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LIVE MARKETS-What's up with banks? "The theme is capital miss"

* European shares set for fourth day of gains

* German economy stalled in Q4

* Earnings in focus: Nestle (Swiss: NESN.VX - news) , Airbus, AstraZeneca (Swiss: AZN.SW - news)

* Banks lead sectoral fallers

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'S UP WITH BANKS? "THE THEME IS CAPITAL MISS" (1011 GMT)

Banks are today's outlier in Europe. Their shares are broadly lower in an otherwise positive

market and it looks that weak capital is a common feature emerging from the raft of updates

released this morning from Credit Suisse (IOB: 0QP5.IL - news) to Commerzbank (LSE: 21170377.L - news) - and low capital is a key reasons

that's keeping investors away from the battered sector.

"The theme today is capital miss," says a European trader.

Here's his recap on the capital numbers:

* Credit Suisse: Capital (Other OTC: CGHC - news) fell from 12.9% to 12.6%

* KBC: Capital a slight miss at 16% pct vs 16.1% expected

* Credit Agricole (Swiss: ACA.SW - news) : Capital at 11.5% is 10bps below expectations

* Commerzbank (Xetra: CBK100 - news) : Capital of 12.9% was below the 13.1% expected

European banks were last down 0.5 percent, leading sectoral losers, while the

broader STOXX 600 was up 0.4 percent.


In the snapshot you can see how (poorly) European banks have performed over the last 2

years. The sector has been hit hard by the global financial crisis in 2007-2008 and has

struggled to meaningfully recover from the lows hit then.


(Danilo Masoni)

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THE HEAVYWEIGHTS ARE BACK: NESTLE AT NEW RECORD, AIRBUS VERY CLOSE (0851 GMT)

Solid updates from the likes of Swiss food giant Nestle to aerodefence group Airbus

and UK drugmaker AstraZeneca (NYSE: AZN - news) are bringing the STOXX 600 benchmark into its

fourth straight day of gains, with hopes for a breakthrough in the Sino (Dusseldorf: 1205802.DU - news) -US trade talks lingering

in the background.

The STOXX has hit its highest level in three months, while Nestle has broken a new record

and Airbus went very close.

Here's your opening snapshot:

(Danilo Masoni)

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LIFT OFF FOR AIRBUS SHARES AS IT GROUNDS ITS SUPERJUMBO? (0757 GMT)

European stock futures are making tentative gains this morning as investors continue to draw

comfort from generally positive noises from Beijing overnight as U.S.-China talks aimed at

resolving the protracted trade spat between the world's two largest economies kicked up a level.

The mood is cautious ahead of Q4 euro-zone GDP data, although the DAX futures took

weaker-than-expected German GDP numbers in their stride.

Earnings season continues, with Airbus, Astrazeneca, Commerzbank, Credit Agricole, Credit

Suisse and Nestle among the big names reporting.

Airbus comforted investors with a better-than-expected set of Q4 results as it confirmed

plans to scrap production of the A380 superjumbo, abandoning its dream to challenge Boeing (NYSE: BA - news) 's

legendary 747. The shares were seen up as much as 5 percent.

British drugmaker Astrazeneca is expected to be rewarded for stronger-than-expected Q4

product sales on the back of strong demand for newer drugs including cancer medicines. The

shares are indicating higher.

Otherwise it was a mixed bag of results from German and French industrial players from

chemicals to elevator makers.

Air Liquide (LSE: 0NWF.L - news) shares were seen under pressure after its results, Swiss elevator and escalator

maker Schindler posted a 14-percent rise in full-year net profits and French electrical

equipment producer Schneider Electric (EUREX: SND1.EX - news) said expects earnings growth to ease this year but at a

pace slower than the market expects.

Dutch speciality chemicals company DSM pledged to buy back 1 billion euros ($1.13 billion)

in shares, as its fourth-quarter core profit topped expectations.

More bank earnings - Commerzbank and Credit Agricole both delivered better-than-expected Q4

profits. Commerzbank shares are up more than 5 percent in pre-market trade.

Credit Suisse said it sees markets starting to steady, as it reported its first annual

profit since 2014, while Deutsche Bank (IOB: 0H7D.IL - news) will be in focus after an FT report that major

shareholders called for cuts at its struggling investment bank. The bank has rebuffed the

report.

German stock exchange operator Deutsche Boerse (IOB: 0H3T.IL - news) shares are expected to drop after it posted a

much bigger-than-expected fall in Q4 net profit and said it had become more cautious about this

year's outlook.

Consultancy services group Capgemini's was seen under pressure after missing FY profit

expectations.

Nestle said it expected its organic sales to rise by more than 3 percent this year after an

improving performance in China and North America helped growth accelerate in 2018 after six

years of slowdowns. But dealers said the outlook may not be good enough to meet the market's

high expectations.

The monthly survey of British property surveyors showing the most downbeat for house prices

in nearly eight years is likely to pour some cold water over the recent run-up in UK

housebuilders.

In dealmaking, Spanish supermarket DIA (EUREX: 13086668.EX - news) is reported to be a takeover target of Lidl,

Carrefour (LSE: 0NPH.L - news) and Sonae.


