MORNING BID EUROPE-Brexit sullies UK corporate mood

* A look at the day ahead from European Economics and Politics Editor Mark John and EMEA Markets Editor Mike Dolan. The views expressed are their own.

LONDON, July 5 (Reuters) - First (Other OTC: FSTC - news) indications of the post-Brexit mood in the British economy are starting to trickle through. A survey conducted by YouGov (LSE: YOU.L - news) and the Centre for Economics and Business Research showed a sharp fall in confidence among British businesses after the vote, with the number of businesses pessimistic about the economy over the next twelve months jumping to 49 percent from 25 percent before the vote outcome. Standard Life (LSE: SL.L - news) 's fund arm said last night it was suspending trading in its UK real estate fund after an increase in redemption requests. Today's Markit Services PMI for June will include a small number of responses given after referendum, while John Lewis' weekly department store and supermarket sales figures may give an added flavour of the mood (although the sales are on, so they may not be representative). Today the Bank of England is expected to loosen capital requirements for banks as part of its response to the Brexit shock, while its six-monthly Financial Stability Report will include an assessment of market conditions at 0930 GMT. A news conference with Governor Mark Carney will follow.

The process of whittling down candidates in the race to become next leader of the Conservative party, and therefore prime minister, starts today. The two front-runners, Home Secretary Theresa May, and junior energy minister Andrea Leadsom, have taken contrary positions on whether the rights of EU citizens already living in the UK should be guaranteed. May, who was a largely silent member of the Remain camp, says they shouldn't be; ardent Leave campaigner Leadsom says they should. Paradoxical? No doubt all part of their efforts to extend their appeal across the broad church of Conservative party members who will ultimately pick the leader.

Austrian voters should know today the date of the new presidential election runoff, ordered by the Constitutional Court after it found breaches in the electoral code in the first one in May. That gives Norbert Hofer of the anti-immigration and anti-EU Freedom Party (FPO) a new chance to become the first far-right head of state in the EU after he fell just 31,000 votes short the first go around. The new vote will be an early test of how other Europeans are reacting to the Brexit vote -- does it embolden other eurosceptics or give them pause for thought?

MARKETS AT 0645 GMT

Complicated by last week's turn of the quarter/half year and Monday's U.S (Other OTC: UBGXF - news) . holiday, the real post-Brexit flows may only start to come through from here and markets are scouring the horizon for signs of fallout. The signals from UK housing and construction are worrying, with Standard Life Investments suspending trading in its UK real estate funds due to heavy redemptions since the Brexit vote and the June UK construction PMI already deep in contractionary territory. The survey period for the June services PMIs released later today also includes three days after the Brexit vote and will be watched closely too. This expected drumbeat of poor sentiment will be matched off the expected policy response, with a BoE (Shenzhen: 200725.SZ - news) rate cut at least in the works and UK finance minister Osborne flagging a corporate tax cut. Today's Financial Stability Committee report may well add to that by mooting some easing in its counter-cyclical capital buffers for the banks, which along with the housing sector have been most hit over the past two weeks. The FTSE100 rebound has been squarely on the back of non-sterling earnings fillip, but European banking indices at large are still down almost 20 pct since the Brexit vote - with growing concerns about Italian banks and Rome's attempts to use the vote to recapitalize the sector have unnerved investors, including those in Italian sovereign debt. The ECB has asked Monte dei Paschi (Milan: BMPS.MI - news) to slash its bad debts. And so, as July trading finally gets underway and UK politics remains inwardly focused, global equities are ticking back lower again - with Tokyo, HK and many regional Asia bourses down overnight and European and US stock futures in the red too. Sterling is testing $1.32 again and Japan's yen is rising too. Government bond yields that have been crushed again since the Brexit vote continue to probe lower. The big level to watch today is 10-year U.S. Treasury yields right on the cusp of the 1.381 pct record low from 2012 - below that is uncharted.

Upcoming events/data/ themes for market reports on Tuesday:

* Global services PMIS

* Europe corp events: RyanAir traffic figures, housebuilder Persimmon (Other OTC: PSMMF - news) trading update, St. Mowden Properties results

* EZ May retail sales

* BoE's Financial Stability Report

* Ireland June jobless

* Sweden May industrial production

* US May durable goods orders

* NY Fed chief Dudley speaks in Binghampton (Editing by Anna Willard)