LIVE MARKETS-There's been a dearth of take-private deals so far this year

* STOXX 600 up 0.4%

* Media, oil & gas stocks drive gains

* Axel Springer surges up 20% on potential private equity bid

* De La Rue plunges 27% after profit warning, CEO leaves

May 30 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on

Messenger to share your thoughts on market moves:

rm://thyagaraju.adinarayan.thomsonreuters.com@reuters.net

THERE'S BEEN A DEARTH OF TAKE-PRIVATE DEALS SO FAR THIS YEAR (1232 GMT)

Axel Springer shares are soaring 19.7% and are headed for their best day since the dot-com

bubble on news U.S. private equity firm KKR is in talks to take the company private.

There have so far this year been fewer take-private deals globally after the best year in

three in 2018.

In Europe, there have been take-private deals worth a total of $8.6 billion so far this

year, a whopping 78% drop compared to the same period last year, according to Refinitiv data

(see below).

With Mediaset buying a tenth of ProsiebenSat and Axel's take-private news, the

European media sector has seen a flurry of dealmaking news. Low valuations make it a potentially

attractive area for private equity.

The media index was lagging the pan-European STOXX this year before these announcements were

made.

Overall, there are quite a few factors specific to the current market environment making

private equity firms consider taking companies private.

"The European market has continued to lag behind its U.S. peers, this combined with low

financing costs and idiosyncratic stock moves sets a ripe backdrop for capital market

transactions," Edward Park at Brooks Macdonald says.

Here are the year-to-date figures for take-private deal volumes: https://tmsnrt.rs/2Z0a3Il

And here are the year-by-year figures: https://tmsnrt.rs/2Z2uPqR

(Helen Reid and Thyagaraju Adinarayan)

PAN-EUROPEAN TV DEALS SEEN FROM THE STREET (1108 GMT)

Mediaset's surprise move on Prosiebensat has rekindled debate over M&A in

the TV broadcasting sector with traders trying to assess how feasible any deal could be, maybe

involving more than two players, even though hurdles exist.

"There is a logic in pan-European deals and the move by Mediaset shows companies may have

become more aversive on strategy," says a merger-arbitrage trader based in London. "You need to

be strong in Italy, in Germany and in France too to compete against the likes of Netflix

".

"One issue we have in Europe is France's ownership law which is a bit tricky for companies

like TF1 and M6. They were supposed to change it this year but with all what

happened in France (yellow vests protests...) it was pushed back," he added.

Another trader highlights that low valuations could keep the chatter alive.

"All major free-to-air broadcasters in Europe are really undervalued and that clearly

creates potential interest," says the Milan-based trader.

As you can see in this chart shares in Mediaset, Prosiebensat, TF1 and ITV are all trading

at a price earnings ratio under 12 times, below that of the broader STOXX 600.

Meanwhile, Markus Huber at city of London Markets says: "I wouldn’t be surprised if some

cross-border deals would materialise simply because the general business environment remains

rather tough and plenty of capital is needed in order to be able to compete. Joining forces and

the synergies involved could for some be the only real option when it comes to growth".

For more on this debate, check out this post from yesterday: More dealmaking in TV?

(Danilo Masoni)

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RARE EARTHS: THE NEXT SHOE TO DROP IN THE TRADE WAR (1008 GMT)

Rare earths look like they're becoming the next frontier in the U.S.-China trade war.

The Chinese commerce ministry said this morning it would be unacceptable that countries

using Chinese rare earths would suppress China, in a barely veiled barb at the U.S. without

however identifying any country by name.

"If China were to decide to restrict rare earth exports to the U.S., the effect would be

significant, in our view," Goldman Sachs analysts write.

This isn't the first time rare earths have been used as leverage in a trade dispute: in 2010

China announced restrictions to rare earth production and exports, driving prices more than 500%

higher.

Since then and partly because of that episode, other countries ramped up their production

and China's share of global rare earths production fell from 98% in 2010 to 71% in 2018, GS

says.

