LIVE MARKETS-Trade war? "We suspect a deal is concluded in Q3"

* STOXX 600 down 0.5 pct as Asian gloom spreads

* Trade-sensitive car stocks lead market lower

* Oil stocks as Middle East tensions lift crude prices

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TRADE WAR? "WE SUSPECT A DEAL IS CONCLUDED IN Q3" (1024 GMT)

The U.S. tariff increase on $200 billion worth of Chinese

imports has come into force but markets aren't exactly falling

off a cliff as investors still hope that a sort of deal will be

reached further down the road, maybe even next month.

Trump himself (and Chinese Vice Premier Liu He) has said he

will would press on with more talks...

Hence, the recent euphoria is not giving way to any form of

panic selling - as some had started to fear last week when

investors suddenly woke up to the prospect that there was no

deal around the corner. The STOXX 600 is down just 0.5 percent

this morning.

So, what are people saying about the timing for the sides to

reach a compromise?

"The re-opening of the U.S.-China trade war has come as a

surprise. We suspect a deal is concluded in 3Q19, but until then

investors look set to play-it-safe," says ING head of foreign

exchange strategy Chris Turner.

For Goldman, Beijing and Washington should make it in 2019.

"Our baseline expectation is that the U.S. and China will

strike a deal later this year," say strategists at the U.S. bank

led by Jan Hatzius.

"We think this would come in the form of a gradual,

staggered reduction in tariffs on a last-in, first-out

schedule."

All eyes are now on the Chinese government which has said it

would never surrender, though it stopped short on announcing how

Beijing would hit back.

The chief editor of China's Global Times believes China is

preparing its response very carefully.

(Danilo Masoni)

*****

OPENING SNAPSHOT: DOUR MOOD SPREADS TO EUROPE (0732 GMT)

Unable to shake off the generally dour mood across Asian

markets overnight amid growing concerns about a prolonged

stand-off between Washington and Beijing over trade talks,

European stocks are under pressure at the open.

STOXX 600 is down 0.3%, with Frankfurt down 0.4%

and lagging its peers as cars and tech stocks - some of the

hardest hit during the year-long row - under pressure and

Thyssenkrupp handing back some of Friday's record gains.

Europe's trade-sensitive car index is leading the charge

lower, down 1.5%.

Daimler is the second biggest faller on the DAX 30, giving

up earlier gains, as investors digest a Reuters report China's

BAIC Group is seeking to buy a stake of up to 5% in the German

carmaker.

BAIC signalled its interest in buying a Daimler stake as far

back as 2015, and has redoubled its efforts after Li Shufu,

chairman of rival Chinese carmaker Zhejiang Geely Holding Group

built a 9.69 percent stake in Stuttgart-based Daimler in early

2018.

EssilorLuxottica's shares are rallying 4.5% after its

feuding partners announced a truce to end a boardroom dispute

over the group's leadership.

The tone across Europe is clearly defensive with the

utilities and food & beverage indices ekeing out small gains.

London's FTSE 100 is bucking the trend, boosted by oil & gas and

Centrica, which is rising almost 2% after its results.

(Josephine Mason)

*****

EUROPE RESILIENT AGAIN (0656 GMT)

European stocks are proving pretty resilient to the cautious

tone that's swept Asian markets overnight as a stand-off between

Washington and Beijing over a truce to end their protracted row

keeps investors firmly on the sidelines.

The Eurostoxx 50 is up 0.1%, with Paris futures up as much

as 0.3 percent. There might be some residual buying left over

from Friday after Wall Street's strong close, which might soon

peter out as U.S. stock futures are indicating a weaker open.

In corporate news, Daimler's catching most of the attention

after Reuters reported China's BAIC Group is seeking to buy a

stake of up to 5% in Daimler. BAIC has started acquiring Daimler

shares on the open market, one source said. Shares are up 1.1%

in pre-market.

Norway's given the green light for Euronext to take a

majority stake in Oslo Bors, ending a five-month battle between

Euronext and Nasdaq for ownership of the Norwegian stock market

operator, while Fresenius has approached potential suitors about

the sale of its blood transfusion business as the German

healthcare group considers divesting non-core businesses.

Eyes still on Thyssenkrupp after its decision on Friday to

spin off its elevators business sent shares soaring - the

company said it will still seek partners for its steel

operations after abandoning a European merger with India's Tata

Steel.

