LIVE MARKETS-UK stocks: "Why take the risk of buying such a market?"

* European stocks turn negative

* Tech, banks, real estate, construction worst performers

* FTSE 100 down 0.7 pct, FTSE 250 down 0.3 pct

* Brexit fallout: All eyes on letters of no confidence in PM May

Nov 16 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to

share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net

UK STOCKS: "WHY TAKE THE RISK OF BUYING SUCH A MARKET?" (1329 GMT)

That's the question Bernstein strategists put to their clients in a note exploring whether

the UK is truly uninvestable.

"One way to overcome extreme political uncertainty is to hunt for signs that an extreme

outcome has been priced in," write Inigo Fraser-Jenkins and team.

"We do not see the case for that in the UK," they say - the UK market is cheaper than

average and earnings have begun to see downgrades but these signals are not at historical

extremes.

They echo what several investors have been telling us: that it's hard to put money on this

given the range of possible outcomes.

"Sometimes this moment of extreme uncertainty proves to be a cathartic moment for risk

assets marking a floor. Maybe. But there are also good reasons to see why uncertainty could

persist," the strategists note.

U.S., Europe ex-UK and Japanese stock markets look preferable in the medium-term, they

conclude, unless you're prepared to stomach these risks.

Meanwhile the FTSE 100 is at a new session low, down 0.8 percent, while mid-caps are down

0.4 percent. Airbus joins the growing chorus of businesses warning on Brexit - Europe's largest

aerospace group says it's planning for a no deal Brexit as its baseline scenario in a staff memo

seen by Reuters.

(Helen Reid)

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BREXIT: SIX TAKEAWAYS ABOUT THE MARKET DRAMA (PLUS THE GOT TRAILER) (1241 GMT)

Here's a collection (in no particular order) of interesting takeaways, silver linings,

findings, lessons or observations about yesterday's Brexit drama.

1) The online gold platform BullionVault reported that trading volumes rose 147% from the

previous week's average and investor demand jumped 598% from the prior 12-month average.

2) Risk management firm Axioma stress-tested a theoretical global multi-asset portfolio for

a 15 percent fall in sterling.

They found it would trigger a 12% plunge in UK share prices, losses in German and French

equities, stress on Italian and Spanish sovereign bonds, and euro depreciation.

3) Citi identified four hedges among UK equities against Brexit political risk: "GBP with

high non-UK sales for UK plc, record outflows from equities already recorded, sharp de-rating

done and a high ERP"

4) The British Pound volatility index has hit its highest level since the Brexit vote in

2016, notes Ricardo Evangelista from ActivTrades.

5) "The pound is a bit like Theresa May at the moment," notes Connor Campbell from Spreadex.

"Seriously bruised by the fallout of the Brexit draft deal, shaken by a series of high profile

resignations, but, for the time being (and however misguidedly), emboldened by a sense of

resilience."

6) The Brexit saga is a bit like Game of Thrones, writes Deutsche Bank (IOB: 0H7D.IL - news) 's Reid in quite a

lively morning note. See for yourself:

"Yesterday was an extraordinary day where we saw rival factions go into battle, huge

infighting, disloyalty, a colossal power struggle, and lots of head scratching over who will win

out and where this is all going to end. Indeed, the teaser trailer for the final Game of Thrones

series out next April was finally released. However, a remarkable 3 hour UK parliamentary

session where PM May was grilled from all sides of the House of Commons probably topped it for

drama even if it lacked the CGI effects."

Here's a link to our story about the final season of 'Game of Thrones' starting in April

where you'll be able to watch the trailer: https://reut.rs/2zewW0b

(Julien Ponthus, Josephine Mason, Helen Reid)

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BREXIT VIEW FROM THE BUY-SIDE: "I'M NOT SURE WHAT THE ALTERNATIVES ARE" (1125 GMT)

The UK is awash with speculation this morning over whether there will be further

resignations, and the FTSE 100 is down 0.3 percent with mid-caps hovering flat as nerves over

the longevity of PM May's government linger.

