LIVE MARKETS-Why has the sell-off been contained to equities?

LONDON, March 28 (Reuters) - 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

WHY HAS THE SELL-OFF BEEN CONTAINED TO EQUITIES? (1246 GMT)

Stocks have been the primary target of selling recently, similarly to the early February

drawdown, with volatility also mostly affecting equities rather than other asset classes.

"It is again remarkable that this correction appears to be almost completely an equity

affair, with limited impact in credits, high yields, currencies and EM debt," notes Lukas

Daalder, CIO at Robeco.

There are two ways of explaining this, he argues:

"Either you are an optimist, stating that the stock market is overreacting, with all other

markets still pretty positive, or you are a pessimist, stating that first the most liquid assets

have been sold, which means that if the selling pressure continues, the other assets are bound

to follow."

Looks like, for today at least, that selling pressure is easing somewhat.

(Helen Reid)

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AN EYE ON IT SECURITY STOCKS (1217 GMT)

There has been a lot of focus on U.S. tech firms and how they use data from social media

users, especially as the EU's General Data Protection Regulation (GDPR) is set to come into

force in less than a month.

Worries have played out in share prices, with Facebook (NasdaqGS: FB - news) down nearly 18 percent over

the past seven sessions since the data misuse scandal came to light.

We have been on the outlook for any fallout, both positive and negative, on Europe's tech

sector, a large part of which is made up of components and software makers. One stock which has

been drawing attention is IT security provider Sophos, down around 20 percent so far

this year.

So it's interesting that analysts at brokerage Stifel say they are "relaxed" with their

"buy" recommendation on Sophos, citing specifically "Facebook foibles" helping drive Sophos' Q4

trading.

"GDPR is currently generating sales momentum as the Facebook debacle reignites uncertainty

of what constitutes 'personal data'," write Stifel's analysts, adding that they think Sophos'

year-end is looking like it will be "in line".

"We sense that GDPR coupled with the new products may create a degree of 'pull-forward'

effect," Stifel analysts say.

Though we should mention that Northern Trust Capital Markets' analysts initiated a "trading

sell" on Sophos last week, citing high leverage and its acquisitive strategy.

(Kit Rees)

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MIDDAY SNAPSHOT: RISK OFF, RISK ON... (1202 GMT)

After a broad sell-off at the open it looks like investor appetite for risk has returned

somewhat: the STOXX 600 is down only 0.4 percent - having lost as much as 1.3 percent at its

daily low, while futures in the U.S. point to a mild bounce, and in the UK the FTSE has popped

up into positive ground.

The move up from lows is due mostly to a rush into defensive plays such as utilities, while

the pharma sector is getting a big lift after Japan's largest drugmaker Takeda said it was

considering a bid for Shire (Xetra: S7E.DE - news) , sending shares in the London-listed firm soaring as much as 25

percent.

Here's your snapshot:

(Danilo Masoni)

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ARTICLE 50 ONE YEAR ON: UK MARKET HEALTH CHECK-UP (1148 GMT)

Tomorrow marks a year since the UK government triggered Article 50, thus setting in motion

arduous negotiations ahead of Britain's exit from the European Union.

In the 15 months since the Brexit vote, UK equities have suffered significant outflows as

domestic and international investors alike shunned the market and shifted their cash elsewhere,

fearing the consequences of the divorce and noting a deteriorating economic environment.

Here are some figures on the UK market since June 23 2016, courtesy of Hargreaves Lansdown (Frankfurt: DMB.F - news)

analysts:

- UK equity funds have seen outflows of 6.7 billion pounds, compared to 8.2 bln into global

equity funds and 19.3 bln into fixed income funds

- General retailers listed in the UK have lost around 10.5 billion pounds in market

capitalisation

- Carpetright (Other OTC: CGHXF - news) , Mothercare (Other OTC: MHCRF - news) , and Debenhams (Frankfurt: D2T.F - news) have been the worst hit

- Small-caps have been the best-performing part of the market

- Returns from the FTSE all-share have been far smaller than other benchmarks' in sterling

terms, partly due to the currency's devaluation (see chart below)

- But even in local currency the returns have been relatively weak

Rowan Dartington technical analyst Guy Stephens reckons UK stocks could catch up, though:

"Given the meteoric rise of some overseas markets coupled with trade war uncertainty, it could

be cause to reconsider the UK as a worthwhile investment opportunity."

