LIVE MARKETS-The start of Europe's catch-up trade?

* European shares down

* Euro zone inflation slows down

* Fed leaves interest rates unchanged

* U.S. stocks futures down as Tesla, Spotify results in focus

LONDON, May 3 (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

THE START OF EUROPE'S CATCH-UP TRADE? (1433 GMT)

Although today's trading has been more negative, the recent pick-up in European equities is

a sign of hope for investors sticking with the region despite the roaringly strong earnings on

the other side of the pond.

"My hunch is there's some rather strong euro zone potential catch-up," says Guy Monson,

chief investment officer at Sarasin & Partners. "I think these European earnings numbers are

going to pick up."

As you can see below, first-quarter earnings growth for the S&P 500 is soaring, tracking

25.3 percent year-on-year so far, while the figure for the STOXX 600 is 1.6 percent.

Now (Frankfurt: 11N.F - news) a large part of that is of course down to the currency differential. Europe's 1.6

percent earnings growth in local currency terms translates to a lot more in dollar terms,

considering how far the euro has come since last year.

Europe's STOXX 600 is actually outperforming the S&P 500 so far this year, down just 1.1

percent against the U.S. index's 2.5 percent decline.

"The era of persistently weak Europe versus U.S., where you had this astonishing

outperformance of the U.S., is past," says Monson.

"Not in the next days or weeks, but in the next months or year we may have one of those

golden periods with tremendously strong fund flows from U.S. to European assets."

And the strong euro's impact on Euro zone earnings? So far the impact has been negligible,

he argues.

(Helen Reid)

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M&A IN THE UK: WHICH STOCKS ARE TARGETS? (1315 GMT)

M&A has been a key characteristic of the UK market this year, and Liberum gives some tips as

to which kinds of stocks are likely to be bid targets.

They share:

- International exposure, possibly undervalued due to the UK market discount

- Growing top line

- Depressed valuations versus history

Among those stocks Liberum finds which fulfil these characteristics, there are several

miners, including Glencore (Frankfurt: 8GC.F - news) , Fresnillo (Frankfurt: A0MVZE - news) , Randgold Resources and Vedanta.

Also potential targets, according to their criteria, are transport company Firstgroup (LSE: FGP.L - news) ,

satellite firm Inmarsat (Other OTC: IMASF - news) , support services firm Babcock, entertainment company Merlin, oil

producers Tullow Oil (LSE: TLW.L - news) and Premier Oil (LSE: PMO.L - news) .

M&A is typically concentrated on the small and mid-cap area, strategists note. The average

M&A as a proportion of index market cap is 1.9 percent for the FTSE 100, 5.7 percent for the

FTSE250 and 6.3 percent for the small caps.

Overall the growing pipeline of deals could lead to the strongest M&A year since the crisis,

Liberum finds.

(Helen Reid)

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LUNCHTIME UPDATE: EURO SPOILS STOCKS PARTY (1220 GMT)

It's lunchtime, and European stocks have hit a session low, which coincided with a pop in

the euro as the single currency moves higher after being set back by that Euro zone inflation

data earlier on.

Over in the U.S., stocks futures are also in negative territory as attention is firmly on

the tech sector following disappointing earnings reports from Tesla and Spotify.

It could be a bumpy ride for Tesla's shares after the company reported a record loss for the

first quarter and CEO Elon Musk cut off analysts from asking questions during a conference call.

Here's your lunchtime snapshot:

(Kit Rees)

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FRENCH BANKS CALLED EUROPE'S GFC WINNERS AS Q1 KICKS IN (1210 GMT)

"French banks have suffered much less than their European competitors from the 2008

financial crisis and the sovereign debt crisis of 2011," a study published by France's central

bank states as the country's listed lenders start publishing Q1 results tomorrow.

You can see in the chart below (from the Banque de France research) how French banks' return

on equity (blue line) overtook that of their European peers (green line) between the beginning

and the end of the decade (circled in red):

The French regulator also notes that the banks it oversees were able to increase their

balance sheet and lower costs more than their competitors throughout the period.

The change of fortunes of pre-financial crisis powerhouses was clearly exposed last week

when Deutsche Bank (IOB: 0H7D.IL - news) vowed to retreat to Europe and end its nightmare on Wall Street after three

expensive decades struggling to become a global investment bank.

