Europe midday: Stocks slip, Oil&Gas strong

Stocks on the Continent are seeing some slight selling after China announced at the weekend that it would postpone any further talk with Washington on trade until after the next mid-term elections.

That was despite a fairly upbeat outlook for stocks at the start of the week from strategists at JP Morgan and Barclays Research.

Indeed, for Michael Hewson at CMC Markets UK, investors should not read too much into America's recent decision to levy only a 10% tariff on an additional $200.0bn-worth of Chinese as goods, instead of a 25% levy.

"This rather naïve belief, that an escalation has been delayed, looks set to be tested in the coming days after China announced at the weekend that it was pulling out from all future trade talks with the US in the wake of the recent decision to impose economic sanctions on a number of Chinese officials in response to the purchase by China of SU-35 Russian combat aircraft and SAM missile systems in the last 12 months," Hewson said.

As of 1316 BST, the benchmark Stoxx 600 was edging lower by 0.24% or 0.92 points to 383.56, alongside a 0.37% or 45.72 point dip for the German Dax to 12,384.26 and a 0.71% or 153.0 point fall for the FTSE Mibtel to 21,383.87.

Oil&Gas shares were especially strong, with the corresponding Stoxx 600 sector gauge adding 1.38% to trade at 356.06 as crude oil futures continued to power higher.

In the background meanwhile, on Monday JP Morgan's Mislav Matejka told clients that financial markets' so-called 'internals' had "clearly improved", with cyclicals outperforming.

"The combination of rising bond yields, and at the same time weaker/stable USD, is reflationary, and it supports our bullish view on the equity market," Matejka wrote.

Similarly, Barclays's European equity strategy team weighed-in saying: "More broadly, European equities are unloved but we believe they offer improving risk-reward into year-end."

Economic data was supportive at the start of the week, with the German IFO institute's widely-followed business confidence gauge holding up better-than-expected last month, with a print of 103.7, which was down from a reading of 103.9 for the previous month (consensus: 103.2).

Retail was in fashion on the corporate news front, after Bloomberg reported that Michael Kors was set to clinch the acquisition of Gianni Versace SpA for $2.0bn.