LIVE MARKETS-Risk appetite falling and investors ditching European equities

* European shares fall, led lower by industrials

* Cable maker Nexans (EUREX: NXSG.EX - news) warns on profits

* Bank CYBG clinches takeover of Virgin Money

June 18 (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

RISK APPETITE FALLING AND INVESTORS DITCHING EUROPEAN EQUITIES (1406 GMT)

These are two of the takeaways Morgan Stanley (Xetra: 885836 - news) details from its global investment seminar.

"Risk appetite has moderated considerably from the record level of bullishness seen in June

2017," Morgan Stanley analysts note (see chart below).

They also observed a "sharp" shift in sentiment from Europe, the favourite last year, to the

U.S.

Here are some nuggets from the poll of 45 "senior investors" at the seminar:

- Only a quarter describe their current level of risk exposure as above average

- Yet 79% do not foresee a U.S. recession before 2020, with UST yields peaking between 3.5

and 4%

- The U.S. is seen as offering the best regional equity returns over next year and the

greatest chance of upgrade to economic growth expectations

- Greater enthusiasm over commodities - now the second most favoured asset class - with 27%

thinking commodity equity sectors will be best performers over next 12 months

- Some 57 percent expect "limited steps" from the upcoming EU summit, but one-third see no

progress at al

- More than 60 percent saw the greatest risk to markets in the next year coming from higher

inflation or central bank balance sheet reduction

(Helen Reid)

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TRADE TENSIONS WEIGH ON INDUSTRIALS (1242 GMT)

The biggest drag on the STOXX 600 today is industrials, which are among the most sensitive

to trade tensions.

Airbus is falling 2.5 percent. The planemaker and competitor of Boeing (Swiss: BA-USD.SW - news) (the single

biggest U.S. exporter to China) has been highly sensitive to trade war developments particularly

as the picture shifted from U.S.-China tensions to potential tariffs targeting Europe as well.

Industrial conglomerates Siemens (BSE: SIEMENS.BO - news) and ABB (LSE: 0NX2.L - news) are also tumbling 1.4 and 2.3

percent respectively. Their high dependence on ease of global trade makes them natural fallers

when tariffs are threatened.

Of course also hit by trade worries, the autos sector is down 1.8 percent, on track for its

biggest fall in nearly three weeks. The arrest of the head of VW's Audi (IOB: 0FG8.IL - news) added insult to injury

for Volkswagen (IOB: 0P6N.IL - news) which is leading losses on the DAX, down 3.7 percent.

After Friday's announcement by the U.S. of Chinese imports subject to tariffs, Goldman Sachs (NYSE: GS-PB - news)

analysts said "the likelihood of tariffs on the first $34 billion in goods rises substantially,

and implementation by the July 6 deadline looks like the base case... if the tariffs take effect

on schedule, we expect China to retaliate with tariffs on a previously announced list of U.S.

products."

UBS (LSE: 0QNR.L - news) ' chief economist Paul Donovan sounds a moderately optimistic note. He reckons the trade

tax won't reduce global trade, but rather redistribute it. China may export less to the U.S.,

but more elsewhere, while the rest of the world might export more to the U.S. but less

elsewhere.

Here's where we stand as the afternoon begins. U.S. futures are down 0.7 to 0.9 percent so

it's looking like a pretty sharp selloff on Wall Street too.

(Helen Reid)

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OCADO FALLS IN FIRST DAY ON FTSE 100 (1137 GMT)

The online grocer Ocado joined the FTSE 100 today but is down 4.1 percent in its first day

of trading. Meanwhile GVC, which also joined the top share index, is up 1.6 percent.

As index funds rejig their holdings after an index reshuffle, stocks promoted to the index

have tended to do well, according to analysis by AJ Bell looking at reshuffles since 2013, while

relegated firms have fallen.

But there are some exceptions, like today's with Ocado.

"Anyone looking to deploy this as a trading technique needs to be aware that there are some

spectacular exceptions to the rule, which suggest that momentum players looking to follow

promoted stocks need to take care that they do not buy in when a firm's fortunes are at their

zenith," write AJ Bell analysts.

Here's their compilation of the best and worst performers after promotion to the index:

(Helen Reid)

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AT&T (Sao Paolo: ATTB34.SA - news) /TIME WARNER (Frankfurt: A0RGAY - news) : ANOTHER REASON TO BANK ON M&A (0949 GMT)

With M&A volumes through the roof so far this year, event-driven and merger arbitrage

strategies seem like good bets and the latter's prospects even more so with the regulatory green

light for the AT&T/Time Warner deal, Lyxor argued this morning.

"Overall, this milestone reinforces our strong convictions on merger arbitrage," the SocGen (Paris: FR0000130809 - news)

arm said, adding it should "lead to additional M&A activity as the case contributes to clarify

the rules on vertical mergers."

