LIVE MARKETS-What's on investors' minds, aside from the end of QE?

* Europe sees choppy session as rally fizzles out

* ECB formally ends QE

* May seeks Brexit help at Brussels summit

* G4S (Copenhagen: G4S.CO - news) shoots up after saying it may list cash business

* German retailer Metro (Dusseldorf: 62M.DU - news) tumbles after poor results

Dec (Shanghai: 600875.SS - news) 13 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to

share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net

WHAT'S ON INVESTORS' MINDS, ASIDE FROM THE END OF QE? (1428 GMT)

As Draghi's press conference concludes, it's worth looking back at the plethora of risks on

investors' minds at the moment, including the end of the quantitative easing era.

Barclays (LSE: BARC.L - news) strategists note six main themes which have emerged from their recent road trip

meeting investors:

* A U.S. recession is "on everyone's lips," head of European equity strategy Emmanuel Cau

and team

write

* China hard landing, Barclays' second most discussed topic with clients. The strategists

believe

China may not be such a key source of downside risk next year

* Earnings downgrades: "Consensus estimates for 2019 look way too high," writes Cau and team

(see

below)

* The end of the asset reflation trade: investors are having to navigate a brave new world

of

tightening liquidity and Barclays advises caution in parts of the stock market that have

benefitted most from the QE trade, recommending investors switch from Growth into Value

* European politics - "can it get any worse?" they ask. "Rising populism could pave the way

to

bumpy European Parliament elections in May next year," keeping the risk premium on European

stocks high. But Cau and team are tactically overweight banks, and say UK domestic exposure is

looking "increasingly attractive"

* Market technicals

Their conclusion is relatively positive, despite all these risks, however. Cau and team

write: "The recent risk-off has lowered the bar for positive surprises in 2019, which no one

seems to be positioned for at present."

So even if we're not set for a Santa rally, we may be in for a new year miracle...

(Helen Reid)

*****

NO REACTION TO HISTORIC ECB MOVE, BUT FOR THE RECORD HERE'S THE STATEMENT (1319 GMT)

The ECB has decided to end its lavish asset purchase scheme in an historic but

well-anticipated move that triggered little to no reaction in financial markets.

The euro got a bit shirty and euro zone stocks wavered around a gain of 0.1

percent. Mario Draghi's press conference starting in around 10 minutes may be more lively ...

So, for the record, here's how the new ECB policy statement looks like compared to the

previous one:

And here's are the highlights so far of our story on ECB's decision:

* ECB keeps interest rates unchanged

* Formally ends asset purchases

* Draghi to stress other supports still in place

* New (KOSDAQ: 160550.KQ - news) economic forecasts seen gloomier on growth

(Danilo Masoni)

*****

LONG STOXX 600? THIS COULD CHEER YOU UP! (1227 GMT)

Excluding the cheering possibility of a Xmas rally, the pan-European STOXX 600 seems to be

on its way to end 2018 in the red and is so far over 10 pct down year-to-date.

There's not that much to look forward to at the moment which would kickstart the benchmark

in 2019 only that, according to Deutsche Bank (IOB: 0H7D.IL - news) 's strategist Sebastian Raedler, it's overpriced

and undervalued.

"At 350 (it's current level), the Stoxx 600 is 6 pct below the level implied by our model,"

he says.

"To make equities fair value at current levels, we would have to assume a Euro area PMI of

49, three points below the current 52.3 and a level that is consistent with euro area GDP growth

of 0%", which is clearly way below the consensus.

"Our macro projections are consistent with 10 pct upside for European equities by Q1 (to 385

on the Stoxx 600) as well as 15% upside for European cyclicals versus defensives."

A word of caution though, DB analysts expect a fade back to 345 by end-2019.

In a note about the euro zone's growth prospects, Bill Papadakis, macro strategist at

Lombard Odier Private Bank, says he is "optimistic about near-term euro-zone growth prospects"

with a "forecast for a pick-up to 2 percent in 2019".

