LIVE MARKETS-Trade war shopping

* European shares set for 5 straight day of gains

* Brexit secretary Davis resigns, FTSE up

* Asian stocks rally on U.S. jobs relief

July 9 - 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

TRADE WAR SHOPPING (1244 GMT)

Another sign that at least a minority of investors are relatively sanguine about the trade

dispute is their willingness to take advantage of the volatility to purchase selective dips

rather than buying the full-blown trade war narrative and running for the hills.

"We have been using the weakness in the auto sector recently to top-up our holdings in the

auto parts suppliers," Tim Crockford, who manages a continental Europe fund at Hermes Investment

Management, just told us.

The European sector has been on a rollercoaster these last few months with reports of Trump

aiming to have a Mercedes (Xetra: 710000 - news) -Benz-free Fifth Avenue in New York and then offering a possible olive

branch to the European Union and its popular German cars.

Crockford argued that the "global footprint" built by European auto parts suppliers during

the last decade would enable them to "move around production" should they be constrained to do

so.

It's interesting to note that the autos and parts sector is up more than two percent

so far this month, one of the best performers with utilities and telecoms, but still one of the

worst year-to-date with a 9 percent fall.

Here's a link to a post last week on Unicredit (EUREX: DE000A163206.EX - news) strategists advising a "buy-the-dip

strategy":

(Julien Ponthus)

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MIDDAY SNAPSHOT: DAX LOSES STEAM (1154 GMT)

European markets are losing a bit of their shine going into the afternoon, with the DAX now

trading flat while the STOXX is up 0.4 percent, slightly less strong than at the open.

The DAX's performance is proof that trade wars aren't being totally shrugged off. The usual

suspects Daimler (IOB: 0NXX.IL - news) , Volkswagen (IOB: 0P6N.IL - news) , BMW (EUREX: BMWE.EX - news) and Continental (IOB: 0LQ1.IL - news) are the biggest weights on the German index

while Europe's autos index languishes at the bottom of the table, down 0.5 percent.

Tech still seems to be the most popular hiding place from trade worries, with the sector

up 1.2 percent.

Wall Street is set for a strong start to the week, with futures up around 0.4 percent across

the S&P 500, Dow Jones and Nasdaq (Frankfurt: 813516 - news) .

In case you missed them, here are some of our latest takes on the challenges facing

carmakers from higher tariffs:

Tariffs on U.S.-made models will mean pricier BMWs in China

Global automakers hail more ships as trade battles heat up

(Helen Reid)

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IS MINING M&A SET FOR A COMEBACK? (1057 GMT)

After a few weeks of declines, European mining stocks are seeing fresh interest

today, up as much as 2.5 percent, aided by a rebound in copper prices and by talk BHP

could sell its U.S. shale assets to BP for over $10 billion.

The possible disposal brings dealmaking back onto the radar and analysts at Jefferies led by

Christopher LaFemina believe there is scope for dealmaking activity to build up.

"We expect the mining industry to transition from the current 'cash flow, capital returns

and austerity' phase to a 'growth and M&A' phase that will start with small deals but escalate

to larger transactions," they say.

"We ultimately expect the major miners to be acquisitive. Pure play copper miners would be

attractive strategic targets for the majors (Rio, BHP, and Vale (Swiss: VALE.SW - news) ) with the

possible help of Chinese partners to take the higher risk assets..." they add.

Summing up, they see an increase in M&A activity (and rising commodity prices) driving share

prices higher next year.

(Danilo Masoni)

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A TOUGH SUMMER AHEAD FOR BANKS (0953 GMT)

Financials will be a closely watched sector this week as U.S. banks JP Morgan and Citi kick

off results on Friday. UBS (LSE: 0QNR.L - news) analysts reckon global banks are in for a "tough summer", among the

worst-performing sectors worldwide this year so far, and highly oversold. They've got a lot to

prove this earnings season against investors' pessimistic forecasts.

Analysts at the Swiss bank point to the flatter yield curve and sluggish lending as signs

the U.S. banks may be late in the cycle, while trade wars have dented sentiment for the sector

globally - though they reckon the fundamental impact will be modest even for trade-sensitive

HSBC and Standard Chartered (BSE: 580001.BO - news) .

In the Eurozone meanwhile the rate cycle is being pushed out with rate rises now expected to

be later, and earnings expectations have been downgraded accordingly with banks' net interest

and fee income likely at risk. In short, not a very encouraging picture for results around the

corner.

