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LIVE MARKETS-Where will volatility settle?

* European stocks in choppy waters

* Oil stocks at 3-year highs

* AMS drops after Q2 sales warning, semis down

* US Treasury yield testing 3 pct level

LONDON, April 24 (Reuters) - Welcome to the home for real-time coverage of European equity

markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach

him on Messenger to share your thoughts on market moves:

julien.ponthus.thomsonreuters.com@reuters.net

WHERE WILL VOLATILITY SETTLE? (1406 GMT)

Volatility is still one of investors' main concerns, but Goldman Sachs analysts are positive

that it should calm down to lower levels than it has been year-to-date. The increase in vol is

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still pretty contained to U.S. equities, too, a fact they see as encouraging.

"While the S&P 500 vol spike has been extreme, both in terms of speed and size, the

spillover to other assets - or even other equity regions - has been limited," they write.

Looking at standard deviations of returns, it's clear that equities have seen the biggest

rise in number of days with big price swings this year (see chart below), while bonds, credit,

commodity and FX markets haven't seen nearly as big an increase.

Speaking of volatility, European stocks have just taken a dip slightly lower to session

lows, with the STOXX 600 down 0.2 percent while the DAX is down 0.4 percent, after U.S. Treasury

yields finally breached the symbolic 3 percent level for the first time since January 2014.

(Helen Reid)

*****

ACTIVE VS PASSIVE FUNDS: LEADERS AND LAGGARDS (1328 GMT)

Lyxor's annual study comparing performance of active and passive funds reveals some

interesting nuggets about the ongoing tug-of-war between stock pickers and the growing ETF

industry:

* Some 44 percent of active funds in Europe outperformed their benchmark last year, up from

just

28 percent in 2016

* A huge 70 percent of UK all-cap managers underperformed the benchmark - a figure Lyxor's

head of

ETF research Marlene Hassine says is down to the fact most UK funds were underweight the

small-cap, domestic parts of the market that significantly outperformed last year

* Flows into ETFs in 2017 were massive - in the U.S. passive accounted for 100 percent of

inflows,

while in Europe 76 percent of flows still went into active funds

* Active equity managers were much more likely to outperform in less liquid, less efficient

markets (Europe and U.S. small-caps), while they did the worst in U.S. large-cap, emerging

markets, UK and China

* In terms of factor performance, Lyxor's analysis finds that the worst-performing active

managers

were those who were overweight "low beta", in an overwhelmingly risk-on, momentum-driven market

* In Europe factor leaders were more clear than in the U.S., perhaps because Europe is

earlier in

the cycle. Size and momentum were the best-performing factors

* While correlations near record lows likely helped active managers perform better last

year, they

have begun to climb again this year, making this a less favourable environment for active

managers

(Helen Reid)

*****

AFTERNOON SNAPSHOT: EUROPE MIXED AS US TREASURY YIELDS TEST 3 PCT (1315 GMT)

European share trading continues to be dominated by caution with corporate earnings failing

to provide a clear direction, as investors keep an eye on the 10-year US Treasury yield, which

is giving it another try in its march to reach 3 percent.

Here's your Treasury yield:

P.S.: The last time 10-year Treasury yields neared 3 percent, in 2013, it rocked risk

appetite, sent stocks sliding and shortly preceded oil prices taking a mighty 75 percent tumble.

And here are your European benchmarks:

(Danilo Masoni)

*****

RUSAL SANCTIONS REPRIEVE: BAD NEWS FOR ALUMINIUM MINERS? (1150 GMT)

The U.S. extended the deadline for U.S. companies to comply with Rusal sanctions yesterday,

offering Americans a reprieve - until October 23, instead of June 5, to wind down business with

Rusal.

The Kremlin today said it is "rather cautious" on hopes the U.S. may ease sanctions on Rusal

, but aluminium is tanking on the news anyway, extending yesterday's decline.

Could this affect the big Europe-listed miners who've enjoyed the boost from surging metals

prices? Yes, but not all in the same direction.

"Glencore has an 8.75% stake in Rusal so any loosening of the sanctions could be positive

for Glencore's holding... Glencore trades some of Rusal's tonnes so there could be an additional

upside if Glencore is permitted to trade those tonnes," write Goldman Sachs analysts.

Rio Tinto and Vedanta, on the other hand, would be negatively impacted if

aluminium falls back to pre-sanction levels. Rio and Vedanta generate 18 percent and 9 percent

respectively of 2018 group EBITDA from aluminium, notes GS. Aluminium firm Norsk Hydro

could also see its shares dented.

