LIVE MARKETS-Time to buy British?

* European shares fall slightly from 3-month high

* Snap vote worries pull Italian stocks down from 8-yr high

* Trump to announce decision on Iran nuclear deal

* Oil price backs off 2014 highs

LONDON, May 8 (Reuters) - 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

TIME TO BUY BRITISH? (1450 GMT)

The FTSE 100 has been in recovery mode, up around 10 percent since hitting its lowest level

since December 2016 back in March, and is now down just 1.6 percent for the year. So is it time

to dip back into UK stocks?

Analysts at Northern Trust Capital Markets seem to think so, saying in a note that they have

a "growing conviction in searching for value in UK stocks".

They point to positives such as the benefits from the UK's relationship with China, while

they feel U.S. investors are instead extrapolating negative outcomes of Brexit.

"Starting prices are low compared to history, newsflow doesn't seem to be getting much

worse, long-term and activist capital is entering as M&A picks up and price action has

stabilised with many stocks going up even on bad news," say Northern Trust Capital Markets'

analysts.

Likewise BofAML's global cross asset strategy team say that they are rotating out of Europe

and into the UK, which they consider a better late cycle play, is underowned and geared to

dollar strength as well as having a high dividend yield.

(Kit Rees)

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HOW'S THE EARNINGS SEASON GOING? "MARGINAL BEAT" (1347 GMT)

We're more than halfway through the earnings season and while some disappointing updates

(William Demant (LSE: 0RGT.L - news) , Deutsche Post (IOB: 0H3Q.IL - news) ) are weighing today, the overall picture for European companies

isn't that bad, although not as bright as in the United States.

Here, in a few bullets, are the latest Thomson Reuters (Dusseldorf: TOC.DU - news) estimates, in local currency:

* MSCI EMU beats 57 pct vs misses 34 pct

* MSCI EMU Q1 growth rate seen at 3.2 pct

* MSCI Europe beats 57 pct vs misses 36 pct

* MSCI Europe Q1 growth rate seen at 4.6 pct

* MSCI USA beats 77 pct vs misses 16 pct

* MSCI USA Q1 growth rate seen at 12.8 pct

And here's a quick take from Morgan Stanley (Xetra: 885836 - news) 's Matthew Garman who also looks mildly positive

and says the reporting season in Europe is shaping up as a "marginal beat".

"With (Other OTC: WWTH - news) around 60% of companies now having reported 1Q results, earnings have tracked 1.5%

ahead of consensus with 4% more beats than misses, slightly softer than 4Q. Sales have been in

line. Telecoms, Financials, Consumer Discretionary and Health Care have delivered the strongest

EPS beats," he says.

(Danilo Masoni)

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BUILDING IMPETUS WITH SKY, SOPHOS (1221 GMT)

Jefferies analysts have decided to add a few new names to their 'European Franchise List' in

order to boost previous positive momentum and "build impetus", and Sky (Frankfurt: 893517 - news) and Sophos are among

their nine new additions.

As UK M&A is one of today's standout themes, it's interesting that Jefferies say that they

have been buyers of Sky since last April, and they still see an attractive risk reward profile

as the bidding saga continues for Sky's assets.

On Sophos, while Jefferies acknowledge the weakness in the stock's share price this year

(-6.8 pct in 2018), they are positive about Sophos' niche -- its focus on SMEs -- and expect

future updates to prove that its business model and growth are sustainable.

Anglo American (LSE: AAL.L - news) , ArcelorMittal (LSE: 0NSF.L - news) , Burford Capital (Other OTC: BRFRF - news) , Generali (EUREX: 566030.EX - news) , Lonza, Indivior (Frankfurt: 2IVA.F - news) and VW are also

among new additions to Jefferies' list of 16 stocks.

(Kit Rees)

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DON'T CRY WOLF FOR A U.S. RECESSION - WHISPER! (1155 GMT)

Rabobank just published a research piece in which it puts the probability of a U.S.

recession at 27 percent by September 2019 using treasury yield curve models.

"Not enough to change our baseline forecasts, but substantial enough to whisper wolf, wolf,

wolf", the bank said, adding it wasn't planning to change its base case forecasts but wanted to

highlight that "there are several indications that recessionary risks might be on the rise".

