LIVE MARKETS-What to watch in tech's Q2 earnings

* European stocks broadly lower

* Energy stocks top weight; M&A chatter lifts industrials

* Indivior (Frankfurt: 2IVA.F - news) soars as U.S. court blocks sale of rival drug

* Wall St opens flat, Asian shares fall on soft China data

LONDON, July 16 (Reuters) - 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

WHAT TO WATCH IN TECH'S Q2 EARNINGS (1410 GMT)

Morgan Stanley (Xetra: 885836 - news) 's analysts have taken a look at the tech sector ahead of Q2 earnings, and

while they expect IT spending to remain strong, FX will continue to be a headwind, something

which MS don't think analysts have taken fully into account yet.

Capgemini is among MS' top picks as they see a strong demand environment helping

the stock, while they also like Avast on the back of its valuation and Dassault thanks

to its operational momentum.

They are more cautious on Software AG (IOB: 0NJS.IL - news) , SAP (Amsterdam: AP6.AS - news) , Hexagon (LSE: 0GRX.L - news) , Temenos

and Indra (Madrid: IDR.MC - news) .

Morgan Stanley also updates its estimates on neutral-rated Wirecard (IOB: 0O8X.IL - news) and Worldline

, given M&A activity remains elevated among the payments stocks.

(Kit Rees)

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EUROPEAN OIL CONTRACTORS? "THE MOST DISCUSSED GROUP" (1350 GMT)

Even (Taiwan OTC: 6436.TWO - news) though oil stocks are out of favour today (see post below), they remain the best

performers in Europe year-to-date and it seems investors are still attracted by the sector.

Analysts at UBS (LSE: 0QNR.L - news) have just come back from a trip in North America and one key takeaway is

that there is "genuine" interest in European oil services, which they say have been "the most

discussed group" due to their exposure to international capex.

They singled out TechnipFMC, Subsea 7 (LSE: 0OGK.L - news) , Saipem (LSE: 0NWY.L - news) and Aker (Stockholm: AKERO.ST - news)

Solutions.

"Investors are in general more focused on the near term contract win opportunities and less

on medium-term margin headwinds as a result of competitive bidding and/or overcapacity,"

analysts at the Swiss bank say in a note.

"Other than the inflection in offshore spend, which investors believe that Subsea 7 appears

to be the most well positioned (for), increase in LNG and refining capex are the other two

themes that investors are looking to gain exposure (to) and consequently, gravitate towards

TechnipFMC as the name that ticks these boxes," they add.

(Danilo Masoni)

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SLIPPERY OIL STOCKS ANOTHER TRADE WAR CASUALTY (1335 GMT)

Oil stocks are the worst-performing today, weighing considerably on the market as oil prices

fall on potential supply increases.

Trade war fears have been putting downward pressure on crude prices, which would suffer from

smaller trade flows impacting global oil demand.

"Tariffs on an additional $200 billion of goods could impact global oil demand by a further

200kbpd, if implemented," write Goldman Sachs (NYSE: GS-PB - news) analysts.

Keeping crude relatively buoyant have been disruptions including supply outages in Libya, a

labour dispute in Norway and unrest in Iraq but GS reckons "without these disruptions, risk

remains skewed to the downside, with inventories in August/September the key test as the surge

in OPEC exports hit."

Still expecting strength from the oil majors, they think Total (LSE: 524773.L - news) , Eni (LSE: 0N9S.L - news) and

BP have the strongest pipeline of mega-projects among European producers.

Below you can see how the European oil sector's estimated EPS has grown recently as crude

prices climbed:

(Helen Reid)

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EUROPE AND ASIA: THE NEW "SPECIAL RELATIONSHIP"? (1205 GMT)

With European Union officials meeting Chinese counterparts in Beijing today in the midst of

a global trade war, there's a sense of European rapprochement with Asia in the air.

"If Trump spray guns trade tariffs to all and sundry, Europe is going to look to the east,

be it former Soviet Union, Russia or China," writes Jim Wood-Smith, chief investment officer for

private wealth at Hawksmoor Investment Management.

"Those he seeks to punish will trade elsewhere and will increasingly close their borders to

American goods."

How would the world reorganise in a scenario of trade war turning the U.S. in on itself?