Results flow has slowed this morning, although German and UK

utilities E.ON and Centrica are on the slate.

E.ON delivered better than expected Q1 EBIT, sending its

shares up 1 percent in early trade, although one dealer said a

slowdown in the retail business as a negative.

Britain's largest energy supplier Centrica said it is facing

a challenging trading environment due to a national price cap on

energy bills, warmer-than-normal weather and falling UK natural

gas prices.

Metro Bank is back in focus after a series of reports over

the weekend - the FT said the troubled lender is exploring the

sale of loans hit by its accounting error while the Telegraph

says an influential City advisory group has hit the bank with an

alert over bonuses for its top execs.

Big moves seen in FTSE mid and small-caps: shares in polymer

maker Victrex are seen falling 5 percent after half-year

results, with the company saying it will be "challenging" to

achieve year-on-year growth in the second half while Dignity

reported a worse-than-expected slump in profits due to a drop in

funerals.

(Josephine Mason)

ON THE RADAR: DAIMLER, NOVARTIS AND EURONEXT (0613 GMT)

It's a bit of a mixed bag with the Eurostoxx 50 fluctuating

between positive and negative territory, with Paris showing

decent gains and Frankfurt under pressure, amid overall caution

over the U.S.-China trade talks.

In corporate news, there's a flurry of dealmaking news to

kick off the week - the biggest is probably a Reuters report

that China's BAIC Group is seeking to buy a stake of up to 5% in

Daimler. BAIC has started acquiring Daimler shares on the open

market, one source said.

Norway will allow Euronext to take a majority stake in Oslo

Bors, the country's finance ministry said on Monday, ending a

five-month battle between Euronext and Nasdaq for ownership of

the Norwegian stock market operator.

And Fresenius has approached potential suitors about the

sale of its blood transfusion business as the German healthcare

group considers divesting non-core businesses.

Elsewhere in pharma, Novartis' Sandoz division has been

named along with 19 others in a U.S. lawsuit alleging they

inflated drug prices and stifled competition for generic drugs,

state prosecutors said.

The Swiss drugmaker has also issued a voluntary nationwide

U.S. recall of its ninth-best-selling medicine, Promacta, in its

12.5 milligram for oral suspension form, due to potential peanut

contamination. Promacta had $1.2 billion in sales in 2018.

Eyes still on Thyssenkrupp after its decision to spin off

its elevators business - the company will still seek partners

for its steel operations after abandoning a European merger with

India's Tata Steel, Chief Executive Guido Kerkhoff said.

In earnings, German energy firm E.ON has reported Q1 EBIT

declined 8% to 1.67 billion euros, beating the 1.64 billion

average forecast in a Reuters poll.

Metro Bank may get a lift after confirming its plan to raise

about 350 million pounds ($455 million) of equity capital to

support its growth is well advanced.

Here are some of the key headlines so far this morning:

Germany's Thyssenkrupp to seek new steel partners, CEO tells

paper

Bayer hires law firm to investigate Monsanto stakeholder

file issue

EXCLUSIVE-China's BAIC seeks to buy 5 percent Daimler stake

-sources

EssilorLuxottica's feuding partners on verge of peace deal

-Les Echos

Britain's Stobart to name new chairman this week - Sky News

Britain's Metro Bank says well advanced in equity raising

plan

EXCLUSIVE-Novartis pitches discounts on pricey gene therapy

for deadly muscle

LVMH pairs up with Rihanna for new fashion brand

EU regulators to investigate Telia's $957 mln bid for

Bonnier

Fresenius talking to potential suitors about sale of blood

transfusion business - sources

Retailer Carrefour's Atacadao arm to book provisions on

Brazilian tax dispute

(Josephine Mason)

*****

EUROPE SEEN MAKING TENTATIVE GAINS BUT FOR HOW LONG?

Spreadbetters are calling European stocks higher with some

hangover from Friday's strong close on Wall Street providing a

little lift, but given how cautious trading has been overnight

and with U.S.-China trade talks in stalemate, there might not be

much momentum behind it to keep it going.

IG Markets expects London's FTSE to open 18 points higher at

7,221, Frankfurt's DAX to open 31 points higher at 12,091, and

Paris' CAC to open 21 points higher at 5,348.

(Josephine Mason)

*****

(Reporting by Danilo Masoni, Helen Reid, Josephine Mason and

Thyagaraju Adinarayan)