LIVE MARKETS-Structural challenges to media still not priced in

* European shares flat

* Socgen retreats after deputy CEO leaves

* ECB bad loans guidelines put banks in focus

* Munich Re, Generali up after results

March 15 (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

STRUCTURAL CHALLENGES TO MEDIA STILL NOT PRICED IN (1424 GMT)

We've known for some time now that advertising-land, and the media sector in general, is

jeopardised by the rise of massive online marketplaces Amazon and Alibaba. But Exane says the

sector hasn't even yet fully priced in the potential impact of shrinking advertising spend from

big companies.

"Judging by the EPS revisions and deratings of the past 18 months, it may seem like most

structural challenges are well understood by investors, and possibly fully priced in. We are not

convinced," they say. They're very pessimistic, with average target prices 20 percent below

consensus.

Ecommerce marketing fundamentally changes the determinants of brand success. "It's less

about advertising intensity and intangible promises and more about targeted online presence,

competitive pricing and high customer satisfaction," writes Exane.

And because ad agencies are more focused on branding, they stand to lose from this shift in

priorities. Exane has cut long-term growth forecasts for agencies and broadcasters by 50 basis

points, and see double-digit downside to their target price on average.

Any signs of light in the sector?

Exane backs London-listed Ascential, and French firm Criteo (listed on the

Nasdaq) as winners, or "at least not losing".

"Ascential has e-commerce (Clavis, One-Click-Retail) and media disruption (Medialink, Cannes

Festival) that together generate the bulk of growth," write analysts, adding that Ascential has

one of the highest growth rates in European media.

Meanwhile Criteo's exposure to ecommerce marketing makes it attractive, they say.

Exane is most negative on Publicis, WPP, Atresmedia, Mediaset

and ProsiebenSat 1.

(Helen Reid)

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"MIFID II IS FOR LIFE, NOT JUST FOR CHRISTMAS" (1337 GMT)

That was one of the fun things we heard at today's FIX trading conference in London where

traders, investors and trading technology providers got together to discuss the issues facing

the industry.

Chief of which, of course, is MiFID II. Just a few days into the dark volume cap regime, the

consensus was that it's too early to tell what effect it's had, but participants recognize these

new rules are here to stay and agree there's more work to be done to adapt.

Here are some takeaways from audience surveys:

- 56% of respondents said they see MiFID II implementation as "by and large successful"

- 33% said they're uncovering new challenges on a daily basis

- 11% percent said they've only been able to implement the bare minimum due to resource

constraints

Data remains the top priority: an overwhelming majority (69 percent) said the biggest

challenge in implementing the new rules is the collection, analysis and delivery of accurate

data.

The discussion became heated when Brexit was mentioned, as some said the divorce might

impair the smooth functioning of the new rules as the EU seeks to create a working capital

markets union.

Tellingly, more than a quarter of respondents said they'd already begun planning for a "hard

Brexit" outcome, while 54 percent said Brexit planning was underway but for multiple possible

outcomes. One-fifth of respondents said they had not started yet, waiting for further

information.

(Helen Reid)

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SHORT INTEREST IN EUROPE KEEPS ON RISING (1303 GMT)

As shorts weather approaches, so investors seem to be multiplying short positions on

European equities. Short balances are up 18 percent year to date, according to data from HIS

Markit (see their chart below).

In terms of countries, Spain has seen the biggest short increase, with Siemens Gamesa

Renewable Energy and Abertis the biggest stock contributors to the increase.

Among sectors, materials stands out as having also seen the biggest increase in short

interest.

And it's also interesting that retailing has seen some of the largest year-to-date

reductions in short demand, though Markit's analysts note this is coming off a "relatively high

base", so some investors might have already taken profit in that area.

(Kit Rees)

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WHICH SECTORS ARE MOST VULNERABLE IN A "TRADE GRIDLOCK"? (1240 GMT)

If you're wondering which European sectors might be most exposed to a ramping-up in global

trade tensions, then some charts from BAML's credit note today might be of use.

Even though they are referring to the credit market, BAML strategists reckon those credit

sectors which are mainly exporters would be hit hardest (no surprises there), with healthcare,

food and beverage and chemicals credit issuers having the biggest U.S. sales exposure.

Basic industries and tech have the largest China sales exposure, says BAML.

"While we are far from a fully-fledged trade war at present, Europe would have some

vulnerabilities should broader trade gridlock materialize," BAML's credit strategists say.