He reckons Europe and Asia will deepen their trading relationship in an "exciting, dynamic

and possibly even positive change".

Here's our latest from today's meeting between Chinese Premier Li Keqiang, European

Commission President Jean-Claude Juncker, and European Council President Donald Tusk:

As you can see below, trade's share of global GDP has increased as average tariff rates have

decreased since the 90s:

(Helen Reid)

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MIDDAY SNAPSHOT: AT FRESH LOWS (1148 GMT)

As we get to the mid point of the trading session it looks like risk appetite is definitely

evaporating in Europe with a drop in crude prices and strength in the pound and euro adding to

the soft Chinese data to help drive regional benchmarks at fresh day lows.

The commodity-heavy FTSE 100 is down 1.2 percent while the broader pan-European STOXX 600 is

down 0.4 percent. Over in the U.S., meanwhile, futures are flat, pointing to a rather subdued

open on another heavy day for earnings releases. Here's your snapshot:

(Danilo Masoni)

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TECH IS IN THIS SUMMER, BANKS NOT SO MUCH (1128 GMT)

It's not surprising really but Goldman's latest mutual fund survey shows that tech is still

an investor favourite with the biggest overweight, while banks remain the biggest underweight.

More than 70 percent of the European asset managers in their sample are overweight tech,

whereas managers have continued to reduce their exposure to banks - see Goldman's graphic below.

Looks like the reflation trade is struggling to stay afloat...

(Kit Rees)

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THE GLOBAL M&A BOOM: NOT AS BIG AS IT LOOKS (1046 GMT)

M&A has been a key theme this year as dealmaking volumes have increased across developed

markets, but if we look beyond the absolute figures it's less clear that this year has been

exceptionally active - which may go some way to explaining why equity markets have been

lacklustre.

"This year's M&A activity looks a lot less impressive if we compare it to the current size

of the equity market," notes JPM strategist Nikolaos Panigirtzoglou.

While M&A deal volumes have boomed, so has the overall size of the equity market - it's now

worth $66 trillion, more than 40 percent larger than its previous 2007 peak.

The ratio of global M&A activity by the dollar value of global equities is 8.3 percent this

year (based on annualised H1 M&A) - a big step up from last year but still relatively low

compared to previous years (see chart below). The peak in 2006 was 13 percent.

"The volume of global M&A activity looks rather modest by historical standards and is far

from the exuberant pace seen in the previous equity cycle during 2006/2007... This in turn

suggests that the support corporate activity has provided to equity markets is somewhat more

muted than the headline figures imply," Panigirtzoglou says.

(Helen Reid)

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INVESTORS STILL WARY OF CHASING CYCLICALS (0954 GMT)

One interesting question facing investors is whether the rotation away from cyclicals and

into defensives, which we began to see in the second quarter as trade war rhetoric became

louder, will continue into Q3.

"I think we have got a few more weeks of caution ahead," says Ian Williams, strategist at

Peel Hunt.

"Those stocks with consistent earnings, and the quality and momentum styles, are starting to

work again and the real underperformers are still value stocks, which tend to do better when

people are more confident about the cycle," he adds.

But some, including JP Morgan strategist Mislav Matejka, see the pullback and caution around

cyclicals as overblown, saying: "We remain of the view that one should be using trade headlines

driven weakness as a buying opportunity, focusing on cyclical exporters."

"We find that most investors believe corporates will use trade concerns as an excuse to

reset their guidances and the feeling is that we have already witnessed a raft of profit

warnings," he adds.

As you can see below, cyclicals' performance is still falling relative to defensives, while

Citi's economic surprise index has recovered somewhat from its recent lows. Perhaps a similar

improvement in cyclicals is around the corner.

(Helen Reid)

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OPENING SNAPSHOT: EUROPEAN SHARES PULL HIGHER (0721 GMT)

European shares have pulled slightly higher from a flat start as M&A talk lifts shares in

big industrial conglomerates Thyssenkrupp (IOB: 0O1C.IL - news) and Kone (LSE: 0II2.L - news) , while a preliminary injunction win against

Dr. Reddy's Laboratories has spurred Indivior's shares a huge 27 percent higher.