Here's their chart:

As a sign that investors are indeed concerned about how much fuel this cycle still has in

its engines, BofAML also issued research of its own which produced slightly more optimistic

findings.

"The yield curve may be flattening but our rates strategists do not expect it to invert in

2018. Given the average lag between inversion and recession is 27 months that would put a

recession at the earliest in 2021!," their global cross-asset strategy team wrote.

The bank cautioned, however, that "history is only a guide" and pointed to the risks posed

by possible trade wars and weakening survey data.

It also gave a reminder that "equity markets tend to peak six months before a US recession"

and that "the majority of investors think the peak in equity markets will be this year".

Anyhow, BofAML believes the cycle is far from over and says it is "happy" be long on

equities but has switched its European position into a FTSE one.

"The makeup of the FTSE, which is commodities and defensive heavy, is more late cycle

oriented. It also has one of the highest dividend yields of global equity markets," it said.

Talking of wolves, here's a link to a 2013 blog by Reuters Photographer Lisi Niesner called

"Among wolves" : https://reut.rs/2I4hSEL

Here's a photo from it:

(Julien Ponthus)

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MIDDAY UPDATE: ITALY LEADS LOSSES (1224 GMT)

At the session's halfway mark Italian stocks are still the worst performers in a broadly

negative European market.

Among sectors, financials are the biggest weight on the STOXX, mainly due to falls among

Italian lenders, whilst the energy sector is also on the backfoot as the price of oil slides in

ahead of Trump's decision on the Iran nuclear deal.

And it's looking to be a similar story in the U.S., with stocks futures trading around 0.3

percent lower.

Here's your midday snapshot:

(Kit Rees)

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UK CHALLENGER BANKS: DISRUPTION IN CONSOLIDATION (1038 GMT)

Is this the age of consolidation for UK challenger banks? CYBG (Frankfurt: 42YA.F - news) 's 1.6 billion pound all-share

offer for Virgin Money sure seems to be making that case. (see also)

"The deal structure (i.e. full share, no cash, small premium) raises a question whether new

financial upstarts, that sought to challenge the UK’s Big 4 banking titans, stand a chance to

steal any meaningful market share within the gruelling financial sector environment on their

own," commented Artjom Hatsaturjants, from Accendo Markets.

"South Africa’s FirstRand mixed cash/shares takeover of Aldermore in 2017, and the newest

CYBG/VM deal adds further fuel to the fire of the idea that the challenger banks will not be

able to survive on their own despite several years of exciting growth prospects," he added.

So what about the next move?

Artjom Hatsaturjants believes Metro Bank (Frankfurt: 6MB.F - news) or OneSavings Bank (Stuttgart: 2OS.SG - news) could be ripe for picking and

that they could even attract foreign bidders thanks to the weak pound.

Here's link to a 2010 story for those of you who remember or would like to be reminded of

how Virgin Money sought to conquer British retail banking: https://reut.rs/2rta6gN

(Julien Ponthus)

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"IT'S NOT A GOOD DAY FOR ITALIAN ASSETS" (0906 GMT)

Italian assets have been shrugging off political worries for months but today it's

different. Italian stocks have progressively lost ground this morning and are last down more

than 2 percent, while government bonds are also being sold off heavily as investors react to

strengthened prospects of an early election.

Here's the background:

President Sergio Mattarella called on Monday for Italy's bickering parties to rally behind a

"neutral government." Italy's two largest parties, the far-right League and anti-establishment

5-Star Movement, came out against the proposal. This raises the likelihood of an unprecedented

immediate return to the polls, even as early as July.

And here are some views from investors:

Carlo Franchini, head of institutional clients at Italy's Banca Ifigest: "It's not a good

day for Italian assets. Markets are starting to feel the pressure of elections. Volumes and

selling pressure on the BTP are growing... Markets were not expecting there could have been

elections so early. That could put at risk the approval of the budget law and recent data has

eroded confidence in the country's economic recovery."

Matteo Ramenghi, UBS Global Wealth Management, Chief Investment Officer for Italy: "The

events of the last few hours suggest that the scenarios of a temporary technocratic government

or repeat elections are more likely. A broad grand coalition supporting a technocratic

government would reassure markets since it could induce political stability and prolong current

economic policies, though its lifespan would be in question. Repeat elections may cause more

uncertainty and therefore may weigh on Italy assets."