"The EU is a fairly "open" economy. EU exports, for instance, are 44% of GDP, while imports

are 41%."

Here's their chart showing European credit issuer exposure to the U.S. and Europe by sector:

And the same chart for exposure to China and the rest of the world:

(Kit Rees)

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WHY ARE EUROPEAN SHARES CHEAPER? IT'S NOT BUSINESS, IT'S PERSONAL! (1232 GMT)

The discount applied to European shares versus their U.S. peers is a regular topic in

research notes and has led to numerous strategies to arbitrate the gap.

Explaining the rebate in price-to-book or price-to-earnings ratio (according to our data the

STOXX 600 has a PE of 14.9 while the S&P 500 is close to 23) is complicated.

Some analysts put it down to the different constituents of U.S. and European indexes, with

for instance more "hot tech" in America.

Others point to the growth potential of the U.S. economy and argue that its labour market,

taxes and regulations make it a more business-friendly environment for companies to thrive in.

One other popular explanation is that fears surrounding the Euro zone's future, and its

possible disintegration, are still spooking investors.

But that doesn't add up, writes Vincent Deluard, from INTL FCStone.

"Why would the discount have persisted in the equity market, while it has all but

disappeared in the bond and currency markets?" the strategist asks, noting that European junk

bonds have lower yields than U.S. government debt.

"For lack of a better explanation, I believe investors are punishing Europe for its lack of

historical relevance," Deluard says.

"The only time Europe manages to make headlines is when it threatens to self-destruct. And

then again, these threats are no longer taken seriously".

Here's an illustration of the European discount:

(Julien Ponthus)

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EYES ON EQUITY TRADING FOR GLOBAL BANKS (1142 GMT)

Examining the banking sector more broadly, analysts at JPM are looking for names geared to

equity trading such as UBS, Morgan Stanley and Goldman Sachs as they

expect Equities to outperform FICC year-on-year in the first quarter of 2018.

JPM's analysts point to the volatility spike in February as a boost for equities business,

with cash transaction volumes up 13 percent year-on-year in the U.S. and 27 percent in Europe on

average.

However, they see European investment banks underperforming in local currency reporting in

both FICC and Equities due to the year-on-year appreciation of local currencies against the

dollar - perhaps this is something already evident in the shares?

(Kit Rees)

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ECB ADDENDUM STARTS ON APRIL FOOLS' DAY! (1035 GMT)

The long-delayed ECB guidelines on non-performing loans (better known as the Addendum) are

finally out and they will go into effect on the first day of next month, yes on April Fools'

Day! The most important news however is not this but rather that euro zone banks may get a

reprieve until 2021 to fully implement the guidelines on treating new soured loans, a climb down

from an earlier proposal for a more aggressive treatment of bad debt.

"All looks pretty much in line with expectations with a mild improvement on the schedule of

provisioning for secured NPEs (non-performing-exposures)... we see a mildly net positive for

banks today," says Mediobanca Securities in a note to clients.

Credit Suisse also highlights how the Addendum is less severe than expected: "The linear

provisioning approach is in line with expectations, but the good news for secured loans is that

it is mandatory as of year three. A better-than-expected outcome is positive for Italian banks,

in our view. Small Italian banks in particular should benefit from the news."

Italian banks hold nearly one third of the euro zone bad loan pile so it's

little surprise to see them outperforming their peers in Europe this morning.

Here's a link to the full Addendum for further reading: https://goo.gl/7JkYHY

(Danilo Masoni)

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GERMANY TO WIN WORLD CUP, EM EQUITIES SEEN MOST PROMISING 2018 ASSET CLASS (0821 GMT)

Germany winning the world cup is one of the many findings of a survey JP Morgan conducted

with 100 clients at a conference in Paris on March 8-9.

Among other key takeaways:

* 45 percent see EM equities as offering the best returns in 2018 and 30 percent favour

developed market equities

* 69 percent are on long positions with a 9 percent minority short

* 54 percent expect 3 hikes from the Fed

* The Trump administration is the biggest risk to the global outlook

* Consensus about shorting the dollar against euro, yen and Swiss Franc

* Volatility is here to stay, algo trading provides deeper liquidity in normal conditions

but worse liquidity when volatility jumps.

Arguably the most important chart:

(Julien Ponthus and Karin Strohecker)

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OPENING SNAPSHOT: ALL CLEAR ACROSS EUROPEAN MARKETS (0807 GMT)

As expected, markets are rising across the European continent, even if only cautiously.