Trading is still cautious as the Q2 reporting season gets underway, while a busy political

schedule and the trade war overhang are also keeping investors on edge.

(Kit Rees)

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WHAT TO WATCH AT THE OPEN: DAX, INDIVIOR, DIALOG (0645 GMT)

The damage from weaker Chinese GDP numbers is set to spread to European shares after Asian

stocks fell on the data, piling further pressure on a market already bruised by the Sino (Dusseldorf: 1205802.DU - news) -U.S.

trade war.

Futures for Europe’s major benchmarks are flat to down 0.2 percent, with the DAX likely the

biggest faller as the most China-exposed of Europe’s economies.

Investors’ attention will begin to turn to Europe’s earnings season starting in earnest this

week, though Societe Generale (Swiss: 519928.SW - news) analysts highlighted this is also a “very political week” starting

today with top EU officials meeting the Chinese Premier, Trump holding a summit in Helsinki with

Putin, and a parliamentary vote on Brexit.

In company news Indivior is seen rising as much as 20 percent after the pharma firm won a

preliminary injunction against generic rival Dr Reddy’s Laboratories, while chipmaker Dialog

Semiconductor is indicated up 4 to 5 percent in pre-market after it upped its margin

expectations in results reported after the close on Friday.

Meanwhile Peugeot could see a small hit from the news that German authorities are

questioning its Oval division.

Also on the radar are Thyssenkrupp and Kone after a report over the weekend that the two

have held talks about a deal to merge their elevator operations.

(Helen Reid)

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FUTURES DECLINE AS WEAKER CHINA DATA WEIGHS (0618 GMT)

Futures are flat to 0.2 percent lower across the major European benchmarks as weaker Chinese

GDP data takes its toll on markets.

"With (Other OTC: WWTH - news) trade tensions still at the forefront of investor concerns, the economic data from

China assume an even greater level of importance than usual," writes Ian Williams, economics and

strategy research analyst at Peel Hunt.

In the UK, a parliamentary debate over Brexit will be a focus for markets as discord in the

leading Conservative party continues after two high-profile government resignations last week.

(Helen Reid)

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EARLY MORNING HEADLINE ROUND-UP (0552 GMT)

Among the morning news to watch today, reported merger talks between Thyssenkrupp and Kone

owners, results from Dialog Semiconductor (LSE: 0OLN.L - news) and Indivior winning an injunction against generic

rival Dr Reddy's.

In what Societe Generale analysts call a "mainly political week", investors will also be

keenly watching today's meeting between top European Union officials and the Chinese Premier on

trade, and the Trump-Putin summit in Helsinki.

Here's your headline sweep:

Britain unveils "short and sharper" code for companies

Planemakers to kickstart Farnborough jetliner order battle

Thyssen and Kone owners held merger talks on elevator ops -paper

UK car insurance premiums see biggest annual fall since 2014-survey

German transport ministry confirms official hearing on Opel emissions

Ryanair flight loses cabin pressure, 33 hospitalised - German police

Indivior wins preliminary injunction against generic rival

Germany's Knorr Bremse to decide on IPO in September - Boersen-Zeitung

Norway oil, gas union widens six-day drilling rig strike

Dialog Semiconductor Eyes Higher-Than-Expected Q2 Profitability

Cassiopea Announces Positive Interim Analysis Phase 2 Results For Breezula

(Helen Reid)

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MORNING CALL: HESITANT OPEN FOR EUROPE AFTER ASIAN STOCKS DECLINE (5GMT)

European shares are in for a hesitant start to the week after Asian markets were hit by

weaker Chinese GDP growth figures, piling further pressure on to equities already weighed by the

Sino-U.S. trade dispute.

Official data showed China's economy grew 6.7 percent in the second quarter of 2018, cooling

from the 6.8 percent growth registered in each of the previous three quarters, driving a 0.5

percent dip in Shanghai stocks.

After their second straight week of gains, it'll be interesting to see whether European

stocks can hold up this week as the earnings season kicks off in earnest with investors' eyes

peeled for any trade war impact on companies.

Spreadbetters call the DAX 12 to 13 points higher at 12,562, the CAC 40 up 11 points at

5,440, and the FTSE 100 10 points lower at 7,659.

(Helen Reid)

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(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)