So the impact on prices is likely to be slightly less this time round, particularly as

China's threat - if it leads to concrete action - only relates to rare earths exported to the

U.S., and not globally.

However, it's already had a significant impact on shares in rare earth producers which have

soared on the prospect of restricted supply of the minerals (see below).

The new threats from China also more broadly signal a deepening of tensions.

"Investors probably would expect further retaliations from the U.S. and risk assets such as

copper could face even more headwinds," conclude GS analysts. Indeed, copper prices are hovering

near a five-month low.

Here's our explainer on why rare earths could be a crucial bargaining chip for China:

(Helen Reid)

*****

NO APPETITE FOR EUROPEAN EQUITIES? (0923 GMT)

As Europe remains hostage to trade uncertainty and "messy politics", Barclays says

investors' exposure to European equities is falling precipitously.

Internal client flow data at UBS suggests the same and the Swiss bank says investors sold

cyclicals "aggressively" in May.

By geography, Switzerland a "traditional defensive haven" has seen the most inflows, as per

UBS, while Germany had the biggest net selling since November. (chart below)

"... for Germany to consistently outperform we need to see some form of de-escalation of the

trade wars."

Despite the persistent outflows, European equities rallied this year and are up 10% --

Barclays sees this divergence as 'stunning', but not unusual.

Barclays: "Flows typically lag performance and a similar situation to the current one

happened in 2016, when equities troughed in Q1 while flows only rebounded in Q4."

(Thyagaraju Adinarayan)

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WHERE NEXT AFTER A WIDELY-HATED RALLY? (0825 GMT)

There's a distinct sense of apathy in markets after a strong start to the year scuppered by

a renewed flare-up in the trade war. With European stocks back at early March levels but still

up 10% for 2019, the question is "where to from here?"

This year's rally has almost universally frustrated investors - and perhaps they were right

to doubt its longevity.

Simply put, Goldman Sachs says, "Support from easier monetary policy is seldom a reason for

a sustained pick-up in risk appetite if a pick-up in growth does not follow."

Signs of such a pick-up are few and far between. In fact, quite the opposite: GS' current

activity indicator "innovations" - which track macro surprises relative to statistical forecasts

- have fallen sharply, as you can see below.

With risk appetite likely to stay muted until growth picks up, GS stays neutral on equities

over three months.

That's a good call if the prediction in our latest poll is correct: investors see the STOXX

600 inching up to 380 points, just 1% above the level it ended last week, by end-2019.

(Helen Reid)

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OPENING SNAPSHOT: AXEL SPRINGER SOARS, DE LA RUE IN FREE-FALL (0729 GMT)

European indices are jumping 0.3% to 0.5% as oil & gas stocks stage a comeback after a sharp

sell-off and the media sector is boosted by Axel Springer M&A news and Daily Mail results.

With stock markets in Norway, Denmark, Finland, Sweden, and Switzerland all closed today for

a holiday, liquidity is thinner than usual.

Axel Springer's shares are soaring 20%, poised for their best day in more than 20 years

after news KKR is considering a bid to take Axel Springer private. Germany's ProSiebenSat.1

continues to rally after Mediaset stake buy.

Shares of Britain's Daily Mail are up 10% after it reported a 19% rise in first-half

adjusted pretax profit.

The STOXX media index is set for its best single-day performance since April 26, up 1%.

Shares of De La Rue, which last year lost the contract for Britain's new post-Brexit blue

passports, are plunging 22% after a profit warning and CEO resignation.

(Thyagaraju Adinarayan)

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EUROPEAN FUTURES RISE; AXEL SPRINGER, DE LA RUE, FIRSTGROUP IN FOCUS (0652 GMT)

Futures across the euro zone and UK are rising 0.3% to 0.6%, a small relief after

yesterday's massive sell-off (-1.4%). The STOXX 600's losses for May now stand at 5% with more

than half-a-trillion euros in value wiped off since U.S. President Donald Trump's tweet on May

3, which rekindled fears of a trade war between the world's two biggest economies.