The latest 'MacroTourist' newsletter from East West Investment Management also makes the

point that the American market is way over-crowded and that fund managers need a hell of a case

to invest in Europe.

"Do you know how difficult it is for a money manager to sit in front of the year-end-review

committee and justify an overweight in European or emerging market equities? I would rather Mr.

Blonde (character in Tarantino's Reservoir Dogs) have a run at me

Anyhow, here's a chart which shows why DB strategists believe the STOXX 600 should rebound

as PMIs improve:

(Julien Ponthus)

****

STILL WANNA PLAY "BREXIT FOOTBALL"? TRY UK HOUSEBUILDERS (1157 GMT)

UK housebuilders are perhaps the most sensitive play to Brexit headlines and UBS (LSE: 0QNR.L - news) has come

out with a timely note whose headline "Opportunity or looking down the abyss?" nicely

illustrates the dilemma facing investors over the battered sector.

"The UK housebuilders have become the 'Brexit football'," analysts at the Swiss investment

bank say.

"Volatility will likely remain high until there is improved visibility on the UK's exit from

the EU and, more broadly, the political direction of the country," they add.

Despite this view, UBS is betting on an orderly Brexit and believes much has already been

baked in their share prices.

"We think the market is now pricing in a substantial decline in earnings/returns which we

think offers good risk/reward across most of the sector," they say.

On top of that, housebuilders' 10 percent dividend yield is attractive and balance sheets

are robust.

Of the nine stocks under their coverage seven are rated "buy" with Redrow (LSE: RDW.L - news) , Persimmon

and Berkeley seen offering the best risk-reward balance.

(Danilo Masoni)

****

IS BREXIT FATIGUE GETTING TO YOU? (1126 GMT)

You'd be forgiven because clearly, many analysts are beginning to suffer from Brexit fatigue

and it's sure starting to permeate through some notes after Theresa May won the leadership

challenged thrown to her by disgruntled Conservative MPs.

"Theresa May, blah, sterling, blah, Brexit, blah blah," was surely a way for Neil Wilson

from Markets.com to get some frustration about the endless divorce process out of his system.

"Nothing has changed after a truly Pyrrhic victory for the PM. She (Munich: SOQ.MU - news) cannot get her deal

through Parliament, and cannot govern essentially. The question is how long she tease it out,"

he added.

Rabobank's Michael Every also had some steam to let off, writing:

"At one point yesterday I turned to the TV screen here on the trading floor and saw a large

Xmas tree outside the door of Number 10 Downing Street. My first thought was that it would make

a better leader than some of the other deadwood: strong, stable, and pine-y fresh to boot."

Paul Donovan, who has been describing the Brexit saga as a "tedious" process for a while

now, took the view that "probably 99% of the UK population just don't care anymore".

Here's a way people who suffer from Brexit grief (so that wouldn't include pro-Brexit

voters) might measure how they're coping:

(Julien Ponthus and Helen Reid)

*****

UK MID- AND SMALL-CAPS NOT AS UNPOPULAR AS EVERYONE THINKS? (1044 GMT)

The FTSE 100 and FTSE 250 have both given back their early gains, with the former flat and

the latter down 0.4 percent now, as you can see below.

Given the widespread negative sentiment on the domestic smaller parts of the UK market in

particular, fund flows monitor Morningstar (NasdaqGS: MORN - news) find a surprising fact: in aggregate since the start

of June 2016 UK mid-cap and small-cap equity funds have actually seen inflows.

"While the trend away from UK equities is clear, it is important to note that these figures

have been exacerbated by fund-specific issues on a small number of the biggest funds in the

category that led to significant redemptions from a loss of investor confidence," writes

Morningstar in a report.

They highlight LF Woodford Equity Income, Invesco Income, Invesco High Income, Invesco

Strategic Income, as funds which have lost a cumulative 24.8 billion euros over the period from

June 1 2016 to end-October 2018.

Factoring these out, "the picture is less clear about the extent of the negative sentiment

towards UK equities," the fund flows monitor writes.

