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

 

IS BREXIT FATIGUE GETTING TO YOU (1126 GMT)

You'd be forgiven because clearly, many analysts are beginning to suffer from Brexit fatigue and it's sure starting to permeate through some notes after Theresa May won the leadership challenged thrown to her by disgruntled Conservative MPs.

"Theresa May, blah, sterling, blah, Brexit, blah blah," was surely a way for Neil Wilson from Markets.com to get some frustration about the endless divorce process out of his system.

"Nothing has changed after a truly Pyrrhic victory for the PM. She cannot get her deal through Parliament, and cannot govern essentially. The question is how long she tease it out," he added.

Rabobank's Michael Every also had some steam to let off, writing:

"At one point yesterday I turned to the TV screen here on the trading floor and saw a large Xmas tree outside the door of Number 10 Downing Street. My first thought was that it would make a better leader than some of the other deadwood: strong, stable, and pine-y fresh to boot."

Paul Donovan, who has been describing the Brexit saga as a "tedious" process for a while now, took the view that "probably 99% of the UK population just don't care anymore".

Here's a way people who suffer from Brexit grief (so that wouldn't include pro-Brexit voters) might measure how they're coping:

 

(Julien Ponthus and Helen Reid)

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UK MID- AND SMALL-CAPS NOT AS UNPOPULAR AS EVERYONE THINKS (1044 GMT)

The FTSE 100 and FTSE 250 have both given back their early gains, with the former flat and the latter down 0.4 percent now, as you can see below.

Given the widespread negative sentiment on the domestic smaller parts of the UK market in particular, fund flows monitor Morningstar find a surprising fact: in aggregate since the start of June 2016 UK mid-cap and small-cap equity funds have actually seen inflows.

"While the trend away from UK equities is clear, it is important to note that these figures have been exacerbated by fund-specific issues on a small number of the biggest funds in the category that led to significant redemptions from a loss of investor confidence," writes Morningstar in a report.

They highlight LF Woodford Equity Income, Invesco Income, Invesco High Income, Invesco Strategic Income, as funds which have lost a cumulative 24.8 billion euros over the period from June 1 2016 to end-October 2018.

Factoring these out, "the picture is less clear about the extent of the negative sentiment towards UK equities," the fund flows monitor writes.

(Helen Reid)

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OPENING SNAPSHOT: ITALY, BANKS RALLY LIFTS EUROPE, UK MARKET SHRUGS (0838 GMT)

Looks like Europe is set for a third straight day of gains, with Italy leading the way after its government committed to a lower budget deficit target, bending to the European Union - and the market's - wishes.

The FTSE MIB is up 1.1 percent with Italy's banks index up 3.1 percent and set for its best day since Nov 26 when Rome first signalled a cut to its budget deficit goal.

Intesa Sanpaolo, UniCredit, and UBI Banca are among top European gainers.

Meanwhile UK markets are shrugging off PM May's no confidence vote win, with the FTSE 100 up just 0.2 percent - lagging European peers - and the FTSE 250 flat.

In single stock movers, German retailer Metro is tumbling 8 percent, the worst STOXX 600 faller, after it warned poor performance in Russia would hurt profits.

G4S meanwhile is up 9 percent, among top STOXX gainers, after it said it was reviewing options to separate its cash solutions business. TUI is also climbing 6.4 percent after strong results which traders said were "reassuring" particularly after rival Thomas Cook's poor performance.

Deutsche Bank and Commerzbank are rising again, up 3.9 and 2.9 percent respectively in a second day of gains after a report Germany is seeking to ease a potential merger between the two lenders.

While it's been a relatively strong start for the European market it remains to be seen whether it will hold on to gains - the STOXX 50 index has already trimmed gains to fall back to flat.

(Helen Reid)

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WHAT'S ON OUR RADAR BEFORE THE OPEN (0746 GMT)

After staging their best two-day rally since July 2016 European shares are set for a softer open with easing trade worries and signs of a possible compromise over Italy's budget tempered by ongoing Brexit uncertainty as yesterday's confidence vote indicated that PM May still lacks the numbers to pass her divorce deal through a divided parliament.

FTSE futures are little changed, while euro zone futures are trading up around 0.3 percent.

While the broader market direction is likely to be driven by macro factors with investors also keeping an eye on today's ECB meeting for any indication over future rate hike, there is some corporate news that could liven up the session.

On the watchlist are Ericsson and Nokia after a report said SoftBank plans to replace equipment from China's Huawei with hardware from the two European vendors. Shares in both Ericsson and Nokia have outperformed the market so far this year, gaining 55 and 33 percent respectively as investors warm up to prospects of 5G roll-outs across the globe.

Spanish builder Sacyr and Salini Impregilo of Italy may come under pressure after an arbitration tribunal ordered the Panama canal construction consortium they are part of to pay back nearly $848 million. Shares in GAM Holding could fall 5-10 percent after the Swiss asset manager posted a big loss and omitted dividend, while German wholesaler Metro is also seen hit after predicting a fall in profits due to its struggling Russia business.

