* Euro STOXX gives up gains, down 0.1 pct
* EuroSTOXX 50 volatility gauge falls back
* Wall Street bounced back
Oct 12 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net
CLOSING SNAPSHOT: A "ROTTEN" TREND IN EUROPE (1630 GMT)
The outperformance of U.S. stocks could not have been more blatant today, with all the main bourses in Europe closing in the red, while Wall Street was comfortably staging a comeback.
In a Shakespearian rant, a trader complained about a "rotten" trend cursing European stocks, which have been underperforming since the beginning of 2018.
On this note, here's your closing snapshot:
(Julien Ponthus)
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IS CANNABIS THE NEW BLOCKCHAIN? (1427 GMT)
Remember a time not so long ago when any mention of the blockchain technology would give a boost to any faltering stock?
It was the age of foolishness, it was the epoch of belief as one could say when remembering how beverage maker Long Island Iced Tea's shares jumped nearly 300 percent when it rebranded itself Long Blockchain Corp.
Tapping the cryptocurrencies frenzy was the total flavour of the month back in December last year, but as you can see below, that business trend didn't age well.
One could be tempted to see a similarity between the blockchain buzz and cannabis, which seems to have the ability to give a shot in the arm to any stock it's associated with.
While pure players, such as Canadian cannabis company Tilray TLRY.O , which is up about 500 percent since its market debut in July, are on a ride, there's potentially quite a lot of action for newcomers too.
Consider Walmart (NYSE:WMT) whose shares jumped after its Canadian unit said it was considering selling cannabis-based products, or speculation that Marlboro maker Altria (NYSE:MO) might buy a stake in cannabis producer Aphria.
Coca-Cola (NYSE:KO) also made big headlines with its eagerness to get a slice of the fast-growing marijuana drinks market and its possible interest for Canada's Aurora Cannabis ACB.TO to develop drinks infused with cannabidiol (CBD), the non-psychoactive chemical found in marijuana.
There seems to be a stampede on that market with beer makers Constellation Brands (NYSE:STZ), Molson Coors and Heineken all playing in the market for cannabis products.
Time will tell whether this market frenzy goes up in smoke but in the meantime, here's an interesting analogy shared by GAM fund manager Paul McNamara:
(Julien Ponthus)
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WHAT'S IN THE BALANCE (SHEET): IS EU LEVERAGE TOO HIGH? (1354 GMT)
In times of stress it makes sense to take a look at how vulnerable companies are to a sustained drawdown.
The good news is financial leverage isn't really a problem in Europe, according to Goldman Sachs (NYSE:GS) analysts.
That's in contrast with the U.S. where leverage levels outside of tech are quite high (see chart below).
And highly leveraged European stocks may not be as vulnerable as many fear. Bond yields rising isn't actually that much of a risk for more levered stocks, GS says - "the key driver is growth, not rates".
Indeed they find, perhaps counter-intuitively, that stocks with weaker balance sheets actually outperformed stocks with stronger balance sheets in the recent bond selloff.
While they're trading at an extreme discount, GS stops short of recommending investors buy weak balance sheet stocks. "We do see these stocks as vulnerable to modestly rising bond yields and slowing economic growth."
In GS' weak balance sheet basket are stocks including BMW, Volkswagen (DE:VOWG_p), Glencore (LON:GLEN), Sanofi (PA:SASY), GSK, Astrazeneca (LON:AZN), Airbus, Atlantia, Leonardo, Tullow Oil (LON:TLW), BAT (LON:BATS), Tesco (LON:TSCO), Ericsson (BS:ERICAs), and RWE.
Strong balance sheet stocks include Continental, Ems-Chemie, Tenaris, Sika, ABF, Howden Joinery, Rightmove, Neste.
(Helen Reid)
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THE DIFFERENCE BETWEEN BITCOIN AND GOLD (1303 GMT)
The case for using cryptocurrencies and bitcoin in particular as a safe haven during market crashes or to hedge an equity portfolio has been eroded during the last few days. The king of crypto lost about 5 percent during the storm while gold rose nearly three percent.
Talking about yesterday's market rout, Deutsche Bank's Jim Reid noted that "Gold had its best day since Brexit, gaining +2.42% as investors sought safe-havens".
You can clearly see below how gold came to the rescue while the S&P 500 and bitcoin sank:
Needless to say, critics of the cryptocurrency indulged in a few bursts of sarcasm on social media:
(Julien Ponthus)
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WHICH DO YOU WANT FIRST: THE GOOD OR THE BAD NEWS? (1205 GMT)
Morgan Stanley's equity strategists Andrew Sheets and team offer their takeaways from the past few days - and manage to find a bright side amid the gloom.
First, the bad news: "The 'rolling bear market' has finally reached the markets' most popular position: growth."
The good news? Tactical indicators are looking more positive, MS says, and many markets have already de-rated - suggesting there's not much room for more.
Sheets et al also highlight another positive for investors in Europe:
Many believed that value and Europe would both underperform in a down market due to their high "beta", or correlation to the market, but the recent market moves - where value outperformed even in a sharp selloff - fly in the face of that belief.
"We disagree, and take recent price action as a silver lining," write Sheets and team.
The number of 3-sigma - or 3 standard deviation - moves in global stock indices is on course to be its highest since the crisis this year, they calculate, adding "liquidity remains poor." So one thing's certain, bigger moves are here to stay.
(Helen Reid)
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TEMPTED BY FRENCH PRIVATISATIONS? BE "FLEXIBLE AND PATIENT" (1126 GMT)
Law firm Davis Polk has issued a colourful memo for clients tempted to get a piece of the action in the upcoming privatisations planned by France's Macron government.
