* European stocks tread water awaiting clarity on U.S.-China trade talks
* British election anxiety hits UK-focussed stocks hard
* Latest YouGov poll points to 28 seat majority for Conservatives
* U.S. stock index futures lower 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://email@example.com
UK HUNG PARLIAMENT – WHAT IF? (1219 GMT)
The latest YouGov poll showing that the UK election race has tightened markedly has raised the spectre of a hung parliament - a scenario that many believe is the worst one because it would drag out even further that Brexit uncertainty that has already caused a massive outflow from UK equities.
So, what if there is indeed an inconclusive election?
Kallum Pickering, senior economist at Berenberg, believes that a hung parliament will ultimately lead to UK voters being called another time to the polling stations, either for a new general election or for a second Brexit referendum.
"Despite probably still having the most seats in a hung parliament scenario, we see no feasible coalition partner for the Conservatives. All other major parties either reject Johnson's renegotiated Brexit deal, want a second referendum or want to stop Brexit altogether", he wrote
"The key question is whether the Labour Party could find a partner. The most likely candidate is the Scottish National Party (SNP). But polling suggests that together they would still fall short of a majority," he added.
That being said, Pickering sees two options remaining:
1. Return to the polls for another general election in early 2020
2. If Labour and the SNP manage to bring the pro-Remain Liberal Democrats into a coalition, we could see a second EU referendum in 2020
Meantime, Betfair data shows that the probability of no overall majority has risen to 29%, a higher chance than it was the day before the last election in 2017, when it stood at 14%.
What looks certain for now is that Thursday's is going to be a long night for traders... Check out this story for more.
LET'S CAUTIOUSLY ROTATE INTO CYCLICALS (1124 GMT)
Global growth will edge up in 2020 giving some relief to investors and pushing away recession risks: This is the outlook for next year from BlackRock.
"Even though it's not a massive growth that is pencilled in, it is very important for markets because it will take away concerns about a recession being around the corner," Elga Bartsch, head of macro research at BlackRock Investment Institute, told reporters.
So if recession is out of sight, the world's largest asset manager thinks it is time to show some love to cyclical investments, which have severely underperformed in recent years.
"We are cautiously rotating into cyclicals so rotating into markets that will perform better in exactly the macro outlook we described," says BlackRock's Chief income strategist Scott Thiel.
What is going to be doing better in the context of modest global growth?
* Go for Japanese, EM and Canadian equities, says BlackRock and underweight EU equities.
* Pick quality stocks and companies that will likely benefit from an improving trade push.
BlackRock's preference for Japan and EM doesn't mean it expects growth to stagnate in Europe, says Thiel.
"We're not saying that we expect kind of some huge slump in Europe, obviously, we are expecting economic growth to increase gradually, that will include Europe as well. But the idea is that when we look at other markets that would be impacted by the macro framework that we have, and we look at the valuations, the story is in our minds more compelling in Japan and in selected emerging markets than it is in Europe," says Thiel.
UK ELECTION: DON'T FORGET THE UTILITIES (0906 GMT)
Eyes on pound, tick! Eyes on FTSE 100, tick! Eyes on FTSE mid-cap, tick!
Investors seem to be ready to be glued on to their screens to watch those big macro moves on Friday morning, but Citi says the utilities sector perhaps could be the big daddy on Friday if there is a clear majority of either parties.
Utilities and in particular National Grid and United Utilities are going to be the most important ones to watch out for after elections tomorrow.
With labour's nationalisation plans looming, National Grid and United Utilities have underperformed the broader utilities rally (chart below).
"We believe political clarity would have a more material impact on NG shares than $/£ (dollar/pound), which Citi expect to go to 1.35-40 range," Citi analyst Jenny Ping says.
If there is a Conservative majority Ping expects UU and NG to catch up with others. And, if there's a clear Labour win, UK utilities shares would react "very negatively".
OPENING SNAPSHOT: ELECTION ANXIETY SETS IN (0824 GMT)
UK's first December election since 1923 is nerve-wracking and hawk-eyed investors are perhaps turning cautious as the latest opinion poll projections cast some doubt over what had seemed to be assured election win for the ruling Conservative Party.
That's perhaps opening a small chance of a hung Parliament, which nobody wants.
Stock moves in Europe are largely centered on the election with high-octane action visible mostly in UK stocks, while rest of Europe treads water. The FTSE 100 index is rising 0.4% on sterling weakness.
Among single stocks, UK's JD Sports is on track for its worst single-day performance (-7.4%) in 2-1/2 years after the company's largest shareholder reduces stake. In Germany, we have Telefonica Deutschland sliding 3% after dividend cut and Aurubis rising 5% after the copper producer's stable full-year results.
ON OUR RADAR: JD SPORTS, CREDIT SUISSE, INDITEX (0749 GMT)
Futures point to a flat to slightly higher open for European stocks with London's FTSE 100 seen outperforming on sterling weakness after the latest YouGov poll on UK election showed Conservative majority sharply narrowing.
That is making things a bit more interesting ahead of the D-Day tomorrow. Sterling declined 0.5% overnight after the poll saw a 28-seat Conservative margin of victory, down from 68 two weeks ago.
"...a hung Parliament is now within the margin of error," says Chris Bailey, Raymond James European strategist.
On the corporate news front, JD Sports shares could come under pressure with one trader calling it 8% lower after the company's largest shareholder Pentland sells a part of its stake.
Credit Suisse is seen falling 1% after the Swiss bank trimmed its profitability targets for next year. Traders expect Zara-owner Inditex's shares to rise 2%, pointing to its strong free cash flow expectations for 2019.
Telefonica Deutschland is seen falling 2% after the German telco cut its dividend and announced plans to invest in improving networks over the next three years.
Headlines to digest:
Aurubis sees stable new year, smelter maintenance completed
Deutsche Telekom CEO denies T-Mobile/Sprint deal will reduce competition
Credit Suisse trims profitability aims as revenue hopes fall short
M&C Saatchi co-founder quits days after profit warning amid accounting woes
Telefonica Deutschland cuts dividend as it prioritises network investments
Thyssenkrupp's elevator unit seeks margin boost ahead of sale
Zara owner Inditex expects like-for-like sales growth of 4%-6% in full year
Safilo to cut 700 jobs in Italy as sluggish sales weigh
ONE DAY TO GO (0630 GMT)
Looks like we're heading for a quiet start today and perhaps the calmness is explained by the major upcoming market moving events: UK election tomorrow, U.S. tariffs on China due to take effect on Sunday and Christine Lagarde's first monetary policy meeting as ECB chief.
UK stocks, especially the domestically-focused ones, are in focus after the latest YouGov poll showed election race has tightened markedly over the past two weeks and Prime Minister Boris Johnson is now likely to win only a modest majority in Thursday's vote.
The poll sees a 28-seat Conservative margin of victory, down from 68 two weeks ago.
Financial spreadbetters IG expect London's FTSE to open 5 points higher at 7,219, Frankfurt's DAX to open 5 points lower at 13,066 and Paris' CAC to open 6 points lower at 5,842.
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)