LIVE MARKETS-UK banks: time to differentiate

* European shares edge lower

* Fiat Chrysler falls as deteriorating health forced CEO to quit

* Ryanair, Julius Baer (LSE: 0QO6.L - news) , Philips (Amsterdam: PHIA.AS - news) down after results

* U.S. futures slightly lower

July 23 (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

UK BANKS: TIME TO DIFFERENTIATE (1337 GMT)

It's another not particularly upbeat assessment of UK stocks, this one specifically about

banks.

"Actual and perceived risks from Brexit, politics and the economic outlook mean sentiment

towards UK banks has rarely been lower," analysts at Berenberg say in a note.

Berenberg's analysts say that even though UK banks have outperformed their European peers

over the past six months, the fact they trade at a "material discount" makes a re-rating

unlikely.

But it does give investors the chance to differentiate between the names. Berenberg advises

investors avoid cyclically-exposed banks, in particular Lloyds, while they reckon RBS (LSE: RBS.L - news) will be

the only UK bank able to pass this year's stress test "without recourse to management actions".

Elsewhere, they like how Standard Chartered (BSE: 580001.BO - news) has been growing its low-risk revenues, which

they think has been overlooked due partly to trade war worries.

(Kit Rees)

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AUTOS: "A GOOD HEADLINE IS JUST AS LIKELY" (1321 GMT)

With (Other OTC: WWTH - news) all eyes on Wednesday's Juncker-Trump meeting likely to focus on autos and other

tariffs the EU has protested against, it's interesting to note some are still optimistic on

sectors threatened by tariffs, such as autos.

Neptune Investment Management is overweight European car stocks.

On autos tariffs, Neptune (KOSDAQ: 217270.KQ - news) 's Rob Burnett says investors are "braced for a bad headline" but

the lobbying effort means we're just as likely to get a supportive outcome. His point slightly

echoes Barclays (LSE: BARC.L - news) analysts at the end of last week who said any news on tariffs - even negative -

could drive a boost for the stocks as it would dispel uncertainty.

"With solid revenue support, decent margins and a pick-up in free cash flow, European autos

do not deserve to be at record discounts to the market," he writes.

Burnett also likes bank stocks, the worst-performing in Europe year-to-date. "EU banks today

offer a ludicrous degree of valuation support and are a standout opportunity in global equity

markets," he argues.

Overall he says recession risk is overplayed and the flight to defensive stocks should

reverse soon. Hopefully for his fund the Juncker-Trump meeting goes well...

(Helen Reid)

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EARNINGS SEASON SO FAR: WHERE'S THE TRADE WAR HIT? (1155 GMT)

Reporting season globally is still in its very early stages, with this week and next the

busiest across regions. JPM analysts note "initial results appear to be supportive of our view

that earnings will be reassuring", and there are already some interesting read-outs from the

numbers so far:

* 67 percent of companies are revising EPS guidance higher, the second best quarterly

guidance

outlook in 5 years - perhaps surprising in the context of trade war which many expected to dent

guidance

* Stock reaction to profit beats has been the best in two years, both for S&P 500 and for

Europe

* In Europe, 51 percent of companies have beat EPS estimates with 63 percent beating sales

estimates

* Overall European EPS growth is coming out at 10 percent year-on-year, driven largely by

cyclicals, especially industrials and consumer discretionary

* The falling euro is likely to help earnings delivery, as the Q2 hurdle has halved versus

Q1

(Helen Reid)

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MIDDAY SNAPSHOT: EUROPEAN STOCKS STAY LOWER (1109 GMT)

We're still in negative territory halfway through the session, and it's not looking any

better for Wall Street with U.S. stocks futures also pulling slightly lower.

Here's your midday snapshot:

(Kit Rees)

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FINDING SHELTER IN DEFENSIVES AS EARNINGS UPGRADES ROLL IN (1029 GMT)

Trade concerns are keeping investors on edge but the broader market in Europe has been

moving sideways over the past few weeks and year-to-date it's down just around 1 percent,

supported by fresh interest in defensive plays.

And today's price action appears to be mirroring just that with utilities, telecoms and real

estate - whose domestic exposure shields them from trade jitters - helping the STOXX 600

briefly erase losses.

"We think the case to position defensively is building," Morgan Stanley (Xetra: 885836 - news) analysts led by

Matthew Garman write. "Given this backdrop, we think it has been important to question both when

to turn Defensive, but also crucially how to turn Defensive."

In the note they recall their recent upgrade of European utilities and pharma

to overweight and equal-weight respectively.

As you can see in this chart, defensives have started to outperform cyclicals in April but

the gap widened more recently in May when earnings upgrades on the STOXX index started to

outnumber downgrades.

(Danilo Masoni)

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STORMY SKIES AHOY FOR UK EQUITIES (1017 GMT)

Europe may be basking in the summer heat wave but don't expect any blue skies ahead for UK

equities, says JP Morgan's equity strategy team.

In a pretty bearish note this morning, they cite three main reasons behind their view. One

is that they expect sterling to strengthen modestly, which is a headwind for stocks, but if it

weakens then that would likely be due to a tail risk political outcome materialising, so also

not great.