The AT&T ruling is expected to trigger a wave of mergers in the media sector, which has been

upended by companies like Netflix (Xetra: 552484 - news) and Alphabet (Xetra: ABEA.DE - news) 's Google.

"The day after the above-mentioned court ruling, Comcast (Swiss: CMCSA.SW - news) made an offer for Fox assets on top

of Disney’s, setting the stage for a bidding war," Lyxor noted.

The fact that merger arb can deliver irrespective of the general trend also adds to its

appeal "in the current market cycle lies", Lyxor analysts said.

So far however, "the strategy has performed below our expectations in H1 on the back of

exogenous headwinds; trade wars and the DOJ attempt to block the AT&T vs Time Warner deal

impacting the pricing of vertical deals".

Here's our ATT/Time Warner story: AT&T closes $85 billion deal for Time Warner

Here's Lyxor's performance chart:

And lastly, here's Thomson Reuters (Dusseldorf: TOC.DU - news) data on M&A volumes this year:

(Julien Ponthus)

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MORNING SNAPSHOT: EUROPE ON THE BACK FOOT (0914 GMT)

It looks like there isn't much out there to encourage risk exposure.

Simmering trade tensions and worries that a crisis over migration policy in Germany could

destabilise Angela Merkel's three-month-old coalition government is keeping investors on the

edge.

As a result, European bourses have started the week in the red, extending Friday's fall and

set to erase the gains seen on Thursday when a dovish message from ECB helped the STOXX score

its biggest one-day gain in more than 2 months.

Here's your snapshot:

(Danilo Masoni)

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EUROPEAN SHARES SET TO EXTEND FRIDAY'S DROP, EYES ON NEXANS (0648 GMT)

European shares are set to add to Friday's losses as trade tensions, a potentially

destabilising CSU party vote over a migration plan in Germany and Brexit debate in the UK

parliament keep investors on the edge.

Futures on main euro zone benchmarks were trading down 0.2-0.5 percent, putting the

pan-regional STOXX 600 on track to erase the gains seen on Thursday when a dovish ECB pushed

back expectations for an interest rate hike.

In an otherwise thin day for big corporate news, shares in Nexans are likely to be sharply

hit after the French cable maker warned that an "abrupt deterioration" of its high-voltage

activities was likely to translate into lower profits for the full year.

Eyes will be also on UK banks after mid-size challenger lender CYBG (Frankfurt: 42YA.F - news) agreed a 1.7

billion-pounds deal to take over rival Virgin Money after more than a month of talks.

Other stock movers: DS Smith (Frankfurt: 877238 - news) 's full-year adjusted profit rises 21 pct

For more headlines check out the previous post.

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUNDUP (0549 GMT)

Siemens wins $2 bln contract to build new London Tube trains

Renault (LSE: 0NQF.L - news) boss Ghosn wins four-year renewal, narrow pay vote

Britain's Tesco (Frankfurt: 852647 - news) pledges to end all-white board

Hannover Re raises prospect of higher payout ratio

Intesa CEO talking to several investors over wealth management deal

Sprint, T-Mobile plan to file deal application to FCC on Monday

Boeing (NYSE: BA - news) creates one-stop shop for jets and services in Airbus battle

Volvo sets goal of 25 percent recycled plastics in cars from 2025

CYBG on track to clinch Virgin Money deal before deadline - source

MEDIA-Deutsche Post (IOB: 0H3Q.IL - news) to keep e-van unit for at least two years - CEO to FAZ

MEDIA-Thyssenkrupp (IOB: 0O1C.IL - news) shareholders are said to be skeptical of Tata deal - Bloomberg

MEDIA-Nestle (Swiss: NESN.VX - news) joins forces with XPO to build 55 mln stg logistics hub- FT

British M&A booms two years on from Brexit vote

Unilever (NYSE: UL - news) takes stand against digital media's fake followers

Orange (LSE: 0OQV.L - news) , former executives to stand trial over staff suicides

Ex-CEO of France's Carrefour (LSE: 0NPH.L - news) to give up part of payout after pressure

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN MIXED (0523 GMT)

European shares are set to open slightly lower today while the FTSE is seen edging up a bit

with sentiment dampened by worries over a possible escalation of a trade spat between the U.S.

and China.

Financial spreadbetters expect London's FTSE to open 10 points higher at 7,644 Frankfurt's

DAX to open 13 points lower at 12,997 and Paris' CAC to open 7 points lower at 5,494.

Over in Asia, shares fell after U.S. President Donald Trump cranked up trade tensions by

going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in

kind.

* Ex-Japan Asia down 0.4 pct, Nikkei falls 0.9 pct

* E-Minis off 0.5 pct, dollar eases from 3-wk highs

* China, HK markets on holiday

* Oil pressured by oversupply fears, trade war

(Danilo Masoni)

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