MORNING BID EUROPE-Post-Brexit leadership manoeuvres

* A look at the day ahead from European Economics and Politics Editor Mark John and Nigel Stephenson, specialist editor, EMEA markets. The views expressed are their own.

LONDON, July 4 (Reuters) - A day of manoeuvring for leadership of Britain's two main parties. On the ruling Conservative side, Home Secretary Theresa May is emerging as a front-runner but is vulnerable to the charge that she was officially on the Remain side of the argument. That will be one of the arguments of Andrea Leadsom, one of the main Leave protagonists, when she sets out her pitch at 1000 GMT. The first of a handful of votes that will chisel the field down to two rival candidates is tomorrow. Labour parliamentarians meanwhile have their weekly meeting later today amid reports of a compromise that will allow disputed leader Jeremy Corbyn to stay on in some kind of symbolic chairman-type role while power is transferred to someone else. It's not sure at this stage that he will buy that.

German politicians calling for less Europe is pretty rare, yet that is what Finance Minister Wolfgang Schaeuble and Economy Minister Sigmar Gabriel did over the weekend. Schaeuble went as far as saying member states should take an "intergovernmental approach" to solving problems, ie cutting out Brussels. Gabriel called for the ranks of EU Commissioners to be streamlined and for Brussels to reconsider how it allocates its budget. Gabriel also asked out loud whether the EU should still put around 40 percent of funds towards agriculture, a question that won't go down well in Paris. A taste of future disputes to come?

Angela Merkel and Italy's Matteo Renzi join Francois Hollande in Paris for a conference on the Balkans. The official agenda is economic development and youth but Serbian PM Aleksandar Vucic may use the meeting to express his concerns that Brexit will blow his country's accession off course.

MARKETS AT 0645 GMT

The post-Brexit recovery in share prices looks to be intact while sterling is up a shade against the dollar and the euro. Commodity prices are up. Australian shares rose and the Aussie dollar is slightly firmer against its U.S (Other OTC: UBGXF - news) . counterpart after an inconclusive election. U.S. markets are closed which may limit action elsewhere, especially with Fed minutes and U.S. jobs data due later this week. Hopes of central bank stimulus helped offset Brexit worries and support markets last week, but JPMorgan (LSE: JPIU.L - news) strategists do not expect the recovery to last for much longer, even though a weak pound should allow UK'S FTSE to continue to outperform.

Deutsche Bank (LSE: 0H7D.L - news) is indicated 1.8 percent higher after its CEO said Germany's largest bank will not need a capital increase for the foreseeable future. Italy is in talks with the European Commission to devise a plan to recapitalise its lenders with public money limiting losses for bank investors, an EU executive spokeswoman said on Sunday; Sabadell chairman said a sharp fall in Spanish banks' share values after Brexit vote severely hampers any potential merger activity in the sector.

The dollar is flat against a basket of major currencies. Britain's pound is up 0.2 percent at $1.3289, having risen as far as $1.3306. Data late on Friday showed short bets against sterling fell in the latest week. The yen is down 0.21 percent at 102.64. The Aussie and NZ dollars are both stronger on higher commodity prices. Euro zone bond yields broadly higher after recent rally took yields to record lows. Watching for any impact from Italian bank recapitalisation plan. Brent crude is up 33 cents a barrel. U.S. output is expected to increase but so is demand from Asia. Copper is up for its sixth consecutive day, at a two-month high of $4,950 a tonne as traders look for more stimulus from top consumer China. Gold (Other OTC: GDCWF - news) is up 0.8 percent at $1,352 an ounce, not far off its June 24 peak of $1,358.

Upcoming date/events/themes for market reports on Monday:

- Turkey June inflation

- UK June construction PMI

- EZ May PPI

- Irish June consumer confidence

- US markets closed for Independence Day

- Bank of Canada business outlook and loan survey (Editing by Sonya Hepinstall)