Another is the oil price, a helpful factor for UK stocks in Q2 which they worry could see

some downside. Finally the UK's sector composition might not be the most useful for times ahead.

"UK performs relatively better when global equities are falling and when bond yields are

moving lower, as it is a defensive high dividend yielding market. We believe global equities

will move higher in 2H, and expect bond yields to move higher too, which doesn’t bode well for

the relative performance of the UK stocks," write JP Morgan's equity strategists.

Unsurprising then that they are sticking with their 'underweight' on UK equities.

(Kit Rees)

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STOXX SET FOR THREE-DAY LOSING STREAK (0753 GMT)

European shares are off to a weaker start today as caution over trade is sending the STOXX

600 benchmark down 0.4 percent, on track for its third straight day of losses, and

keeping most sectors in negative territory.

Investors are bracing for Wednesday's meeting in Washington between Trump and EU Commission

President Jean-Claude Juncker to discuss strained trade relations. Besides that the main focus

are earnings and this week is pretty heavy in releases.

Here's your snapshot:

(Danilo Masoni)

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WHAT WE'RE WATCHING BEFORE THE OPEN: FIAT CHRYSLER & EARNINGS (0650 GMT)

European shares are expected to open lower on Monday following losses in Asia overnight as

worries over a possible trade war linger following Trump's threat last week to slap tariffs on

$500 billion of Chinese imports. Futures are down 0.4-0.5 percent.

The expected losses however are unlikely to push the pan-European STOXX 600 index outside

the narrow range it has been trading in over the last couple of weeks as growing optimism around

company earnings provide support.

Fiat Chrysler will be in focus after the carmaker named its Jeep division boss

Mike Manley to take over immediately from longtime CEO Sergio Marchionne, who is seriously ill

after suffering major complications following surgery. The replacement, which comes around 7

months sooner than expected, could weigh on Fiat (Hanover: FIA1.HA - news) shares at the open, although analysts expect

Manley to carry on with the strategy set by his predecessor.

Fiat shares are down 2-3 percent in pre-market trade. Marchionne has also been replaced at

luxury carmaker Ferrari (Xetra: 30092157.DE - news) , down 3-4 percent in premarket, and CNH Industrial.

Elsewhere, earnings will keep investors busy with Ryanair shares seen down as much

as 4 percent after it warned that average fares would be lower than expected during its key

summer, while Philips was seen down 2 percent after sales growth was light, offsetting

strong order growth.

(Danilo Masoni)

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EARLY MORNING HEADLINES ROUNDUP (0552 GMT)

Fiat Chrysler names Jeep boss to replace stricken CEO Marchionne

Ryanair says summer fares weaker than expected, warns of more strikes

Philips Q2 core profit rises 10 pct on higher hospital orders

Julius Baer reports 19 percent rise in first half profit

Atos (Paris: FR0000051732 - news) to buy Syntel (Frankfurt: 908698 - news) for about $3.57 billion

GlaxoSmithKline (Other OTC: GLAXF - news) considers splitting up the group - FT

Britain's IWG (LSE: IWG.L - news) gives three suitors more time to make takeover offers

China's JD.com plans move into Europe - CEO tells German newspaper

U.S., European allies map out larger role for F-35 fighter

Rolls-Royce threatens to end 'mini-nuke' project for lack of support - FT

Italy's Carige says must lift capital quickly or seek merger

VW to temporarily park cars due to new emissions testing bottlenecks

German industry groups warn U.S. on tariffs before Trump-Juncker meeting

Illness ends career of Sergio Marchionne, the CEO who liked to fix things

Airbus CEO says eyes merger of its, BAE's jet fighter units -Sunday Times

Leonteq (IOB: 0QNE.IL - news) does not expect another capital increase - Finanz und Wirtschaft

U.S. censures UBS (LSE: 0QNR.L - news) over its anti-money laundering systems - WSJ

U.S. open to lifting sanctions off aluminum giant Rusal (HKSE: 0486-OL.HK - news) -Mnuchin

Swiss, German drugmakers join U.S. price freeze

UniCredit (EUREX: DE000A163206.EX - news) says EBA rejects Caius' request for 'CASHES' inquiry

(Danilo Masoni)

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MORNING CALL: EUROPEAN SEEN OPENING LOWER (0536 GMT)

European shares are set to open lower, adding to losses on Friday as worries over a possible

trade war linger following last week's remarks by U.S. President Donald Trump who said he was

ready to put tariffs on $500 billion of imported goods from China.

Financial spreadbetter CMC Markets (LSE: CMCX.L - news) expects London's FTSE to open 33 points lower at 7,645,

while Frankfurt's DAX is set to open 46 points lower and Paris' CAC down 19 points.

"Despite Fridays sell off, markets in Europe are still well above their lowest levels this

year, which means that investors still don’t appear too concerned for now, however that could

change in the coming days, especially if there is no sign of the U.S. ratcheting down its

rhetoric, or the EU and China institute retaliatory measures to any new U.S. measures," said

Michael Hewson, Chief Market Analyst at CMC (BSE: CMC.BO - news) .

Over in Asia, shares dipped on fears of more protectionist measures from the United States

while the dollar declined against major currencies after U.S. President Donald Trump criticised

the Federal Reserve's tightening policy.

(Danilo Masoni)

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