LIVE MARKETS-What we're watching: Bayer, Rio Tinto and Air France-KLM

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters

stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your

thoughts on market moves: josephine.mason.thomsonreuters.com@reuters.net

WHAT WE'RE WATCHING: BAYER, RIO TINTO AND AIR FRANCE-KLM (0758 GMT)

European stock futures were under pressure on Wednesday, with markets taking their cues from

Wall Street's weaker close.

Frankfurt's DAX and London's FTSE were leading the charge lower, each down 0.4 percent, with

the exporter-heavy UK blue chips capped by the stronger sterling. Rising tensions between India

and Pakistan may also rattle investor appetite for risky assets.

In corporate news, consensus-busting results due to higher commodity prices and a pledge for

a special dividend are expected to boost cash-rich miner Rio Tinto.

Bayer has also reported better-than-expected Q4 results, boosted by the addition of U.S.

seeds maker Monsanto and as its consumer healthcare business bounced back from earlier declines.

The shares are indicated lower in pre-market trade though.

Nivea skin cream maker Beiersdorf is also lower in pre-market trade after it announced plans

to invest in its consumer products business.

Back in the UK, more good news for housebuilders with Taylor Wimpey reporting higher

profits, hot on the heels of Persimmon on Tuesday, while fashion retailer Ted Baker has warned

on its full-year profits due to inventory writedowns and the impact of forex rates. Broadcaster

ITV said it is teaming up with the BBC to create a British rival to Netflix as it reported a

drop in 2018 earnings.

France's Safran predicted higher revenues and profits this year as it posted

better-than-expected 2018 profits, supermarket operator Ahold Delhaize reported Q4 earnings in

line with expectations, and French waste and water group Suez booked double-digit 2018 earnings

growth and gave strong guidance for 2019.

Plenty of M&A news: speculation over a potential Deutsche Bank-Commerzbank merger continues

to swirl, with a German paper reporting a major investor in both banks, Cerberus, is now in

favour of a tie-up, in an apparent change of heart.

The Dutch government surprised the French overnight with news it plans to take a stake in

Air France-KLM equal to that of Paris in order to increase its influence in the carrier's

operations. Air France-KLM shares are expected to open down up to 10 percent.

Experian Plc and rival ClearScore have abandoned their proposed merger, after Britain's

competition watchdog indicated in November that it may block the deal. MetroBank has confirmed a

report yesterday it was planning a share issue to shore up cash after its accountancy blunder

and M&S and Ocado confirmed their plans to create a food delivery JV.

Here are your UK headlines (for others, see earlier blog):

UK's M&S seals Ocado tie-up to take food online

Rio Tinto posts best underlying earnings since 2014, beats estimates

St. James's Place FY profit up 9 pct, gets new year asset boost

British homebuilder Taylor Wimpey full-year profit rises

Ted Baker warns on full-year profit

ITV to team up with BBC in 'BritBox' subscription streaming offer

Experian, ClearScore scrap merger plans

Playtech Signs New Long-Term Agreement With GVC Until 2025

(Josephine Mason)

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FRANKFURT AND LONDON LEAD EUROPEAN FUTURES LOWER (0720 GMT)

European stock futures are under pressure, as expected, with Frankfurt's DAX and London's

FTSE leading the charge lower, each down 0.4 percent. London's exporter-heavy blue chips may be

capped by the stronger sterling, which is holding near its 21-month highs hit yesterday amid

renewed hopes of a Brexit delay.

We also have more Brexit votes in parliament this evening, although there's less at stake

after PM May's pledge yesterday to give lawmakers the chance next month to block a no-deal

Brexit and delay Britain's exit day if her agreement is rejected. That's postponed her moment of

reckoning for now.

Here's your snapshot:

(Josephine Mason)

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ON OUR RADAR: BAYER, AIRLINES AND BANKING DEALS (0702 GMT)

Early indications are for a quiet start this morning, but there's plenty of corporate news

to provide some momentum.

Bayer has just released better-than-expected Q4 results, boosted by the addition of U.S.

seeds maker Monsanto and as its consumer healthcare business bounced back from earlier declines.

Early indications are for the shares to come under pressure though.

Staying in Germany, the 'will they, won't they' continues to swirl around Deutsche Bank and

Commerzbank. U.S. investor Cerberus, a major shareholder in both banks, has changed its mind and

now favours a merger between the two, a German newspaper reported late on Tuesday.

Elsewhere in M&A, the Dutch government surprised the French overnight with news it plans to

take a stake in Air France-KLM equal to that of Paris in order to increase its influence in the

carrier's operations.

Sunrise Communications has entered "advanced discussions" to buy Liberty Global's Swiss

business in a deal which values the internet and digital television provider at 6.3 billion

Swiss francs ($6.30 billion).

In other earnings news, France's Safran, which co-produces the world's most-sold family of

jetliner engines with General Electric, predicted higher revenues and profits this year as it

posted better-than-expected 2018 profits featuring a sales boost from the acquisition of cabin

maker Zodiac Aerospace.

Ahold Delhaize, which operates supermarkets in Europe and the United States, reported Q4

earnings in line with expectations, while French waste and water group Suez booked double-digit

2018 earnings growth and gave strong guidance for 2019, but unlike sector peer Veolia it left

its dividend unchanged at 65 cents.

Shares in Beiersdorf were indicating lower in pre-market after the Nivea skin cream maker

announced it would boost spending on its consumer business segment to counter falling sales

growth.

Here are your headlines:

French group Safran predicts growth after better-than-expected 2018

Airbus, OneWeb aim to kick off new satellite era with first launch

Supermarket operator Ahold Delhaize's Q4 earnings meet expectations

Sunrise in advanced talks for Liberty Global's $6.3 bln Swiss unit

Dutch take stake in Air France-KLM to counter French influence

Home Credit pulls out of deal to sell Czech assets to MONETA

Metro Bank accounting blunder prompts early 350 mln pound cash call

Beiersdorf launches new strategy programme with investments

Investor Cerberus favours Deutsche Bank, Commerzbank merger - Handelsblatt

U.S. senators tell drug company execs pricing is 'morally repugnant'

StanChart gets approval to open unit in Saudi Arabia

Fiat Chrysler to invest $4.5 bln in Michigan for new Jeep SUV models

Bayer profit better than expected on Monsanto, consumer health

LVMH says aiming to boost presence in high-end wines

Utility Suez's core earnings climb although dividend left unchanged

Britain's Laura Ashley dismisses unsolicited offer from Flacks

(Josephine Mason)

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EUROPE LACKING MOMENTUM (0620 GMT)

Europe's afternoon gains and relatively strong close yesterday (except for London) don't

appear to have the legs to sustain a rally today, with stocks expected to lose ground at this

morning's open and taking their lead from Wall Street overnight.

Fed testimony provided few surprises, with chairman Powell reiterating the central bank

would remain "patient" in deciding on further interest rate hikes and that rising risks and

recent soft data should not prevent solid growth for the economy this year.

The markets have already rallied in recent weeks on dovish signals from the Fed along with

positive trade signals, so the market appears to be taking the comments in its stride.

And don't forget, investors are still waiting for more news on the U.S.-China trade talks.

Financial spreadbetters IG expect London's FTSE to open 8 points lower at 7,143, Frankfurt's

DAX to open 6 points lower at 11,534 and Paris' CAC to open 8 points lower at 5,231.

(Josephine Mason)

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