Here are some more headlines (others in previous blogs):

AstraZeneca product sales top forecasts with 8 pct rise

Insurer Lancashire swings to profit in 2018, expects higher rates ahead

Indivior (Frankfurt: 2IVA.F - news) 2018 operating profit rises 51 pct on lower expenses

Ashmore Group H1 assets buoyed by $2.4 bln in net inflows

UK's Restaurant Group CEO Andy McCue To Leave

Credit Suisse sees markets steadying in early 2019

Aegon (Swiss: AGN.SW - news) 's H2 underlying profit drops, lags estimates

French retailer Casino to sell catering arm 'R2C' to Compass

French minister says government backs Fincantieri's deal: newspaper

(Josephine Mason and Danilo Masoni)

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TENTATIVE GAINS SO FAR IN EUROPE (0729 GMT)

European stock futures are making tentative gains so far - between 0.2 and 0.3 percent -,

with DAX futures taking a weaker-than-expected GDP reading in their stride.

GDP in Europe's biggest economy grew by 0.0 percent quarter-on-quarter, slower than the 0.1

percent growth forecast. Perhaps there is some relief it escaped recession by the narrowest of

margins, although a downbeat number may have been priced in

Here's your futures snapshot and some of the major headlines so far this morning:

Four big shareholders of Deutsche Bank call for cuts at investment bank - FT

Airbus to scrap production of A380 superjumbo

Renault Chairman: not time to discuss Nissan chairmanship -Jiji

Commerzbank posts 51 percent rise in Q4 net profit

Credit Agricole's Q4 profits rise more than expected, meets targets a year early

Credit Suisse sees markets steadying in early 2019

Swiss elevator maker Schindler posts in-line 2018 profit as demand grows

France's Schneider Electric sees 2019 growth slowing less than expected

DSM Q4 core profit rises 3 pct, narrowly beats estimates

Deutsche Boerse's net profit drops 35 pct in Q4

AstraZeneca product sales top forecasts with 8 pct rise

EXCLUSIVE-VW, Ford far apart on investment in Ford autonomous unit -sources

Italian railways group to start talks with Delta, easyJet on Alitalia (Stuttgart: 2278962.SG - news)

ANALYSIS-Airbus A380: from European dream to white elephant

Airbus' Q4 profits rise and beat expectations

Paddy Power Betfair (Other OTC: PDYPF - news) to challenge 55 million euros in tax bills

Nestle expects sales to grow this year -

Renault (LSE: 0NQF.L - news) sales and profits fall on diesel, currency setbacks

(Josephine Mason)

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BLAST OF EARNINGS: AIRBUS, COMMERZBANK AND RENAULT (0658 GMT)

Aside from the blast of earnings to digest this morning, Airbus is in focus after confirming

plans to scrap production of the A380 superjumbo, abandoning its dream to challenge Boeing's

legendary 747. That may overshadow stronger-than-expected Q4 results and its forecast higher

aircraft deliveries and profits in 2019.

Elsewhere generally solid results from industrial players from chemicals to elevators.

Air Liquide said it was confident in its ability to deliver net profit growth in 2019 at

constant exchange rates, Swiss elevator and escalator maker Schindler posted a 14-percent rise

in full-year net profits and French electrical equipment producer Schneider Electric expects

earnings growth to ease this year but at a pace slower than the market expects.

Dutch speciality chemicals company DSM pledged to buy back 1 billion euros ($1.13 billion)

in shares, as its fourth-quarter core profit topped expectations.

More bank earnings - Commerzbank and Credit Agricole both delivered better-than-expected Q4

profits. Commerzbank shares are up more than 5 percent in pre-market trade. Credit Agricole also

met its profit goals set for 2019 a year ahead of target.

Deutsche Bank will be in focus after an FT report that major shareholders called for cuts at

its struggling investment bank. The bank has rebuffed the report.

German stock exchange operator Deutsche Boerse reported a much worse-than-expected 35

percent fall in net profit in the fourth quarter and said it had become more cautious about this

year's outlook.

Nestle said it expected its organic sales to rise this year while Renault's revenue and

profits fell in 2018, hit by collapsing diesel sales, exchange-rate setbacks and a withdrawal

from the Iranian market.

(Josephine Mason)

*****

EUROPE STILL IN CHIPPER MOOD? (0627 GMT)

Can the STOXX 600 make it a fourth day of gains?

It's a mixed bag in the early indicators: IG (Frankfurt: A0EARV - news) financial spreadbetters expect London's FTSE to

open 13 points lower at 7,178, Frankfurt's DAX to open 21 points higher at 11,189 and Paris' CAC

to open 3 points higher at 5,077.

The good news is that noises were generally from Beijing overnight as U.S. Treasury

Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer held meetings in the

Chinese capital to ease the trade tensions between the world's two largest economies.

But we'll have to wait til tomorrow to find out if any concrete progress on some of the

major sticking points - IP among them - has been made. Whether investors can sustain the chipper

mood that has swept the markets this week is not clear.

Chinese trade data released earlier showed exports unexpectedly returned to growth in

January after a shock decline the previous month, while imports fell much less than expected,

but analysts said it was likely due to seasonal factors and predicted renewed trade weakness

ahead.


Closer to home, we'll find out if Germany slipped into recession at the end of last year

when Q4 flash GDP is released at 0700 GMT. Seasonally adjusted GDP seen +0.1 pct q/q, +0.7 pct

y/y. Unadjusted GDP seen +0.9 pct y/y.

That's followed by closely watched Q4 euro-zone growth data at 0900 GMT - consensus is for

0.2 percent growth, unchanged from Q3.

It's a packed day for earnings too, but more on that later.

(Josephine Mason)

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