The latest "naked economic terrorism" comment from China's Vice Foreign Minster Zhang Hanhui

doesn't help the situation as it heightens the risk of a prolonged trade war.

Citing the current market environment, Danish drug merchant Abacus Medicine postpones its

IPO. In stark contrast with that, Britain's Watches of Switzerland is set to go public today

despite rising trade war and no-deal Brexit risks.

German M&A is heating up: Axel Springer is seen rising 17% after group says KKR could make a

takeover bid. The news comes a day after Mediaset bought a 9.6% stake in Germany's

ProSiebenSat.

Banknote and passports maker De La Rue's CEO is to step down and the company warns FY20

profit will be "somewhat" lower than current year. Its shares are seen down 10-20%.

UK rail and bus operator FirstGroup says it is looking to sell its U.S. coach

service Greyhound and is also looking at ways to separate its UK First Bus operations from the

group. Shares are seen 5% higher.

UK headlines:

Watches of Switzerland prices IPO at 270 pence per share

Johnson Matthey's profit jumps on emission control device growth

Daily Mail publisher report 19% rise in first-half profit

Greyhound-owner FirstGroup says looking to sell

Western Link expects return to service in early June

Imperial Brands says U.S. cigarette volume down 6.4%

Banknote, passports maker De La Rue's CEO to step down

Southwest Water owner Pennon's profit rises on waste recycling

Brexit shutdowns hammer UK car production in April - industry group

(Thyagaraju Adinarayan)

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"NAKED ECONOMIC TERRORISM" (0557 GMT)

Fears of a full blown trade war rise as war of words between Beijing and Washington reach

new heights.

"This kind of deliberately provoking trade disputes is naked economic terrorism, economic

chauvinism, economic bullying," China's Vice Foreign Minster Zhang Hanhui said.

Reports that Beijing could use rare earths to strike back at Washington hit global stocks on

Wednesday.

"Few hiding places for European equity investors yesterday as the trade war fears persisted

and intensified, with China's warning that the supply of rare earth elements may be restricted

was the latest salvo," Peel Hunt's Ian Williams says.

In corporate news, Axel Springer's negotiations with KKR for potential investment

make big headlines today. Shares jump 17.6% in pre-market trade.

Bloomberg reported that the Springer family and KKR were considering a bid to take Axel

Springer private.

Please note: Sweden, Denmark, Norway, Finland and Swiss markets are closed today.

Some key headlines:

Axel Springer in negotiations with KKR for potential investment

Nissan CEO sees no big downside to FCA-Renault merger

Engie tells Brazil court it raised $3 billion for suspended deal

China's rare earth supplies could be vital bargaining chip in U.S. trade war

European drug wholesaler Abacus postpones IPO

(Thyagaraju Adinarayan)

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EUROPEAN STOCKS: FLAT AS PANCAKE (0520 GMT)

After two straight sessions of losses, European stocks are expected to open flat as fears of

a prolonged trade war kept investors on the sidelines.

Financial spreadbetters IG expect London's FTSE to open 2 points higher at 7,188,

Frankfurt's DAX to open 36 points higher at 11,874, and Paris' CAC to open 14 points higher at

5,236.

European shares have lost about 5% or half-a-trillion euros in value since U.S. President

Donald Trump's tweet on May 3, which rekindled fears of a trade war between the world's two

biggest economies.

Danish drug merchant Abacus Medicine is one of the latest companies to be hit by the

uncertain environment as it postponed its IPO plan citing an "unfavourable market environment".

Is it a favourable environment for acquisitions due to depressed valuations?

More M&A in Germany: German publishing house Axel Springer is in talks with

private equity firm KKR and Friede Springer of the Springer family for a potential strategic

investment of KKR in the company.

The news comes a day after Italian broadcaster Mediaset bought a 9.6% stake in

Germany's ProSiebenSat.

(Thyagaraju Adinarayan)

*****

(Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)