"In light of the challenging near-term outlook, we advocate a more defensive approach to

stock selection," writes UBS. Their picks in Europe are UK domestics and Nordics, pointing to

Lloyds and Danske

(Helen Reid)

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OPENING SNAPSHOT: STOXX EXTENDS WINNING STREAK, FTSE TOO (0714 GMT)

European shares are off to a positive start today with Friday's strong U.S. jobs report and

modest wage growth providing more fuel to the recent rebound and sending the STOXX 600

index up 0.5 percent, set for its fifth straight session of gains.

The FTSE too is joining the party, up 0.4 percent and set for three days of gains,

after the resignation of Brexit minister David Davis.

"It's unwelcome timing for the PM ahead of the UK’s white paper on Brexit, and before

crucial talks with Brussels, but markets welcome the removal of a major impediment to a

pro-business 'soft-Brexit'," said Mike van Dulken and Artjom Hatsaturjants at Accendo Markets.

In less than one hour the successor of Davis will be announced.

Here's your snapshot:

(Danilo Masoni)

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ON THE RADAR AT THE OPEN: OPTIMISM AND SARCASM (0752 GMT)

Stock markets are expected to open slightly up this morning and there's a bit of sarcasm

floating around as to why things seem so rosy with no shortage of worries, such as the Brexit

crisis in the UK or the escalating trade war.

Talking about sarcasm, here's how Rabobank analysts started their daily comment: "And so it

came to pass that the trade war began; and markets thought that it was good."

Pushing the argument even a bit further they asked whether "using a simple model, perhaps if

they put more tariffs in place today equities will go up again?"

Anyhow, common explanation on the street is that U.S. job data is really good and there’s no

need to sell stocks further until there's evidence that the tariffs are actually having an

impact on the economy.

On the bright side too this morning, ING noted that "German exports rebounded in May,

providing more evidence of a strengthening of the economy in the second quarter".

In terms of individual movers, French telcos could be sensitive stocks after Orange (LSE: 0OQV.L - news) said it

was ready to discuss potential tie-ups with other operators.

Eyes also on Daimler which temporarily halted deliveries of a truck engine after finding

that, in certain driving conditions, its emissions of nitrogen oxide could exceed legal limits.

Good news for Air France KLM which reported higher passenger traffic for June on Monday.

In the UK, U.S. satellite group EchoStar Corp said it does not intend to make an offer for

Inmarsat (Other OTC: IMASF - news) after the company rejected a $3.2 billion takeover approach.

Mears Group (LSE: MER.L - news) said its chairman Bob Holt would not stand for re-election at the company's 2019

annual general meeting, two days after a shareholder called for his removal.

As a sign that the return of volatility is starting to bite, industrial group OC Oerlikon

became the third Swiss company this year to shelve a planned stock market listing when it halted

the share offering for its drives unit on Monday.

(Julien Ponthus)

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STYLE POLICE: DON'T USE "DESPITE" IN A HEADLINE (EVEN TODAY!) (0617 GMT)

One simple rule in journalism is to always tell your readers WHY something happened and not

DESPITE of what.

Today seems like it's going to be a difficult one on the style front because it is obviously

tempting to write that Asian stocks markets are up DESPITE the trade war escalation and the

pound is rising DESPITE the resignation of British Brexit Secretary David Davis and the FTSE is

expected also to rise DESPITE all of that.

One way to look at it, writes Jasper Lawler, an analyst from LCG, is that Friday's job

report data shows that the "U.S. economy was soaring with a healthy labour market".

Given the resilience of the U.S. economy, "sentiment could remain resilient until we see

solid evidence of these trade tensions feed through to softer economic data, particularly in

China", Lawler argues.

As for why the pound has not fallen on the new Brexit crisis hitting Theresa May's cabinet,

well it does suggest that "investors believe she will keep hold of the reins", Lawler also

writes.

Here are European futures at the open:

(Julien Ponthus)

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MORNING CALL: DON'T LET A TRADE WAR OR A BREXIT CRISIS GET IN THE WAY (0531 GMT)

The mood in Asia is definitely on a 'risk-on' mode and investors are not, at least at the

moment, letting fears of a full-blown trade war getting in the way of a positive session.

The optimism is spreading to Europe where financial spreadbetters expect Frankfurt's DAX to

open 66 points up and Paris' CAC to rise 28 points.

London's FTSE is expected to open 41 points higher as two members of the British government

resigned over Brexit and put the future of Prime Minister Theresa May in doubt.

The pound now is stable after initially edging down on the resignation of Brexit Secretary

David Davis who said he was not willing to be "a reluctant conscript" of Prime Minister Theresa

May's plans to leave the European Union.

(Julien Ponthus)

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