You can see below how French banks beat the Euro zone banking index over the last decade:

Overall, betting on European banks as a proxy for the #Euroboom economic recovery has been a

disappointment with the sector underperforming the broader STOXXE in 2017 and in 2018.

European lenders are still (desperately?) waiting for monetary normalisation and the higher

interest rates necessary to boost their profits.

In the meantime, there's little spark expected from the Q1 vintage which Jefferies said it

sees as a "transitional quarter for French banks".

UBS (LSE: 0QNR.L - news) analyst Lorraine Quoirez, who is hoping for an "easier Q2" believes Q1 could be "the

toughest quarter of the year" with retail revenues only expected to improve later in 2018 and

investment banks profits hit by negative dollar swings.

BNP Paribas (LSE: 0HB5.L - news) and Société Générale publish their Q1 results tomorrow while Natixis (LSE: 0IHK.L - news) and Crédit

Agricole will report earnings on May 9 and 15 respectively.

Here's a link to Banque de France's research note but it is unfortunately only available in

French at the moment: https://bit.ly/2HLiEKV

(Julien Ponthus)

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FTSE OUT OF THE RED AS WEAK DATA HITS POUND AGAIN (0913 GMT)

The British blue-chip index is the only major European benchmark trading in positive

territory but that is yet again thanks to a little help from its sterling friend.

Weak data from Britain's services sector has probably given a final blow to any remaining

expectations of a Bank of England interest rate rise next week, and that's definitely bad news

for the pound.

"Following the blow dealt by last week’s GDP figures, markets are unlikely to be mollified

by today’s Services PMI," said Dean Turner, UBS Wealth Management economist.

It took about half an hour for traders to make up their mind completely but after a few

bounces up and down, the pound is reaching the session's low and entering negative territory

while the FTSE is doing exactly the opposite, now up 0.1 pct.

Here's how things unfolded:

(Julien Ponthus and Helen Reid)

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OPENING SNAPSHOT: EUROPE IN THE RED, RESULTS DISAPPOINTMENTS BITE (0721 GMT)

European stocks are following in Asian markets' footsteps, falling as trade tensions trigger

anxiety once again. The Trump administration was reported to be considering executive action to

restrict some Chinese companies' ability to sell telecoms equipment in the United States.

The STOXX 600 is down 0.2 percent, while the FTSE is holding flat.

Financials and consumer staples are the worst-performing sectors, while results are pulling

some stocks sharply down.

Bpost (EUREX: BPO.EX - news) is the standout loser, down 10 percent, alongside Schibsted (-5.9%) and Smith & Nephew (Frankfurt: 502816 - news)

(-6.6%) which all reported results lagging expectations.

Logitech on the other hand is rising 7.8 percent after its fourth-quarter results beat

expectations.

M&A activity is also a driver. Germany's Vonovia (Milan: VNA.MI - news) is down 2.1 percent at the bottom

of the DAX after the firm made a $1 billion offer for Swedish real estate company Victoria Park (LSE: 0QIC.L - news)

. The acquisition target is, for its part, rising 8 percent on the news.

(Helen Reid)

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WHAT YOU NEED TO KNOW BEFORE EUROPE OPENS (0651 GMT)

European shares are expected to open slightly lower in another busy day for earnings

releases and weighed down by a bounce in the euro from near 4-month lows against the dollar

after the Fed delivered no hawkish surprises in yesterday's policy statement.

Futures are trading down 0.2-0.4 percent.

Even (Taiwan OTC: 6436.TWO - news) though the euro has started to weaken in the last couple of weeks, its strength has

weighed on company results during the first quarter.

Today, Bayer (IOB: 0P6S.IL - news) shares are seen falling 1-2 percent after the group cut its full year guidance,

blaming the strong currency. Adverse FX also led to a 2 percent revenue drop at healthcare group

Fresenius (Swiss: FRE-EUR.SW - news) (down 1 percent premarket) and resulted in a lower-than-expected core profit for

Belgian chemicals group Solvay (down 1-2 percent premarket).

Shares (Berlin: DI6.BE - news) in chipmaker Infineon (Xetra: 623100 - news) , utility Veolia and sports goods maker adidas, however, are

seen rising at the open following strong updates, while a big sales miss at Fingerprint could

lead its shares to decline around 10 percent.