Italy's FTSE MIB benchmark is set for its worst day in more than 2 months. Just in

the previous session the index hit its highest level since October 2009 and, despite today's

drop, it is still the best performer in Europe, up 12 percent so far this year.

(Danilo Masoni)

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OPENING SNAPSHOT: EUROPEAN SHARES WITHOUT DIRECTION (0712 GMT)

European shares have opened without a clear direction with the STOXX 600 moving in and out

positive territory in early deals, as caution dominated ahead of President Donald Trump's

decision on whether to withdraw the United States from the Iran nuclear deal.

Here is your snapshot with Europe's main country indexes and, as you can see, there is not

much conviction around: the FTSE is up 0.3 percent while the DAX is down 0.1 percent.

At the single stock level, top STOXX movers were hearing aids firm William Demant

and German postal and logistics group Deutsche Post DHL Group, down 8.7 and 6.2

percent respectively following disappointing updates.

Ambu (LSE: 0R4L.L - news) shares rose sharply for a second day, hitting a fresh record high, following solid

results released on Monday, while Shire (Xetra: S7E.DE - news) advanced nearly 5 percent after Japan's Takeda

agreed to take over the UK company for 46 bln pounds.

(Danilo Masoni)

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DON'T FORGET POWELL! (0619 GMT)

Federal Reserve Chairman Jerome Powell is due to participate from 0715 GMT in a panel before

the Swiss National Bank (LSE: 0QKG.L - news) and International Monetary Fund.

His intervention will be closely watched as the rising dollar helped European shares close

at three-month highs yesterday as the dollar hovered around 4-months peak.

(Julien Ponthus)

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FUTURES RISE IN LONDON, DIP IN FRANKFURT (0608 GMT)

FTSE futures are currently trading in positive territory but it's not looking as good

elsewhere with the DAX set to open about 0.2 percent down.

Here's how futures are doing at 0606 GMT:

(Julien Ponthus)

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MORNING HEADLINES: IRAN DEAL AND COMCAST'S FIRE POWER DOMINATE (0558 GMT)

It should be announced after the end of trading in Europe today but Trump's decision on

whether he will withdraw from the Iran nuclear deal will be on every investor's mind, especially

those with an interest in energy stocks as oil prices close to their 3-1/2 year highs.

Here's our latest on that front:

Another twist in the Sky saga: U.S. cable operator Comcast (Swiss: CMCSA.SW - news) is asking investment banks to

increase a bridge financing facility by as much as $60 billion so it can make an all-cash offer

for the media assets that Twenty-First Century Fox has agreed to sell to Walt Disney (Swiss: DIS-USD.SW - news) .

Also on the M&A front, Virgin Money said that it received an 1.6 billion pounds all-stock

takeover offer from rival CYBG and Shell (LSE: RDSB.L - news) is to sell stake in Canadian Natural for

about $3.3 bln

The earnings season is still on:

DSM's Q1 net profit doubles on high vitamin prices

Adecco Group (IOB: 0QNM.IL - news) sees revenue growing at 5-6 pct rate

Deutsche Post DHL confirms 2018 targets despite Q1 earnings miss

E.ON's Q1 profits beat estimates on energy retail boost

Axel Springer Q1 in line, confirms 2018 guidance

Munich Re Q1 net profit up 48 pct amid low payouts for major losses

Uniper (Swiss: UNIPE.SW - news) posts profit drop at Global Commodities segment

(Julien Ponthus)

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MORNING CALL: EUROPEAN SHARES SEEN BROADLY FLAT AT THE OPEN (0521 GMT)

European shares are seen opening broadly flat at the beginning of the session. Financial

spreadbetters expect London's FTSE to open 13 points higher at 7,580 points, Germany's DAX to

lose 6 points at 12,942 points and Paris' CAC to open flat at 5,531 points.

Investors will be bracing themselves for Trump's decision on whether to withdraw the United (Shenzhen: 000925.SZ - news)

States from the Iran nuclear deal as such a move could disrupt global oil supply.

Oil prices have just eased slightly this morning after hitting 3-1/2 year highs.

Asian stocks ended the session slightly up thanks notably to gains in technology stocks.

Wall Street ended in positive territory, boosted by Apple (NasdaqGS: AAPL - news) 's sixth straight day of gains.

(Julien Ponthus)

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