* STOXX 600 down 0.1 pct
* Inditex falls 6 pct after MS cuts to "underweight"
* RTL jumps 5 pct
Aug 29 - 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
U.S. MEXICO DEAL: WHAT DOES IT MEAN FOR AUTOS STOCKS? (1100 GMT)
One key aspect of the U.S.-Mexico deal - which could become a broad NAFTA deal if agreement with Canada is reached - is over the autos sector, where details of the agreement have emerged and analysts say Mexico has actually agreed to rules of origin much closer to the U.S. position.
The proposed deal would allow Trump to impose punitive tariffs of up to 25 percent on imports of Mexican-made cars and parts above certain volumes, auto executives and sources told Reuters. could be part of the reason why Europe's autos stocks .SXAP - including Volkswagen (DE:VOWG_p), BMW, Fiat Chrysler, and Daimler who import vehicles from Mexican manufacturing plants into the U.S. - are falling 0.3 percent today.
The agreement would increase required regional auto content to 75 percent and high-wage (at least $16/hour) content to 40-45 percent, while Mexico's position had been in the 20 percent range for the high-wage share, Goldman Sachs (NYSE:GS) analysts say.
But they add the U.S. sunset clause "appears to have been substantially watered down" as it calls for a review process once every six years that would extend the agreement for 16 years.
That lessens uncertainty compared to the original proposal calling for termination after 5 years unless all parties agreed to extend the agreement.
"Stronger content rules for autos could impact the competitiveness of the sector in the short-term. However, the reduction in uncertainty as a new NAFTA deal is achieved should be positive for investment in the medium-term," say Citi analysts.
"We continue to believe that Canada will eventually get into the U.S.-Mexico agreement in principle as trade talks resume," they add.
Analysts' expectations for European autos' earnings growth have fallen this year as trade disputes multiplied, barely managing a recovery in the recent weeks, as you can see below:
(Helen Reid)
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EUROPEAN STOCKS WILT, INVESTORS EYE SPANISH BANKS' EM EXPOSURE (1021 GMT)
European stocks have given back their early gains and are now down 0.1 percent as caution over trade weighs with Canada still in talks to hammer out a three-region NAFTA deal after the U.S. and Mexico struck an agreement.
The Turkish lira TRY= is sliding again, hitting a two-week low after Finance Minister Albayrak was quoted as saying he does not expect a big risk to the economy or financial system. emerging markets still seen as a key area of stress for investors, Man Group have taken a closer look at euro zone banks' exposure - and see Spain as particularly vulnerable.
"As the Turkey crisis persists and investors worry about contagion in the rest of the emerging markets, we believe the European banking system generally, and Spain especially, could be at risk," say Man Group in their 'Views from the Floor' note.
Spain's exposure to foreign claims from the most vulnerable EM economies is 170 percent of total country bank equity, they add, citing BCA research which counts Argentina, Brazil, Chile, Coloombia, Mexico, South Africa, and Turkey, as the most vulnerable.
Spain's IBEX .IBEX is down 0.7 percent and underperforming today, though that's more down to Inditex ITX.MC which has suffered a downgrade from Morgan Stanley (NYSE:MS) to "underweight" for the first time ever, than it is to do with EM.
(Helen Reid)
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ON THE RADAR AT THE OPEN: VERY CAUTIOUS OPTIMISM (0649 GMT)
European bourses are expected to open roughly flat as very cautious optimism continues to prevail among investors on the trade front.
While we're not far from a two-week high for the STOXX, this is clearly not “irrational exuberance”.
Yes the US/Mexican deal was a relief but an agreement with Canada, let alone China, is far from done. Oh, and there's that political risk in Italy too.
A few significant earnings this morning with RTL above consensus. Pernod Ricard (PA:PERP) reported growth accelerated in 2017-18 but Jefferies believes guidance could be slightly below expectations. oilfield services provider Petrofac (LON:PFC) reported a net loss in the first half, hurt by a more than $200 million expense related to the sale of some oil-producing assets. some speculation about what could be the end game for Italy's Atlantia and its Autostrade unit after the collapse of the Genoa bridge.
Also in France, EDF (PA:EDF) and its nuclear plants seem like they could benefit from the resignation of the environment minister.
Other movers could include Novartis whose unit Alcon is withdrawing a glaucoma stent. small caps, Sinclair Pharma should skyrocket after agreeing to an offer from China's Huadoing. Ponthus)
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A MIXED BAG OF FUTURES (0614 GMT)
The picture is slightly more blurry that one could have expected from spreadbetters. While the CAC 40 futures are rising close to 0.3 percent, other indexes are not faring so well such as the Ibex, down 0.1 percent or the DAX, which is flat.
Here's what it currently looks like:
(Julien Ponthus)
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EUROPE SEEN RISING AT THE OPEN (0632 GMT)
European bourses are expected to rise towards a two-week high at the open with investors on a moderate "risk-on" mood as optimism (or a rather lack of pessimism) on the trade front prevails.
Financial spreadbetters expect London's FTSE to open 22 points up, Frankfurt's DAX to rise 31 points and Paris' CAC 16 points higher.
There were no sparks on Wall Street, which finished flat, and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eked out a rise of 0.26 percent.
(Julien Ponthus)
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https://reut.rs/2MC6oi7 Spain exposure to EM Man Group chart
https://reut.rs/2wnq4fF AUTOS EARNINGS GROWTH AUG 29
https://reut.rs/2LA6ZeM
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