Overall, first quarter earnings for the MSCI EMU index are seen up 2.5 percent in euro terms

or 14.6 percent in dollar terms, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data.

In the UK, Rolls-Royce confirmed its profit forecast, while miner Glencore predicted trading

profit at upper end of forecast range.

(Danilo Masoni)

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UK HEADLINES: GLENCORE, ROLLS-ROYCE AND M&A (0626 GMT)

Results from companies including Rolls-Royce, Glencore, and Smith & Nephew will drive the UK

market today.

There's also more inbound M&A with France's Fonciere des Regions (LSE: 0J6V.L - news) buying a portfolio of UK

hotels from Starwood Capital for $1.1 billion.

Here are some of the headlines to watch:

Rolls-Royce sticks to profit forecast, working on engine repair solution

Fonciere des Regions buys UK hotels portfolio from Starwood worth $1.1 bln

Glencore expects trading profit at upper end of forecast range

Smith & Nephew downgrades outlook after weak Q1

(Helen Reid)

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EUROPEAN STOCK FUTURES DIP AS EURO REBOUNDS (0616 GMT)

Top European stock index futures have opened slightly lower, trading between flat and a fall

of 0.3 percent, as the dollar fell back and weakened against the euro after the Federal Reserve

delivered no hawkish surprises in yesterday's statement where it left interest rates unchanged.

"Initial market reaction saw the US dollar slip back sharply, on the basis that markets had

expected a much more hawkish tilt given recent inflation readings," said Michael Hewson, Chief (Taiwan OTC: 3345.TWO - news)

Market Analyst at CMC Markets UK.

"This was always likely to be optimistic, given the previous reluctance to pre-commit. There

was nothing in yesterday’s statement to undermine the prospect that rates won’t rise next month,

as Fed officials remained non-committal as to whether we could get 3 or 4 rate rises this year,"

he added.

Here's your snapshot:

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUNDUP: EARNINGS DOMINATE (0556 GMT)

Bayer cuts full-year guidance on strong euro

Fresenius Q1 net income slips 2 pct on strong euro

Solvay Q1 results hit by currency impact, fixed costs

Infineon nudges up revenue guidance as earnings improve

Siemens Healthineers posts 4 pct Q2 sales rise

Fingerprint Cards (LSE: 0RGY.L - news) sees "some" market stabilization ahead as Q1 lags

Geberit (IOB: 0QQ2.IL - news) sees higher raw materials prices in Q2

Utility Veolia's Q1 revenues rise 3.7 pct, boosted by new services

Novartis (IOB: 0QLR.IL - news) biosimilar cancer drug hits U.S. regulatory bump

Vonovia to make $1 bln offer for Sweden's Victoria Park

Ceva Logistics prices IPO at 27.50 Swiss francs per share

UBS seeks regulatory nod for 51 pct controlling stake in China JV

Sprint's outgoing CEO says scepticism over T-Mobile merger is expected

Poorest U.S. consumers seen hit hard by T-Mobile, Sprint merger

Fresenius alleges 'blatant fraud' at U.S. drugmaker Akorn

Societe Generale (Swiss: 519928.SW - news) ready to pay up to $1 bln to end U.S. probes- Bloomberg

Chairman of En+ says actively working on reducing Deripaska stake

French utility EDF (Paris: FR0010242511 - news) says received 24-hour strike notice

L'Oreal snaps up South Korean cosmetics firm Nanda

Germany confident Eurofighter supplier issue can be resolved soon

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN LOWER (0527 GMT)

European shares are seen opening slightly lower this morning in another busy day for

earnings releases and following losses in Asia and Wall Street overnight.

Financial spreadbetters expect London's FTSE to open 21 points lower at 7,522, Frankfurt's

DAX to open 36 points lower at 12,767 and Paris' CAC to open 24 points lower at 5,505.

While in Asia shares were weighed down by waning hopes for real progress in Sino (Dusseldorf: 1205802.DU - news) -U.S. trade

talks, U.S. stocks fell after the Federal Reserve left interest rates steady and said inflation

had "moved close" to its target.

(Danilo Masoni)

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