You can read our story on the investors daring to buy into UK retail here:

(Helen Reid)

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"TRUMP IS A STOCKS GUY" (1110 GMT)

President Donald Trump has been dubbed the "U.S. stock market cheerleader-in-chief" for his

enthusiastic tweets celebrating the rise of Wall Street indexes under his tenure.

He has been less vocal since the February correction. Some commentators say Trump wants to

avoid any blame for the recent market declines, especially those linked to his policies or the

U.S. trade spat with China.

Rabobank market economist Stefan Koopman noted this tweet last Monday:

"He stopped tweeting about the stock market right when #MAGA! ("Make American Great Again")

conflicted with the market’s perception of what’s actually great, but Monday’s rally did prompt

a modest 'Great news!' tweet", Koopman noted in his daily market commentary.

Koopman said "Trump is a stocks guy" who cares about the Dow and the S&P and he "might get

cold feet" if his agenda triggers a long-term sell-off.

"Admittedly, it's highly speculative or possibly wishful thinking, but the armchair

psychologist in me says that the explicit and volatile moves in equities might just be enough to

convince Trump to keep his composure in the negotiations with China, even as North Korea is now

getting into the mix again."

Here's a nice chart designed by Reuters' Ritvik Carvalho last week showing the frequency of

Trump's tweets touting the stock market upswing and the radio silence which followed the

February correction.

You can read his story here:

(Julien Ponthus)

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POSITIVE THINKING: BATTERED EUROPEAN SHARES NOW "VERY ATTRACTIVE" (1001 GMT)

Always look on the bright side of life! Sure, European shares are down over 6 percent since

the beginning of the year but that makes some of them look like a bargain for investors

determined to invest in the stock market despite the current turbulence.

"Post the recent moves, Europe's absolute valuations are looking very attractive", reckons

Morgan Stanley (Xetra: 885836 - news) in a strategy note this morning.

The broker notes that stocks on the old continent have hit a number of thresholds which

could make them look cheap in the eyes of stock pickers looking to "buy the dip".

Among European shares, Morgan Stanley is looking for opportunities among defensive stocks

and in particular, those which have seen analysts positively revise their earnings per share.

The broker identified Ipsen, Novartis (IOB: 0QLR.IL - news) , Anheuser-Busch Inbev and Enel (LSE: 0NRE.L - news) in this group.

Stocks with strong balance sheets and high dividend yields are also seen as a good option. A

few examples? Among financials, MS likes Aviva (Other OTC: AIVAF - news) , Caixabank (Amsterdam: CB6.AS - news) , Danske Bank (LSE: 0NVC.L - news) or BNP Paribas (LSE: 0HB5.L - news) , Orange (LSE: 0OQV.L - news) or

Deutsche Telekom (IOB: 0MPH.IL - news) for telecoms and Enel and Total (LSE: 524773.L - news) for energy.

It's also worth "screening for cheap UK stocks with high global exposure", strategists add,

naming among other stocks British American Tobacco (Kuala Lumpur: 4162.KL - news) , Shire or Randgold.

Here's a chart showing how European shares are valued under their long-term average:

(Thyagaraju Adinarayan and Julien Ponthus)

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EUROPEAN CHIPMAKERS HIT BY SELF-DRIVING CAR WORRIES (0834 GMT)

Top fallers among European tech stocks are chipmakers, from ams to STMicro

and Infineon (Xetra: 623100 - news) , all down between 4 and 9 percent. For IG analyst Alexandre Baradez

that's ultimately linked to growing worries over self-driving cars.

"As concerns semiconductors, the fear comes from the environment of bad news that is

accumulating around the functioning and testing of autonomous vehicles, with a particular focus

on the bad news on Tesla: investigation by the NTSB of the crash and the delay in deliveries of

vehicles and the recent downgrade note from Moody's," he says.

More broadly on tech, Baradez also raises the issue of stretched valuations.