The world's top security company, G4S, is seen rising 5-7 percent after it said it was reviewing options to separate its cash solutions business.

Other stock movers: Serco turns corner with revenue and profit growth seen in 2019, G4S reviews options to separate cash solutions business, TUI Group confident on earnings growth after hotels, cruises lift 2018, Technipfmc sees 2019 subsea revenue $5.45.7 bln

(Danilo Masoni)

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MAY DAY: HAS ANYTHING CHANGED (0715 GMT)

The PM survived the confidence vote last night, but it wasn't quite the firm affirmation she may have needed as she heads to Brussels today to seek reassurances on her Brexit deal. Does the result really change anything

Goldman's Brexit base case is broadly the same following the vote and Credit Suisse agrees - it's keeping its neutral stance on equities and reckons the result reinforces expectations for a soft Brexit.

While the basic constraints on the specifics of the deal - the limited scope for renegotiation with the EU - haven't gone away, Goldman analysts say the victory may embolden her attempt to resist opposition in her own party to compromises in the Withdrawal Agreement.

But the political instability that has punished UK stocks this year - the blue chips and midcap index are both on track for their worst year since 2008 - hasn't disappeared with the vote. On Tuesday, BlackRock suggested that Chinese equities may even be a better bet given the country's tortured divorce from the EU. urn:newsml:reuters.com:*:nL1N1YG0WJ

Investors may not be rushing back into the market in droves.

The FTSE 100's exposure to international markets, with 70% of its income from abroad, may stand it in better stead to withstand some of the jitters. But the market may move on pretty quickly, with investors choosing instead to focus on easing U.S.-China trade tensions.

Take the pound: after bouncing off 20-month lows ahead of the vote, it's now down slightly this morning, a sign that traders are nervously looking ahead to the Brexit vote in January.

(Josephine Mason)

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HEADLINES ROUNDUP: EYES ON ERICSSON, NOKIA, PANAMA CANAL BUILDERS (0553 GMT)

While the broader market direction is likely to be driven by macro factors (Brexit/trade and Italy budget), with investors also keeping an eye on today's ECB meeting, there is some corporate news that could liven up the session.

On the watchlist are Ericsson ERICb.ST and Nokia NOKIA.HE after a report said SoftBank plans to replace equipment from China's Huawei with hardware from the two European vendors.

Sacyr and Salini Impregilo may come under pressure after an arbitration tribunal ordered the Panama canal construction consortium they are part of to pay back nearly $848 million. A big loss at no dividend at GAM Holding  could also weigh on the Swiss asset manager.

Here's your headlines round up:

* Japan's SoftBank to shun Huawei in favour of Ericsson, Nokia equipment -Nikkei 

* MEDIA-Huawei pledges to do 'anything' to soothe security concerns- FT 

* Tribunal orders Panama canal construction group to pay back $848 mln 

* Swiss asset manager GAM sees big 2018 loss, omits dividend urn:newsml:reuters.com:*:nL8N1YI0V8

* Australian regulator casts doubt on tie-up between Vodafone's local arm and internet provider TPG 

* J&J says its psoriasis drug superior to Novartis treatment in study urn:newsml:reuters.com:*:nL3N1YH4C3

* Saipem says Shamoon variant crippled hundreds of computers urn:newsml:reuters.com:*:nL1N1YH1NO

* Nissan to boost external board seats, set up compensation committee -source urn:newsml:reuters.com:*:nL8N1YH756

* ChargePoint to equip Daimler dealers with electric car chargers urn:newsml:reuters.com:*:nL8N1YG37B

* U.S. tribunal to review ruling on Qualcomm request for iPhone ban urn:newsml:reuters.com:*:nL1N1YH27F

(Danilo Masoni)

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FTSE SEEN FLAT AS MAY SURVIVES CONFIDENCE VOTE (0620 GMT)

European shares are expected to open higher this morning on the back of easing Sino-US trade tensions and hopes of a compromise over Italy's contested budget, although the UK's FTSE is set to lag behind as uncertainty over Brexit continues.

British Prime Minister Theresa May survived yesterday's confidence vote by the Conservative Party, but a mutiny by more than a third of her lawmakers indicated parliament was heading towards deadlock over the country's divorce from the European Union. urn:newsml:reuters.com:*:nL8N1YH15G

"The 117 dissent votes coupled with the DUP and the opposition, add up to a clear majority against May’s deal and if her deal fails in Parliament eventually, a no-confidence motion in Parliament remains probable outcome," says Stephen Innes, Head of Trading APAC at OANDA.

Financial spreadbetters IG expect London's FTSE to open 1 point higher at 6,881, Frankfurt's DAX to open 33 points higher at 10,963 and Paris' CAC to open 10 points higher at 4,919.

(Danilo Masoni)

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(Reporting by Danilo Masoni) ((Danilo.Masoni@TR.com; +39-02-66129734; Reuters Messaging: danilo.masoni.thomsonreuters.com@reuters.net; On Twitter https://twitter.com/damasoni))