(Helen Reid)

*****

OPENING SNAPSHOT: ITALY, BANKS RALLY LIFTS EUROPE, UK MARKET SHRUGS (0838 GMT)

Looks like Europe is set for a third straight day of gains, with Italy leading the way after

its government committed to a lower budget deficit target, bending to the European Union - and

the market's - wishes.

The FTSE MIB is up 1.1 percent with Italy's banks index up 3.1 percent and set

for its best day since Nov 26 when Rome first signalled a cut to its budget deficit goal.

Intesa Sanpaolo (Amsterdam: IO6.AS - news) , UniCredit (EUREX: DE000A163206.EX - news) , and UBI Banca (Amsterdam: UF8.AS - news) are among top European gainers.

Meanwhile UK markets are shrugging off PM May's no confidence vote win, with the FTSE 100 up

just 0.2 percent - lagging European peers - and the FTSE 250 flat.

In single stock movers, German retailer Metro is tumbling 8 percent, the worst STOXX 600

faller, after it warned poor performance in Russia would hurt profits.

G4S meanwhile is up 9 percent, among top STOXX gainers, after it said it was reviewing

options to separate its cash solutions business. TUI (LSE: 0NLA.L - news) is also climbing 6.4 percent after strong

results which traders said were "reassuring" particularly after rival Thomas Cook (Frankfurt: A0MR3W - news) 's poor

performance.

Deutsche Bank and Commerzbank (Xetra: CBK100 - news) are rising again, up 3.9 and 2.9 percent respectively in a

second day of gains after a report Germany is seeking to ease a potential merger between the two

lenders.

While it's been a relatively strong start for the European market it remains to be seen

whether it will hold on to gains - the STOXX 50 index has already trimmed gains to fall back to

flat.

(Helen Reid)

*****

WHAT'S ON OUR RADAR BEFORE THE OPEN (0746 GMT)

After staging their best two-day rally since July 2016 European shares are set for a softer

open with easing trade worries and signs of a possible compromise over Italy's budget tempered

by ongoing Brexit uncertainty as yesterday's confidence vote indicated that PM May still lacks

the numbers to pass her divorce deal through a divided parliament.

FTSE futures are little changed, while euro zone futures are trading up around 0.3 percent.

While the broader market direction is likely to be driven by macro factors with investors

also keeping an eye on today's ECB meeting for any indication over future rate hike, there is

some corporate news that could liven up the session.

On the watchlist are Ericsson (Hanover: ERCB.HA - news) and Nokia (Milan: 23568.MI - news) after a report said SoftBank (Swiss: SOFB.SW - news) plans to replace

equipment from China's Huawei with hardware from the two European vendors. Shares (Berlin: DI6.BE - news) in both

Ericsson and Nokia have outperformed the market so far this year, gaining 55 and 33 percent

respectively as investors warm up to prospects of 5G roll-outs across the globe.

Spanish builder Sacyr (LSE: 0OFU.L - news) and Salini Impregilo of Italy may come under pressure after an

arbitration tribunal ordered the Panama canal construction consortium they are part of to pay

back nearly $848 million. Shares in GAM Holding (IOB: 0QN3.IL - news) could fall 5-10 percent after the Swiss asset

manager posted a big loss and omitted dividend, while German wholesaler Metro is also seen hit

after predicting a fall in profits due to its struggling Russia business.

The world's top security company, G4S, is seen rising 5-7 percent after it said it was

reviewing options to separate its cash solutions business.

Other stock movers: Serco turns corner with revenue and profit growth seen in 2019, G4S (Amsterdam: GF6.AS - news)

reviews options to separate cash solutions business, TUI Group confident on earnings growth

after hotels, cruises lift 2018, Technipfmc sees 2019 subsea revenue $5.45.7 bln

(Danilo Masoni)

*****

MAY DAY: HAS ANYTHING CHANGED? (0715 GMT)

The PM survived the confidence vote last night, but it wasn't quite the firm affirmation she

may have needed as she heads to Brussels today to seek reassurances on her Brexit deal. Does the

result really change anything?

