LIVE MARKETS-Useless low euro

* Trade talks progress boosts European shares

* China's Xi says meetings to continue in Washington next week

* Scout24 (IOB: 0RB8.IL - news) jumps 12 pct on private equity takeover offer

* Vivendi (LSE: 0IIF.L - news) , Saab (LSE: 0GWL.L - news) climb after results

Feb 15 - 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

USELESS LOW EURO (1519 GMT)

An interesting fact from Morgan Stanley (Xetra: 885836 - news) research: the low euro has failed to give Euro zone

shares an hedge against their U.S. peers.

"The EUR is close to the lowest levels since mid-2017, yet Europe hasn't managed to

translate currency weakness into equity outperformance, as it appears markets have lost

confidence in European growth", the European strategy team notes.

As you can see below, that fall in the euro hasn't helped the market's relative performance

against the S&P 500:

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(Julien Ponthus and Helen Reid)

"ROUND TRIP" LEAVES MARKETS BACK WHERE THEY STARTED (1449 GMT)

After an awful end to 2018 and exuberant January, Goldman Sachs (NYSE: GS-PB - news) analysts say we're

essentially back to where we started. Indeed, the STOXX 600 has hit its highest level since Oct (Shenzhen: 000069.SZ - news)

10 - in four months. It's like December never happened!

"In the end, and despite a good deal of volatility, this has largely been a 'round trip'; in

our view, not much has really changed and the sharp correction, which has largely reversed,

leaves us back in a 'Flat & Skinny' trading range," Goldman Sachs writes.

"Returns are likely to be low from here because valuations are now unlikely to rise and the

bulk of prospective returns are likely to come from earnings."

Meanwhile, earnings estimates have been sinking fast in the U.S. and Europe (see below).

In what GS calls a "flat trap" of a market, they reckon focusing on yield in Europe is the

way to go, as well as sectors transitioning from "value trap" to "value opportunity".

Accordingly, they're overweight oil & gas and basic resources.

(Helen Reid)

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BREXIT: COUNTDOWN TO PANIC? (1335 GMT)

There's a growing sense among analysts that the lack of any meaningful market reaction to

May's latest defeat in Parliament illustrates how complacent investors are about Brexit and how

quickly they could lose their nerve.

"GBP didn’t react much to the vote, but arguably should have," wrote Rabobank strategists

while Jasper Lawler at LCG reckoned "the pound is still looking relatively relaxed at these

levels".

"As the clock continues to tick we can expect pound traders to start loosing their nerve

unless there are tangible signs of an extension to Article 50," he wrote.

For BNP Paribas' econ and strategy teams, "markets may become increasingly nervous in the

coming weeks" as "the constant Brexit can-kicking has also increased the risks of a disorderly

exit".

Sarah Carlson, Moody’s lead sovereign analyst for the UK, notes the lingering uncertainty

"is clearly credit negative" and reiterates her assessment of a high risk of a no-deal Brexit.

On the other side of the argument, many stress that there hasn't been a Brexit armageddon.

"UK consumers still do not care," UBS WM Paul Donovan said last night, correctly predicting

that "that disinterest should be visible in the retail sales data released today". (Donovan was

right: sales rebounded in January)

Despite some bragging about stockpiling anything from French wine to basic flour, British

folk and businesses seem to be keeping their cool.

"Recent data for the UK economy revealed no evidence of significant stock building by UK

companies", says Graham Bishop, Investment Director at Heartwood Investment Management.

Some of course, would disagree:

(Julien Ponthus)

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LINGERING MARGIN PRESSURE HITS EM EXPOSED STOCKS HARDEST (1217 GMT)

While it's a party on European stocks now that China's Xi has said talks will continue in

Washington earnings are showing a very different picture.

Only 46 percent of European companies so far have beat EPS estimates, more than one standard

deviation below the long-term average, according to BAML equity strategists.

That compares with 57 percent beating sales expectations - suggesting margins continue to be

under pressure.

This gap between top-line revenues and bottom-line earnings is especially wide for companies

more exposed to emerging markets, BAML says - as you can see below - an interesting trend in the

context of consistently weak data out of China while a sharp rally in emerging market stocks

cools down with the index at a two-week low today.

Perhaps this sign of strain in companies exposed to emerging markets is an indication the

long EM "crowded trade" could unravel soon?

(Helen Reid)

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TRADE: PALPABLE RELIEF, PALPABLE ANGST (1039 GMT)

Most European bourses have made their way back to positive territory as a gentle breeze of

trade war optimism has made its way through trading floors this morning.

The DAX, which has really become a barometer for trade war stress, has bounced back from a

0.7 percent loss to a 0.2 percent rise after U.S. Treasury Secretary Mnuchin said Sino (Dusseldorf: 1205802.DU - news) /U.s.

talks were "productive".

There is however an elephant in the room. Sitting behind the steering wheel of a German

luxury car, you can tell there's sweat trickling down his forehead despite his French luxury

sunglasses. "We're next", the European elephant mentally screams as the autos sector

falls 0.7 percent.

(Julien Ponthus)

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WHAT'S ON THE RADAR FOR THE OPEN (0749 GMT)

The weakest factory-gate inflation since Sep (Shanghai: 600021.SS - news) 2016 from China is set to dent European stocks

further on Friday after U.S. retail sales sent markets spiralling in the previous session.