Glencore's shares are up more than 13 percent since sanctions were imposed on April

6, boosted by the surge in base metals prices.

(Helen Reid)

*****

APPLE SUPPLY CHAIN "TAKEN BY SURPRISE" (1044 GMT)

It's a pretty significant fall from grace for ams, the darling of European markets

last year, down 8 percent after results which were - to say the least - a big disappointment.

The chipmaker warned of a slowdown in sales in its second quarter and reported Q1 sales at the

lower end of its guidance range.

While suppliers aren't allowed to directly name their big customers, ams said it was seeing

significantly lower business from "a large smartphones programme" and analysts think it's likely

this reflects a slowdown in the new iPhone.

"What is very clear is that the phasing down of the iPhone X has taken the supply chain by

surprise," writes Neil Campling of Mirabaud, who closed his "buy" on ams last week.

Ams' warning comes after Taiwan Semiconductor, another big Apple supplier, last

week also reported weaker numbers, and adds to signs of strain in the supply chain.

The Swiss chipmaker is still almost universally liked by analysts, as you can see below.

"A massive consensus long and missed numbers by more than 10 percent, so the whole Apple

supply chain is under the cosh," says a trader.

So, where to from here?

"The valuation needs to reset... ams is, for now, still highly dependent on Apple and the

valuation is unwarranted," says Campling.

All eyes will be on STMicro's results tomorrow for signs the pattern among chipmakers and

iPhone suppliers is sticking.

UBS analysts are still broadly positive on Apple: "Despite our concerns about iPhone X

demand and lack of rebound in China, the pricing strategy has successfully moved users up the

curve."

(Helen Reid)

*****

OIL PRICES: A CONCERN BUT NOT FOR ENERGY STOCKS (1023 GMT)

Oil has risen above $75 a barrel to its highest since November 2014 and while that is

fuelling concerns about inflation and growth, which in turn is contributing to the broader

market's cautious tone, for energy stocks it has been a boon so far.

The European oil and gas index has already risen nearly 11 percent in April, set for

its best month since October 2015 and firmly moving at its highest level in nearly 3 years, as

you can see in this chart:

The index is now the best sectoral performer in Europe so far in 2018, up more than 6

percent, while the pan-European STOXX 600 benchmark is still down 1.5 percent.

"A rise in oil prices used to motivate investors as it indicated more demand and growth.

Now, it’s becoming a source of concern, with prices hovering near a three-year high of $75.

Investors are likely to question the implications of higher commodity prices on inflation and

the wider economy," Hussein Sayed, Chief Market Strategist at FXTM.

Perhaps a reason why the inflation worries are still not putting off investors is that its

effect on prices is still seen as temporary and unlikely to speed up monetary policy

normalisation.

"Inflation is about a general rise in prices, not about one price rising relative to other

prices. Central banks should look through oil-related inflation, unless higher oil prices

encourage wage increases (which could create a more general price pressure)," says UBS's

Donovan.

It might be interesting to hear what Mario Draghi will have to say on oil, on Thursday at

the press conference that follows the European Central Bank's governing council meeting.

(Danilo Masoni)

*****

MUCH ADO ABOUT A NUMBER (0957 GMT)

Not everyone is excited that the yield on the U.S. 10-year Treasury has come close to the 3

percent level (though it's eased somewhat today):

"US Treasury bond yields are flirting with 3%. What does this mean? It means 3% is a nice

round number and bond dealers are simple people who like nice round numbers," says Paul Donovan,

chief economist at UBS Global Wealth Management.

"Economically, 3% is no different from 2.98%."

So perhaps it's not surprising that the bond proxies in Europe have calmed down a bit today

and are recovering - consumer staples and utilities are both making headway.

(Kit Rees)

*****

OPENING SNAPSHOT: EUROPEAN SHARES STEADY, SEMIS SLIDE (0718 GMT)

European shares may be flat in early trading but the attention is squarely on results. Of

note is weakness among semiconductor stocks after AMS warned on Q2 sales - its shares

are down around 10 percent.

Conversely SAP, Europe's biggest tech stock, is among the top STOXX gainers after

the company gave a set of upbeat results in which it said it was gaining market share.

More broadly, falls among materials, industrials and consumer discretionary stocks are

weighing most on the STOXX.

Here's your opening snapshot:

(Kit Rees)

*****

WHAT TO WATCH AT THE BELL (0652 GMT)

European shares are expected to open flat despite a mixed session on Wall Street and a lack

of enthusiasm for tech stocks there.

U.S. 10-year yields have retreated to 2.96 percent giving investors some respite to look at

indicators, such as Germany’s IFO or Belgium leading indicator (a Euro zone bellwether) and a

fresh new batch of corporate earnings.