Goldman's Brexit base case is broadly the same following the vote and Credit Suisse (IOB: 0QP5.IL - news) agrees -

it's keeping its neutral stance on equities and reckons the result reinforces expectations for a

soft Brexit.

While the basic constraints on the specifics of the deal - the limited scope for

renegotiation with the EU - haven't gone away, Goldman analysts say the victory may embolden her

attempt to resist opposition in her own party to compromises in the Withdrawal Agreement.

But the political instability that has punished UK stocks this year - the blue chips and

midcap index are both on track for their worst year since 2008 - hasn't disappeared with the

vote. On Tuesday, BlackRock (Sao Paolo: BLAK34.SA - news) suggested that Chinese equities may even be a better bet given the

country's tortured divorce from the EU.

Investors may not be rushing back into the market in droves.

The FTSE 100's exposure to international markets, with 70% of its income from abroad, may

stand it in better stead to withstand some of the jitters. But the market may move on pretty

quickly, with investors choosing instead to focus on easing U.S.-China trade tensions.

Take the pound: after bouncing off 20-month lows ahead of the vote, it's now down slightly

this morning, a sign that traders are nervously looking ahead to the Brexit vote in January.

(Josephine Mason)

*****

HEADLINES ROUNDUP: EYES ON ERICSSON, NOKIA, PANAMA CANAL BUILDERS (0553 GMT)

While the broader market direction is likely to be driven by macro factors (Brexit/trade and

Italy budget), with investors also keeping an eye on today's ECB meeting, there is some

corporate news that could liven up the session.

On the watchlist are Ericsson and Nokia after a report said SoftBank

plans to replace equipment from China's Huawei with hardware from the two European vendors.

Sacyr and Salini Impregilo may come under pressure after an arbitration

tribunal ordered the Panama canal construction consortium they are part of to pay back nearly

$848 million. A big loss at no dividend at GAM Holding could also weigh on the Swiss

asset manager.

Here's your headlines round up:

* Japan's SoftBank to shun Huawei in favour of Ericsson, Nokia equipment -Nikkei

* MEDIA-Huawei pledges to do 'anything' to soothe security concerns- FT

* Tribunal orders Panama canal construction group to pay back $848 mln

* Swiss asset manager GAM sees big 2018 loss, omits dividend

* Australian regulator casts doubt on tie-up between Vodafone's local arm and internet

provider

TPG (Taiwan OTC: 6521.TWO - news)

* J&J says its psoriasis drug superior to Novartis (IOB: 0QLR.IL - news) treatment in study

* Saipem (LSE: 0NWY.L - news) says Shamoon variant crippled hundreds of computers

* Nissan to boost external board seats, set up compensation committee -source

* ChargePoint to equip Daimler (IOB: 0NXX.IL - news) dealers with electric car chargers

* U.S. tribunal to review ruling on Qualcomm (Swiss: QCOM-USD.SW - news) request for iPhone ban

(Danilo Masoni)

*****

FTSE SEEN FLAT AS MAY SURVIVES CONFIDENCE VOTE (0620 GMT)

European shares are expected to open higher this morning on the back of easing Sino (Dusseldorf: 1205802.DU - news) -US trade

tensions and hopes of a compromise over Italy's contested budget, although the UK's FTSE is set

to lag behind as uncertainty over Brexit continues.

British Prime Minister Theresa May survived yesterday's confidence vote by the Conservative

Party, but a mutiny by more than a third of her lawmakers indicated parliament was heading

towards deadlock over the country's divorce from the European Union.

"The 117 dissent votes coupled with the DUP and the opposition, add up to a clear majority

against May’s deal and if her deal fails in Parliament eventually, a no-confidence motion in

Parliament remains probable outcome," says Stephen Innes, Head of Trading APAC at OANDA.

Financial spreadbetters IG (Frankfurt: A0EARV - news) expect London's FTSE to open 1 point higher at 6,881, Frankfurt's

DAX to open 33 points higher at 10,963 and Paris' CAC to open 10 points higher at 4,919.

(Danilo Masoni)

*****

(Reporting by Danilo Masoni)