Luxury stocks and miners are expected to be hurt by the weak China data as well as the lack

of concrete signs of progress from U.S.-China trade talks in Beijing.

On the corporate front results from Allianz (Swiss: ALV-EUR.SW - news) – in line with expectations – are helping the

German insurer’s shares inch up 0.7 percent in premarket trade, while French video game maker

Ubisoft is seen falling 2 percent after it cut its full-year sales target, blaming fierce

competition.

Vivendi shares are expected to rise 2 to 3 percent after the media giant reported strong

results for its Universal Music Group arm and confirmed it aims to sell up to 50 percent of

Universal.

M&A is in the air also for Scout24 which said it welcomed a higher takeover offer from a

consortium of Hellman & Friedman / Blackstone (NYSE: BX - news) , having rejected an initial offer last month. The

German internet portal’s shares shot up 11 percent in pre-market.

UK lender RBS (LSE: RBS.L - news) is expected to gain 1-2 percent after boosting its dividend but warning Brexit

turmoil could increase costs. The stock has “had a good run so may tread water on a red tape”,

one trading desk said.

In results disappointments, Fingerprint Cards (LSE: 0RGY.L - news) – which made its name producing fingerprint

sensors for smartphones – is seen tumbling 10 percent after reporting an unexpected loss for the

fourth quarter and saying challenging market conditions would hit first-quarter sales.

(Helen Reid)

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FUTURES SLIDE AS TRADE TALK RESULTS AWAITED (0725 GMT)

Futures are down across the board in Europe, though oil prices having hit a 2019 high -

above $65 a barrel - will help limit losses.

There has been no decision to extend a March 1 U.S. deadline for a trade deal with China,

White House economic advisor Larry Kudlow said on Thursday, adding however that the "vibe" in

Beijing is good.

Meanwhile in UK companies reporting, lender RBS impressed with a bigger than expected

dividend. And in M&A news German internet portal Scout24 said it would pursue a takeover offer

by a private equity consortium called Pulver BidCo.

Vivendi is seen rising in pre-markets, which traders are putting down to the media giant

saying it's selecting financial advisors for the sale of a stake in Universal Music Group in the

coming weeks.

RBS's 2018 dividend better than expected as profits double

Private equity (IOB: 0QLS.IL - news) consortium bids for Scout24

UK hotel group sees Brexit-led hiring problems

Premier Foods (Frankfurt: A1JWNB - news) shelves Ambrosia sale after bids disappoint

(Helen Reid)

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EARLY MORNING COMPANY NEWS ROUNDUP: ALLIANZ, VIVENDI, UBISOFT, FINGERPRINT CARDS (0651 GMT)

There's a lot of news to wade through this morning for traders and investors, not least the

latest out of the U.S.-China trade talks: the FT reported the two countries were "scrambling" to

at least produce a memorandum of understanding by the end of Friday.

In corporate news, German insurer Allianz reported in-line profits, and French exchange

operator Euronext (Euronext: ENX.LS - news) said 2018 EBITDA rose. Meanwhile billionaire Vincent Bollore, Vivendi's number

one shareholder, will leave the media giant's board in April in a sign he is further withdrawing

from his businesses.

Results from French video game producer Ubisoft won't be welcomed by investors: the firm cut

its revenue guidance by 5 percent, blaming intense competition and clarifications on IFRS norms.

Sweden's Fingerprint Cards reported an unexpected loss in its Q4 and warned challenging

market conditions would hit sales in the first quarter.

Some M&A is in the air too with sources saying Chinese e-commerce giant Alibaba (Berlin: AHLA.BE - news) is in talks

to acquire a stake in the China operations of Germany's Metro (Dusseldorf: 62M.DU - news) .

Here are your early headlines:

Allianz Q4 net profit up 19 percent, in line with expectations

Euronext FY 2018 EBITDA Increases to 354.3 Million Euros

Ubisoft cuts FY sales target amid fierce competition

Alibaba in talks on stake in China operations of Germany's Metro (Amsterdam: ME6.AS - news) - sources

Bayer (IOB: 0P6S.IL - news) stresses drug's tolerability in bid for prostate cancer market

Germany's JAB plans to list unit owning Keurig, Dr Pepper

Bollore (Paris: FR0013201365 - news) to hand over Vivendi to sons as Universal rumours swirl

Fingerprint Cards posts unexpected Q4 operating loss

(Helen Reid)

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EUROPE SET TO SLIP AS CHINA DATA DEALS ANOTHER BLOW (0618 GMT)

European stocks are set to fall according to spreadbetters' calls this morning, after weak

U.S. retail sales data took the wind out of markets yesterday and more weak data from China -

showing factory-gate inflation slowed for a seventh straight month - further sapped investors'

enthusiasm.

Asian stocks fell overnight, retreating from four-month highs after data out of China raised

concerns over deflationary pressures building in the world's second biggest economy.

Data released on Friday showed China's factory-gate inflation slowed for a seventh straight

month in January to its weakest pace since September 2016 amid cooling domestic demand.

Financial spreadbetters at IG (Frankfurt: A0EARV - news) expect Frankfurt's DAX to open 26 points lower at 11,063 and

Paris' CAC to open 9 points lower at 5,054.

They see London's FTSE opening flat at 7,197 in a tepid reaction to yet another Brexit

defeat - albeit a symbolic one - for Prime Minister Theresa May in Parliament.

(Helen Reid)

*****

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