The results are shedding light on the health of a lot of sectors across the continent and

clearly chipmaker AMS’ first-quarter sales are likely to worry investors as the stock seems

ready to fall at the open.

In the auto sector, premarket indications show little enthusiasm for car makers PSA and

Volvo or Michelin. Banks, (Santander and Swedbank) will be closely monitored after UBS’

disappointing results while Deutsche Bank may be a mover after it was reported that it could

announce a revamp of its investment bank Thursday.

Other big names to report this morning: SAP, Akzo Nobel, Dutch employment agency Randstad's

Q1 earnings exposing strong growth in Europe.

(Julien Ponthus)

*****

EARLY MORNING HEADLINE ROUND-UP (0633 GMT)

There's plenty of earnings to keep investors busy this morning, notably from the banking

sector with updates from Santander and Swedbank.

Here's a round-up of the headlines catching our eye ahead of the open:

Santander Q1 profit rises 10 pct, buoyed by Brazil

Swedbank Q1 profit tops forecast as Swedish housing market steadies

St. James's Place Q1 assets dip on weaker market returns

Deutsche Bank may announce investment bank revamp on Thursday -report

Zurich court backs Julius Baer in East German assets row

Munich Re says expects Q1 profit of over 800 million euros

SAP, gaining market share, raises outlook

Apple sensor supplier AMS ,AMS.S> warns of second-quarter slowdown

Akzo Nobel Q1 profit misses estimates as sales drop

Puma says China powered strong first-quarter sales

Dutch employment agency Randstad's Q1 earnings rise on strong Europe growth

Gardening tools maker Husqvarna Q1 EBIT just lags expectations

Booming demand lifts AB Volvo profit, straining supply chain

PSA sales jump 42 percent on Opel-Vauxhall acquisition

Michelin sales fall as euro compounds China, U.S. weakness [Michelin sales fall as

euro compounds China, U.S. weakness

AstraZeneca to raise stake in Circassia to up to 19.9 pct

London Stock Exchange Group's quarterly profit rises

Norway's Telenor adjusts guidance to reflect CEE sale, Q1 slightly ahead

Anglo American's Minas-Rio in Brazil to ramp up in Q4 after leaks

Saipem swings to Q1 net loss after reorganizing charges

Telecom Italia shareholders to vote on CEO as board showdown delayed

(Kit Rees)

*****

EUROPEAN FUTURES TRADING HIGHER AS EARNINGS COME IN (0610 GMT)

Futures for major European indexes are trading in positive territory as Q1 results start to

flow in. Here's the Top News page for European companies where you can check out how it's going

so far on the earnings front:

Here's a snapshot of European futures at 0605 GMT:

(Julien Ponthus)

*****

EARNINGS AND INDICATORS: LOTS OF THEM! (0548)

It's not all about FAANGs or U.S. treasury yields this morning: a batch of fresh indicators

and corporate earnings should give enough data to animate the session with notably Germany's

Ifo, but also business sentiment indicators in France, Belgium, Italy and the UK as well as

employment figures for Sweden.

In terms of earnings, they are coming from across all sectors and regions, here's a sample:

Akzo Nobel NV Q1 2018 Earnings Call

Ams AG Q1 2018 Earnings Call

Banco Santander SA Q1 2018 Earnings Call

Coface SA Q1 2018 Earnings Call

Cofinimmo SA Q1 2018 Earnings Release

Iberdrola SA Q1 2018 Earnings Release

Mediaset SpA Q4 2017 Earnings Call

Randstad Holding NV Q1 2018 Earnings Call

Santander UK Group Holdings PLC Q1 2018 Earnings Call

SAP SE Q1 2018 Earnings Call

Swedbank AB Q1 2018 Earnings Call

Telekom Austria AG Q1 2018 Earnings Release

Telenor ASA Q1 2018 Earnings Call

Volvo AB Q1 2018 Earnings Release

Zodiac Aerospace SA HY 2018 Earnings Release

(Julien Ponthus)

*****

MORNING CALL: EUROPEAN BOURSES SEEN RISING AT THE OPEN (0520 GMT)

European shares are expected to rise at the open this morning ahaed of a earnings-heavy

session after Asian stocks bounced back from near two-week lows.

Financial spreadbetters expect London's FTSE to open 10 points higher, Frankfurt's DAX 27

points higher and Paris' CAC 6 points higher helped by the recent rise of the dollar.

US 10-year Treasury yields, which were close to breaking the 3 percent benchmark on Monday,

have currently retreated to 2.96 percent.

(Julien Ponthus)

*****