Senior Eurosceptic minister Michael Gove, who has been suspected of wanting to resign, has

just said he has confidence in May and is focused on working for a good deal for Britain.

Investors meanwhile are still scratching their heads as to how to accurately measure and

protect for this political uncertainty - and what possible scenarios could come into play if

uncertainty around May proves prescient.

"It’s very difficult to know - not possible to know what’s going to happen," Kevin Gardiner,

global investment strategist at Rothschild Wealth, tells us.

"I was reading yesterday everywhere that the arithmetic doesn't favour the PM but what I

can't work out is whom exactly the arithmetic does favour at the moment," he adds.

"The Conservative Party is profoundly and permanently divided on Europe, the opinion polls

suggest a general election tomorrow would return pretty much the same Parliament, the Labour

party doesn't seem to have a view on Brexit, so I'm not sure what the alternatives are from

here."

William Hill (Frankfurt: 633847 - news) has just suspended betting on the year that May will leave office as the

uncertainty made it impossible to accurately price the different outcomes.

Gardiner says Rothschild hasn't made any big changes to portfolios, and that its holdings

are tilted towards the international FTSE 100 rather than domestic stocks partly in order to

lessen the impact of negative Brexit developments.

"For a globally diversified portfolio this may not matter as much as the politics makes it

seem," he says.

As you can see below, analysts have become increasingly negative on earnings for UK domestic

stocks, cutting their earnings estimates at the fastest pace since the Brexit vote aftermath in

June-July 2016.

(Helen Reid)

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OPENING SNAPSHOT: WHAT A RELIEF RALLY (0837 GMT)

After a bruising session yesterday, European markets are staging a decent rally with London,

Frankfurt and Paris markets all up more than 0.6 percent. Media stocks are leading the pack as

Vivendi (LSE: 0IIF.L - news) shares surge following its better-than-expected results.

Whether it has legs to last the day remains to be seen.

Talking of someone who needs a bit of relief, UK Prime Minister Theresa May is currently

fielding questions from the public on LBC (Shanghai: 600727.SS - news) radio. Listen in on: https://www.lbc.co.uk/london/radio/player/

Here's a snapshot of the early moves:

(Helen Reid)

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WHAT'S ON THE RADAR: VIVENDI, ABB (LSE: 0NX2.L - news) , NKT (0752 GMT)

Futures for the main euro zone stock indices and Britain’s FTSE 100 have opened higher,

suggesting a relief rally could sweep the region after Brexit nerves drove risk-off moves in the

previous session.

After a week which saw a sharp oil selloff, Italy squaring up for a budget showdown with the

EU, and the longevity of the UK Prime Minister’s government questioned, the pan-European STOXX

600 is set for a weekly loss after two straight weeks of gains.

Earnings reports are few and far between as the season draws to a close, but Vivendi could

be a mover after its results late Thursday.

The French media group announced better than expected Q3 sales and said it is lining up

banks for a possible sale of part of its Universal Music Group division – a spin-off which

analysts say would be highly lucrative for the company. The stock is indicated up 2 to 3

percent according to traders.

The highly-valued tech sector is also in focus after U.S. chipmaker Nvidia (Swiss: NVDA.SW - news) disappointed,

warning of slower sales over the holiday period due to a sharp drop in enthusiasm for

cryptocurrency mining as crypto prices tank.

The stock fell nearly 17 percent in late trading, and European chipmaker shares could also

be bruised by the latest in a string of negative news from the chip sector. Austrian chipmaker

AMS (IOB: 0QWC.IL - news) , which was Europe’s best-performing stock in 2017 (up a cool 208 percent) is down 69 percent

this year.

M&A could also be a mover after sources said ABB was in talks with three Asian suitors for

the sale of its Power Grids division. Traders see it rising 2 to 4 percent on the news.

On the Brexit front, businesses are raising the alarm over Brexit uncertainty. German

carmaker BMW (EUREX: BMWE.EX - news) said it was continuing to prepare for a no-deal Brexit considering the uncertainty

in the UK, and British aero-engine maker Rolls-Royce also said it would plough on with

contingency plans.