"The market is realizing that a stock like Facebook can lose more than 20 percent in a few

days, which throws up questions over the valuation of other big tech names and their sensitivity

to a potential scandal," he says.

On a price to earnings basis, both European and U.S. technology stocks are valued around

their highest level in more than a decade, as you can see in this chart.

(Tom Pfeiffer and Danilo Masoni)

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OPENING SNAPSHOT: EUROPE PAINTED RED (0744 GMT)

European shares have opened down sharply with tech stocks feeling the heat of a sell-off

overnight in their U.S. peers. Although there is no scarcity of negative headlines to explain

the declines in the sector, for UniCredit (EUREX: DE000A163206.EX - news) it's ultimately a matter of high valuations.

"A recent stream of negative news has acted as a trigger for the sell-off in the U.S. tech

sector. But the underlying cause ... is extremely stretched valuation metrics that have

generated a sizeable misalignment with fundamentals, mostly for the big technology stocks," said

UniCredit analysts in a note. "It should not come as a surprise that some negative news would

precipitate a sell-off."

Here's your opening snapshot:

(Danilo Masoni)

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US TECH SELL-OFF SENDS EUROPE'S STOCK FUTURES DOWN 1 PCT (0605 GMT)

It looks that European shares are going to give up most of the gains seen yesterday after

fresh selling pressure hit U.S. tech stocks overnight, offsetting ebbing trade war fears.

Futures on main regional stock benchmarks were trading down around 1 percent.

(Danilo Masoni)

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EARLY MORNING HEADLINE ROUND-UP (0555 GMT)

Nestle (Swiss: NESN.VX - news) , other food groups likely suitors for GSK's Horlicks - sources

Ex-Deutsche Telekom boss favourite to be next Airbus chairman-report

British VW drivers start "dieselgate" claim in High Court

EU regulators look at Volkswagen (IOB: 0P6N.IL - news) 's Luxembourg tax deals -Bloomberg

Telecom Italia (Amsterdam: TI6.AS - news) notifies watchdog on network separation

Italy's watchdog looking into Telecom Italia board resignations -sources

Sky (Frankfurt: 893517 - news) 's Italy unit close to broadband deal with Open Fiber - sources

Louis Vuitton expands French manufacturing to meet handbag demand

Ryanair's Portugal cabin crews to go ahead with Easter strikes

Casino says sale process of Via Varejo (Sao Paolo: R2:VVAR11S.SA - news) unit continuing

Unions at VW's Skoda Auto say latest wage proposal by carmaker not satisfactory

Norsk Hydro (LSE: NHY.L - news) to start shutdown of half Alunorte capacity by mid-April -sources

UK's Capita (LSE: CPI.L - news) to set out new strategy, rights issue on April 26 - source

MEDIA-HSBC froze account linked to alleged $500 million Angolan fraud - FT

Data, mobile money main revenue drivers for Orange in Africa

UAE healthcare provider NMC (Brussels: BE0035966762.BR - news) raises $2 billion loan - sources

Eni (LSE: 0N9S.L - news) sees no problems in Russian gas supply to Italy from political tensions

Metro (Dusseldorf: 62M.DU - news) says to seek new approach to wage deal blockage at Real

Sainsbury (Amsterdam: SJ6.AS - news) 's needs year's notice to act on post-Brexit trade deal

Repsol (Amsterdam: RP6.AS - news) , Premier (BSE: 500540.BO - news) win oil block in last Mexico auction before election

(Danilo Masoni)

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MORNING CALL: EUROPE SEEN LOWER AGAIN (0522 GMT)

European shares are expected to open lower today following a late reversal on Wall Street

overnight when tech stocks came under renewed selling pressure, led lower by shares including

Facebook and Alphabet (Xetra: ABEA.DE - news) , while Twitter (Frankfurt: A1W6XZ - news) tumbled after short-seller Citron Research called the stock

"most vulnerable" to privacy regulations.

While shares fell in Asia too, here are your opening calls for Europe, courtesy of CMC (Shanghai: 600327.SS - news)

Markets:

FTSE100 is expected to open 50 points lower at 6,949

DAX is expected to open 120 points lower at 11,850

CAC40 is expected to open 65 points lower at 5,060

(Danilo Masoni)

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