

Hugo Boss sales accelerate in key Christmas quarter

Logitech raises FY outlook after gaming-powered third quarter

Ricardo Plc Says HY Rev Slightly Ahead Of Prior Period

Drone disruption at Gatwick hits easyJet operations and costs

Swiss testing firm SGS reports 2018 profit rises 3.5 pct

Kier Says CEO Will Stand Down Immediately

Jupiter CEO Slendebroek to step down, Andrew Formica appointed

Dixons Carphone's Christmas sales rise 1 pct

IG Group profit hit by regulatory clampdown

French company Bonduelle in talks to buy U.S. plant from Seneca Foods

Pets at Home (Frankfurt: A1XFE7 - news) quarterly like-for-like revenue rises 5.1 pct

UBS posts $862 mln Q4 pre-tax earnings, missing expectations

China's thirst for cognac helps Remy Q3 sales beat forecasts

(Julien Ponthus and Josephine Mason)

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FUTURES POINT TO ANOTHER RISK-OFF SESSION IN EUROPE (0721 GMT)

Seems Davos 2019 probably won't be a vintage remembered for its irrational exuberance with

the IMF cutting its forecast a day before the official start of the event.

Anyhow, as the rich and the powerful gather in the Swiss Alps, European futures are falling

between 0.3 percent and 0.5 percent.

As a bonus, Davos delegates in a graphic: https://tmsnrt.rs/2HgY4lx

(Julien Ponthus)

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NO REBOUND FOR EUROPEAN STOCKS AS GROWTH WORRIES WEIGH (0628 GMT)

New (KOSDAQ: 160550.KQ - news) day, same gloom: European stocks are set to start the session in negative territory as

the same growth worries which broke a streak of four positive session session yesterday hit

global market again.

Financial spreadbetters expect London's FTSE to open 22 points lower, Frankfurt's DAX to

lose 40 points lower and Paris' CAC to go down 16 points lower.

Pessimism for risky assets has been felt earlier on Asian shares and is still hitting U.S.

futures and oil prices.

(Julien Ponthus)

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