As a reminder, French lawmakers are currently reviewing a bill to allow several large sales of state assets, including airport operator ADP ADP.PA , energy group Engie ENGIE.PA and the national lottery FDJ, in order to finance a 10 billion euro innovation fund.
Investors who lack visibility in France should prepare carefully given "the extreme sensitivity of the assets concerned" and might consider involving French players to soothe concerns, Davis Polk says.
"Be patient and flexible" is one of the tips given, which include words of caution such as "the privatisation processes can be relatively long and can be punctuated by unforeseen events".
The formalism of the process, which will mostly be done in French, can be "destabilising" and investors are warned that "an aggressive tax structure, even if legal, is likely not to be viewed favourably".
Here's a link to the memo: https:// and here is a recent blog post: French privatisations: How's Safran (PA:SAF) as a taster? meet the locals:
(Julien Ponthus)
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MORE THAN HALF THE MSCI WORLD IS IN A BEAR MARKET (1041 GMT)
BAML strategists have the scores on the doors in their flow show piece - and it doesn't look good.
* 1557 global stocks out of 2767 - or 56% of the MSCI ACWI - are in a bear market (>20% decline)
* U.S. Treasuries are on course for 3rd largest annual loss in 40 years
* 16 of 21 commodity markets are in correction (>10% price decline)
BAML's indicator of breadth of the market, which measures the percentage of global stocks trading below their 200-day moving average and 50-day moving average, triggered a "buy" signal as the ratio hit 89% (see below).
But the strategists don't think it's time to buy back into stocks yet, saying "we remain fundamentally bearish on peak policy & peak profits... we respect technicals and seasonality but will sell the rally".
(Helen Reid)
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A HALF-HEARTED BOUNCE REVEALS LINGERING JITTERS (1032 GMT)
Today's bounce looked strong at first but investors seemed to curb their enthusiasm pretty swiftly, leaving indexes at about half their opening gains. The Euro STOXX .STOXXE is up 0.3 percent while the DAX .GDAXI is up 0.5 percent and the FTSE 100 .FTSE 0.7 percent.
There's clearly still some anxiety in the air, and investors are also likely sitting on their hands ahead of results from the big U.S. banks in a couple of hours.
(Helen Reid)
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WHAT'S ON OUR RADAR: A BOUNCEBACK TO END A TURBULENT WEEK (0648 GMT)
A rebound in Asian shares (which excluded China) was set to spread to Europe on Friday with futures extending gains up 0.7 to 1.3 percent across the main euro zone and UK benchmarks. If the bounce is sustained the euro zone STOXX could make up some of this week's heavy losses which have left it on track for its worst week since the February selloff.
Positive comments from the IMF could help cement Europe's bounceback: the head of the IMF's European unit said the direct impact of potential U.S. car tariffs on Europe would be relatively limited, though they could still affect investor sentiment.
Investors' eyes will be on U.S. banks today kicking off the Q3 earnings season, a crucial test for both U.S. and European markets which have shown how flimsy they can be in recent days.
Europe's big brewers ABInBev and Carlsberg (CO:CARLa) could be moved by a source-based Reuters report that India's antitrust watchdog raided their offices in at least two Indian cities as part of an investigation of price-fixing allegations.
In the UK results from more asset managers are likely to move shares after Jupiter and Hargreaves Lansdown (LON:HRGV) disappointed on Thursday. Both Man Group's and Ashmore's funds under management rose thanks to market gains and net inflows.
In other company news or stock movers:
Atalaya Mining to explore strategic options Direct buys Glasgow department store Frasers for 95 mln stg Group Q3 assets up 0.4 pct on inflows buoy Ashmore Q1 assets, up 3 pct to $76.4 bln Reid)
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EUROPEAN FUTURES UP STRONGLY (0622 GMT)
Futures have opened up strongly across European benchmarks, with the Eurostoxx 50 futures up 0.9 percent, DAX futures up 0.8 percent and FTSE 100 futures up 0.5 percent.
(Helen Reid)
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EARLY MORNING HEADLINES ROUND-UP (0554 GMT)
All eyes will be on Wall Street's banks kicking off the reporting season later on today, but here are the potentially stock-moving headlines so far.
In interesting consequences of the stock selloff, sources say Tencent Music is delaying its $2 billion U.S. IPO. News the Gulf of Mexico's oil output has been cut by 40 percent due to Hurricane Michael is helping support oil prices rebounding after two days of heavy losses.
Lockheed, Rheinmetall to make joint bid to supply German navy helicopters brewers raided by Indian watchdog in price-fixing probe -sources Carige to look at naming investment bank for tie-ups could have around 15 pct of new Alitalia, Italy railways on board Branson halts talks on $1 bln Saudi investment in space ventures seeks to sell Venezuela JV stake to France's Maurel & Prom -sources Gulf of Mexico oil output cut by 40 percent on Hurricane Michael -BSEE Music delays $2 bln U.S. IPO due to weak markets - sources to raise import tariffs on electronic and communication items Buys Stake in Residential Portfolio From SNCF As Part Of Consortium negotiators eye Monday breakthrough, N.Irish party ups the ante Reid)
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MORNING CALL: RESPITE FOR EUROPEAN STOCKS? (0526 GMT)
European stocks look set for a bounce today after a stronger session in Asia overnight. Wall Street extended its slide into a sixth session before that, though, and the Nasdaq flirted with correction territory, down as much as 10.3 percent from its Aug 29 closing record high.
Asian shares found a slightly firmer footing to set course for their first gains in two weeks, but the rout continued in Shanghai where shares hit lows last seen in 2014. euro zone's STOXX is currently set for its worst week since February, but that may change if the bounce proves material.
Spreadbetters expect London's FTSE to open 27 points higher at 7,034, Frankfurt's DAX to open 110 points higher at 11,649 and Paris' CAC to open 53 points higher at 5,160.
(Helen Reid)
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