Pound and stocks bouncing up and down!

* European stocks retreat after hitting one-year highs on Tuesday * STOXX 600 -0.1%, FTSE 100 -0.2%, FTSE 250 -0.3%; DAX +0.4% * Tug of war between UK exporters and domestic stocks as last-ditch Brexit talks continue * Roche gains, ASML down after results Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your thoughts on market moves: rm://joice.alves.thomsonreuters.com@reuters.net BREXIT: POUND AND STOCKS BOUNCING UP AND DOWN! (1316 GMT) These are complicated moments in the life of financial journalists: prices move so fast that by the time a story has been updated, prices have reversed, making said story irrelevant. While the day began with cautious pessimism, the last hour or so has seen sterling suddenly jump into positive territory on a RTE report and hopes of a breakthrough and then fall back in the red, courtesy of the DUP saying EU sources were talking “nonsense”. Needless to say, European stocks played the same dance and yoyoed away. “Nail-biting headline drama as the Brexit pendulum swings back and forth… Don’t put those G and T’s away just yet,” SPI Asset Management’s Stephen Innes said earlier in a note as Brexit headlines were pour in. Sterling is now hovering around 0%, perfectly illustrating market sentiment: you know nothing Jon Snow! The white line shows the breakeven point for sterling: (Julien Ponthus and Thyagaraju Adinarayan) ***** TRICK OR TREAT: HOW TO PLAY BREXIT? (0851 GMT) There are headlines flying from left, right and centre on B-R-E-X-I-T and as we fast approach Halloween, also the deadline for the UK to exit EU, here’s how Liberum recommends you to play the Brexit game: ** Treat: deal Sterling rallies and domestic stocks explode – much like last Friday and yesterday when positive noise fuelled big gains. Within domestics, Liberum recommends buying companies with more than 50% exposure to the UK, trades at a significant discount to the last five years and has EPS growth expectations of over 5%. Premier Oil, IP Group, Drax, Clipper Logistics, Speedy Hire , Tesco, among others, meet those criteria. ** Trick: no deal Sterling slumps and stocks with international exposure soar – much like the moves we saw after the Brexit referendum. Companies with more than 40% exposure to international markets, 12-month forward price to earnings ratio well below 5-year average and has EPS growth expectations of over 5% are likely to be your natural picks. Balfour Beatty, Pagegroup, Sophos, Ashtead and B&Q-owner Kingfisher are some of the names making it to the ‘trick’ list. Good luck with your trades! (Thyagaraju Adinarayan) ***** YOU DON’T WANT TO FIND YOURSELF UNDEREXPOSED TO ANY BREXIT DEAL, DO YOU? (0826 GMT) Fair enough, caution and uncertainty have stepped back in after yesterday’s bust of optimism over a possible Brexit breakthrough, but still there is a sense that being too underexposed to assets that could benefit from a deal may not be too wise. Take Barclays strategists, who have just closed their long-held overweight on UK exporters, advising clients to rotate into domestic plays. “While headline risks remain elevated on both fronts (Brexit and trade), we think it is prudent to cut some of our defensive hedges and add to UK domestics,” they said. “In the case of a Brexit deal, banks, housebuilders, retail, travel & leisure and real estate could benefit the most,” they add. The chart below shows how London-listed companies that make their cash at home, some of the world’s most unloved stocks in recent years, have outperformed their exporter peers and the FTSE 100 over the past week amid fresh optimism about Brexit. (Danilo Masoni) ***** OPENING SNAPSHOT: EUROPE ON BACKFOOT AMID BREXIT JITTERS (0744 GMT) European shares have opened on the backfoot which may not be surprising given the euro-zone benchmark hit more than one-year highs yesterday after the late rally fuelled by fresh Brexit optimism. There are some signs of resilience though as Roche helps lift healthcare stocks and exporters on London’s blue chips benefit from the weaker sterling. On the other hand, UK domestic stocks – housebuilders, retailers and banks – are among the biggest fallers on the pan-European STOXX 600 index, hit by a sharp retreat of the pound with investors on tenterhooks for a potential Brexit deal. The STOXX 600 the euro zone index are both 0.3% lower. Roche’s 1% gain to near five-year highs is helping lift the healthcare index, one of only three sectors in positive territory. ASML is down 1% and among the top fallers on Europe’s blue-chip index as investors lock in profits after its better-than-expected results. Among other individual movers, Signify is leading the charge higher, up 2.7% after the lighting company agreed to buy Cooper Lighting in the United States for $1.4 billion in a bid to grow its footprint in the North American market. (Joice Alves and Josephine Mason) ***** ON OUR RADAR: ASOS, CHIPS AND BREXIT (0701 GMT) European stocks may take a bit of a breather after their late afternoon flurry yesterday amid hopes of a Brexit deal, although markets are likely to be volatile as investors brace for headlines on how negotiations are faring. London stock futures are down 0.2%, dragged lower by the positive sterling, although any positive news on Brexit is likely to push up domestic stocks from housebuilders to banks and may offset gains among exporters. Other major futures are mixed, with the Eurostoxx 50 down 0.1% but off earlier lows. Some better-than-expected results may provide some cheer as investors digest latest forecasts that point to a deepening corporate recession in the region as Q3 kicks into gear next week. Swiss drugmaker Roche boosted its 2019 sales outlook for a third time, helped by rising Chinese revenue, and said it expects to finish its $4.3 billion takeover of Spark Therapeutics this year despite repeated delays. Its shares are indicated to open up almost 2%. Chipmakers may also get a boost from better-than-expected results from semiconductor equipment maker ASML which saw solid demand for 5G telecom network and artificial intelligence applications. Indications are mixed for the ASML stock though, with some traders expecting profit taking after shares hit all-time highs yesterday. In UK retail, ASOS has delivered a set of in-line results and said it’s made some headway with resolving its warehousing issues. Dealers see the shares in the AIM-listed stock higher. Key headlines: Royal Mail union votes overwhelmingly in favour of a nationwide strike Wacker Chemie Lowers Guidance For 2019 Atlantia gives conditional green light to investment in Alitalia ASML posts better-than-expected Q3 profit, sees strong bookings Italy’s Gavio says open to investing in Autostrade per l’Italia Roche boosts 2019 sales outlook, sees Spark deal this year TomTom Q3 core earnings beat analyst expectations Rio Tinto quarterly iron ore shipments rise 5% on China demand Signify to buy Cooper Lighting from Eaton for $1.4 bln Sunrise shareholder Canada Pension Plan Investment Board backs $2.8 bln capital hike New Swiss A220 jet engine failure forces checks CEO of Britain’s Next sells shares worth more than 10 mln stg Britain’s ASOS profits slump 68% on warehouse problems Secure Trust Bank sees loan demand slow ahead of Brexit CEO of Britain’s Next sells shares worth more than 10 mln stg BRIEF-Housebuilder Barratt Sells More Homes In 15-Week Period, Order Book Healthy BRIEF-Nanoco FY Rev More Than Doubles, Loss After Tax Narrows BRIEF-Russia’s Polymetal secures $500 mln loan from Sberbank (Joice Alves) ***** BREXIT DEAL HOPES BACK ON (0537 GMT) Investors have gotten used to headline watching around the U.S.-China trade talks. Since last Friday they’ve been glued to their screens for any crumb of detail from Britain’s last-ditch Brexit talks with Brussels. That’s not going to change today, although European stocks may take a bit of a breather this morning following their late afternoon rally yesterday to near three-month highs after a report that the two sides were close to a deal renewed hopes that a long-waited agreement may be sealed this week. Officials and diplomats involved in negotiations over the divorce said that differences over the terms of the split had narrowed significantly. But a lot can still go wrong ahead of a make-or-break EU summit on Thursday and Friday. Concerns about continued political unrest in Hong Kong and the U.S.-China trade spat will also weigh. Euro zone inflation data will also be released today at 0900 GMT, but really Brexit concerns will monopolise investors’ attention. CMC expect London’s FTSE to open 18 points lower at 7,193, Frankfurt’s DAX to open 21 points lower at 12,608, and Paris’ CAC to open 11 points lower at 5,691. London’s blue chips may suffer from the stronger pound, although as seen yesterday a surge in domestic stocks from housebuilders to banks offset the gains to see the index close flat. (Joice Alves) ***** (Reporting by Danilo Masoni, Joice Alves, Josephine Mason, Julien Ponthus and Thyagaraju Adinarayan)