Among news-driven moves, France's Socgen got a 4 percent knock at the open after the

unexpected departure of its deputy chief executive Didier Valet. The French bank is now down a

more moderate 2.5 percent.

Here's your opening snapshot:

(Julien Ponthus)

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What you need to know before Europe opens (0746 GMT)

European shares are set to open up slightly with earnings back in focus especially in the

insurance sector, where good looking numbers from German reinsurer Munich Re and Italy's

Generali could provide support. Stock index futures for main euro zone benchmarks are up around

0.4 percent, while FTSE futures are pointing to a flat open.

Shares in Munich Re were indicated up more than 2 percent after the world's largest

reinsurer nudged its 2018 profit guidance higher after eking out a small profit in 2017.

Generali is indicated up 1 percent after it raised its dividend on Thursday after posting record

high operating profits in 2017 boosted by life and asset management businesses and cost cuts.

Still in earnings, H&M, however is seen opening down more than 1 percent after the world's

second-biggest fashion retailer reported weaker than expected sales.

Banks, especially Italian ones, could also be in the spotlight after the ECB released long

delayed guidelines on treating new soured bank debt, saying they will go into effect on April 1.

Italy holds nearly one third of the euro zone's bad loan pile.

Here are some more corporate headlines that could move shares today:

SocGen deputy CEO unexpectedly leaves after disagreement

H&M Q1 sales miss expectations

Unilever picks Rotterdam over London as corporate HQ​

Airbus warns Melrose on GKN takeover - FT [http://on.ft.com/2pcMHQk]

Moody's may cut RWE to "junk" -

Marston's chairman quits for new role at Persimmon

BRIEF-PZ Cussons Says ‍Profit For Full Year Will Fall Short Of Expectations​

Lufthansa eyes stable pricing after record 2017 profit

Italian regulator approves Richemont bid on YNAP

Italy's Leonardo to pay unvaried dividend after fall in 2017 profitability

Cineworld's full-year revenue rises 11.6 pct on blockbuster releases

(Danilo Masoni and Tom Pfeiffer)

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European stock futures on the up (0708 GMT)

European stock index futures have opened with gains of up to 0.4 percent, confirming earlier

indications from financial spreadbetters, with earnings likely to be a focus today, especially

in the insurance sector. FTSE futures however were pointing to a flat open

Banks could be in the spotlight too after the ECB released long-delayed guidelines

on treating newly soured bank debt, which will come into effect on April 1. Italian

banks hold nearly one third of the euro zone's 800 billion euro bad loan pile

inherited from the financial crisis.

Here's your snapshot:

(Danilo Masoni)

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EARLY MORNING COMPANY HEADLINE ROUND-UP (0652 GMT)

Here are your early morning headlines and, as you can seen, there are some solid-looking

results from German reinsurer Munich Re and Italy's Assicurazioni Generali

which could provide support to the insurance sector.

Munich Re nudges 2018 profit guidance higher

Generali raises dividend after posting record high operating profit

Glencore signs massive cobalt sale deal with China's GEM

French healthcare group Sanofi sells 8 bln euros of bonds

Statoil to change its name to Equinor

UBS merges equity, debt capital markets businesses in Asia -memo

Shell close to clinching Hong Kong's first LNG import deal - sources

Credit Suisse sued over U.S. 'volatility' product losses

Argentina approves AB Inbev plan for post-merger beer divestments

Italy's Atlantia joins ACS to end $22 bln battle for Spain's Abertis

Airline caterer Gategroup opens books for IPO of up to $2.8 bln

Vivendi CEO could suspend powers as Telecom Italia chairman after activist move

Siemens Healthineers IPO likely to price at 28 euros per share - sources

Ardian launches sale of German pharma firm Riemser -sources

Finnair drops hope of joining airline consolidation, looks to Asia

(Danilo Masoni)

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MORNING CALL: EUROPEAN SHARES SEEN UP (0720 GMT)

European shares are expected to open flat to higher this morning following a mixed close in

the previous session when trade concerns weighed on sentiment.

In Asian trading, stocks slipped broadly while government bonds attracted safe-haven demand

on mounting concerns that growing trade tensions would hurt the global economy.

Financial spreadbetters expect London's FTSE to open 2 points higher at 7,135, Frankfurt's

DAX to open 30 points higher at 12,268 and Paris' CAC to open 17 points higher at 5,250.

(Danilo Masoni)

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