Outside the large-cap space, the Finnish maker of the “Angry Birds” mobile game series,

Rovio Entertainment, said sales will fall in the full-year due to tight competition and high

marketing costs.

Danish industrial components firm NKT could sink up to 15 percent, traders say, after a

profit warning and its CEO leaving.

(Helen Reid)

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FUTURES OPEN UP, EURO ZONE INFLATION IN FOCUS (0714 GMT)

Futures are trading up strongly across euro zone and UK indices though they've already lost

a bit of momentum from a +0.6% open, now averaging around +0.4%.

Euro area final inflation figures are expected at 1000 GMT, and Societe Generale (Swiss: 519928.SW - news) analysts

see the figures confirming headline inflation increased by 2.2 percent year-on-year in October

while core inflation accelerated at 1.1 percent year-on-year.

On the UK, they write: "PM May finally managed to agree the withdrawal agreement with the EU

but this halfway house leaves almost no-one happy. A stream of resignations from the UK

government have put the deal and Mrs May’s future in jeopardy."

(Helen Reid)

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EARLY MORNING HEADLINES ROUND-UP: BREXIT NEWS, VIVENDI RESULTS, ABB M&A (0658 GMT)

With (Other OTC: WWTH - news) the STOXX set for a loss on the week after two weeks of gains, it's clear that

political worries have taken centre stage again as the earnings season died down.

On the Brexit news front, the Daily Telegraph reported overnight that the Conservative

Party's deal with Northern Ireland's DUP on Brexit is over unless PM May is replaced with a new

leader.

German carmaker BMW said it was continuing to prepare for a no-deal Brexit given uncertainty

around the deal after yesterday's ministerial resignations. Business bosses across industries

expressed growing alarm about the deal.

Though results are few and far between now, Vivendi did report after the close and said it

is lining up banks for a possible sale of part of its Universal Music Group division.

And there's some action on the M&A front too: Swiss industrials firm ABB is in talks with

three Asian suitors - Hitachi, Mitsubishi Electric Corp, and State Grid of China - about the

sale of its Power Grids business, sources said.

In world politics, tensions between the U.S. and Saudi Arabia are rising with the U.S.

imposing economic sanctions on 17 Saudi officials for their role in the killing of journalist

Jamal Khashoggi.

Here's your early morning headline round-up - with more than its usual share of political

headlines and analysis:

ABB talking to three Asian suitors about Power Grids sale - sources

Vivendi committed to Telecom Italia (Amsterdam: TI6.AS - news) , pushes on with Universal Music stake sale

Tory deal with DUP over unless UK PM May replaced -Daily Telegraph

BMW says preparing for no-deal Brexit given political uncertainty

Business bosses alarmed as resignations imperil Brexit deal

VW's supervisory board eyes multi-billion electrification plan

California judge orders next Monsanto (Hamburg: 1132157.HM - news) weed-killer cancer trial for March

ANALYSIS-How Britain's Raab tripped on "Barnier's staircase"

U.S. imposes sanctions for Khashoggi killing, Saudis seek death penalty

(Helen Reid)

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EUROPEAN STOCKS TO RECOVER, ALL EYES ON TECH AFTER NVIDIA WARNING (0632 GMT)

European stocks could see a recovery today after a tumultuous week and yesterday's

Brexit-driven selloff, but tech is likely to be under pressure after disappointing results from

U.S. chipmaker Nvidia battered the sector and sent the stock down nearly 17 percent in late

trading.

Nvidia forecast disappointing sales for the all-important holiday quarter, blaming unsold

chips piling up with distributors and retailers after the evaporation of the cryptocurrency

mining boom.

Also potentially weighing on the mood will be comments from a senior Trump administration

official to Reuters that China's written response to U.S. demands for trade reforms is unlikely

to trigger a breakthrough at talks between Trump and Xi Jinping later this month.

Spreadbetters at CMC Markets (LSE: CMCX.L - news) see the FTSE100 opening 24 points higher at 7,062, the DAX 70

points higher at 11,423 and the CAC40 to open 25 points higher at 5,058.

(Helen Reid)

*****

(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus)