LIVE MARKETS-What's on the radar for the European open

May 28 - 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'S ON THE RADAR FOR THE EUROPEAN OPEN (0649 GMT)

European stocks are set for a bounceback on Monday as investors grow more optimistic over

the region after Italy’s president vetoed anti-establishment parties’ eurosceptic pick for

economy minister, setting the country on a path to likely fresh elections. Progress towards a

summit between North Korea and the U.S. also helped risk appetite overnight.

Futures for the Eurostoxx 50, DAX, CAC 40 and IBEX are up 0.3 to 0.7 percent while Britain’s

FTSE 100 is closed for a holiday.

A rally in the euro – a bellwether of confidence in the European Union’s resilience – and

decline in Italian bond yields indicated the anti-establishment parties’ failure was well

received by investors.

Some analysts, including at Societe Generale (Swiss: 519928.SW - news) and Berenberg, were however warning new

elections in Italy could make matters worse, opening the possibility of a more radical outcome,

and the likelihood of a power vacuum over the summer with elections in the autumn.

After a sharp sell-off on Friday futures for the Spanish stock market are also rising,

indicating some relief there too after concerns Prime Minister Rajoy would face a vote of no

confidence.

Oil stocks are however likely to be a drag after crude prices tumbled as OPEC and Russia

said they were discussing raising oil production by some 1 million barrels per day.

In a thin day for corporate news Swiss Re (LSE: 0QL6.L - news) stands out, pulling the plug on talks with

SoftBank (Swiss: SOFB.SW - news) to acquire a minority stake. News the two were in talks had sent the shares up at the

end of March, so there could be some selling after drawn-out talks were fruitless.

(Helen Reid)

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EUROPE ON TRACK FOR BOUNCEBACK AS EURO OPTIMISM RETURNS (0615 GMT)

It looks like European stock markets are set for a bounceback today after Spanish and

Italian political turmoil dented performance on Friday.

If there is going to be stress from Italy, it'll be relatively contained - and some

investors are even calling for a bounce on relief that the anti-establishment government won't

materialise. Indeed Italian bond yields are falling back after the parties abandoned plans to

form a government.

Renewed optimism over a U.S.-North Korea summit is likely to also be helping boost European

futures this morning, while the euro - the barometer of investors' confidence in the euro zone -

has rallied half a percent, after hitting a low.

Futures are up 0.3 to 0.6 percent. Here's your snapshot:

(Helen Reid)

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EARLY MORNING HEADLINE ROUND-UP (0557 GMT)

Here's this morning's harvest of corporate, M&A and political headlines to digest, including

Swiss Re and SoftBank ending talks about a potential minority investment.

Daimler (IOB: 0NXX.IL - news) faces scrutiny of 120,000 Vito, C-Class diesels -BamS

Deutsche Post (IOB: 0H3Q.IL - news) considers raising price for letter postage -report

Fiat Chrysler recalls 5.3 mln vehicles for cruise control defect

Smiths Group (Frankfurt: QS2A.F - news) , ICU Medical (Frankfurt: 894139 - news) in talks about medical division merger

Audi CEO says diesel crisis not over and vows to stay on - report

Enel (LSE: 0NRE.L - news) in advanced talks with Russia's Melnichenko over Reftinskaya coal plant sale - sources

LafargeHolcim (LSE: 0QKY.L - news) to close Paris, Zurich head offices, axing 200 jobs

Veolia CEO sees opportunities in China from Beijing's waste crackdown

Gemalto Announces Collaboration With Qualcomm Technologies

Swiss Re, SoftBank pull plug on talks about minority stake

Italy's president calls in former IMF official amid political turmoil

Italy's efforts to form govt fail as president defends euro

(Helen Reid)

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ITALY: NEW ELECTIONS ON THE HORIZON? (0553 GMT)

Italy's efforts to form a government have failed after the President vetoed the two

anti-establishment parties' pick for economy minister - and early elections are looking

inevitable.

"President Mattarella has announced he is going to meet with Mr Carlo Cottarelli, former

head of the Fiscal Affairs Department at the IMF tomorrow," writes Goldman Sachs (NYSE: GS-PB - news) ' senior

economist Silvia Ardagna in a note late last night.

"Most likely, President Mattarella will grant Mr Cottarelli a mandate to form a caretaker

government, in our view, as the various attempts to form a conventional government have failed."

She (Munich: SOQ.MU - news) doesn't expect a caretaker government to win a confidence vote in Parliament, and says

new elections could take place "as early as October".

Societe Generale analysts say "most political parties have said they will not support such a

government and want elections soon, maybe in September". A general election has never been held

over the summer period, so the prospect of an "extended hiatus in power" looms, they add.

The new election campaign could also become a referendum on a euro, and there's a likelihood

that an even more radical government will be brought in, SocGen (Paris: FR0000130809 - news) notes, making it a volatile

environment for investors.

(Helen Reid)

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MORNING CALL: EUROPEAN STOCKS SEEN RISING AS EURO SLIDES ON ITALY RISK (0526 GMT)

Italian political risk is likely to loom large again today in European trading after the

President rejected 5-Star and League's choice for economy minister, Paolo Savona, a eurosceptic.

The euro hit a 6 1/2 month low late on Friday but is bouncing back in early trading. The

currency's drop is still likely to give a boost to euro zone stock markets, while Italian stocks

could still see choppy trading after a fragile Friday.

Overnight U.S. oil futures hit six-week lows on expectations major producers may ease

production cuts, which could weigh on European commodities stocks. Overall Asian markets gained

on further signs the U.S. and North Korea were still working towards holding a summit.

UK stock markets are closed for trading today due to a bank holiday, but euro zone

benchmarks are seen rising.

Spreadbetters call the DAX 36 points higher at 12,974 and the CAC 40 up 2 points at 5,545.

(Helen Reid)

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