Europe midday: Bounce gains altitude, Basic Resources and Autos lead

The early bounce in stocks is strengthening on the back of a more positive news-flow around the US-China trade talks, helped by somewhat more positive economic headlines on the Continent.

Overnight, officials from Washington and Beijing reportedly kicked-off trade talks, with Bloomberg reporting towards noon that China was moving to reduce the tariffs which it had recently levied on imports of cars.

In the background meanwhile, even as Prime Minister Theresa May was visiting Amsterdam and Berlin to try and garner support for her plans from the European Union, some analysts appeared to be sounding a more optimistic note on the likelihood that a 'hard Brexit' could finally be avoided, despite the political turbulence that likely still lay ahead.

But the recent sharp drop in stockmarkets globally meant traders remained quite cautious, with Chris Beauchamp at IG telling clients: "After slumping to two-year lows, some rebound was to be expected, but it is still far from clear whether there is sufficient momentum behind this one, when recent recoveries have proven to be short-lived."

Against that backdrop, as of noon, the benchmark Stoxx 600 was ahead by 1.86% or 6.31 points to 345.32, alongside a 1.97% or 208.61 point advance for the German Dax to 10,829.65, while the FTSE Mibtel was up by 1.46% or 269.56 points to 18,678.56.

Pacing gains at the sector level, the Stoxx 600's gauge for Basic Resources was jumping 3.20% to 389.45, alongside an advance of 3.03% in a separate sub-index for Autos&Parts to 454.82.

Spain's Ibex 35 was higher too, adding 1.65% or 143.20 points to 8,803.20, despite the ongoing political tensions in Catalonia after the regional president reportedly backed acts of civil disobedience, calling on the local police not to act in response, and having at one point moved to purge some of the top ranks of the police.

On a more positive note, according to Italian daily La Repubblica, finance minister Giovanni Tria was trying to convince Rome to lower its target for the country's budget deficit in 2019 to 2.0% as a proportion of GDP, versus the 2.4% goal initially tabled.

Brussels meanwhile was reportedly ready to accept a deficit goal of 1.95% of GDP.

In economic news, INSEE reported that French non-farm employment rose at a quarter-on-quarter pace of just 0.1% over the three months to September (consensus: 0.2%).

But in Germany, the ZEW institute's economic confidence gauge for December improved to a reading of -17.5 after a print of -24.1 for the month before.

Shares of Spanish grocer Dia were reeling a day after the country's market regulator announced it was to exit the top-flight Ibex 35 index, on the heels of a report that the firm had asked its lenders to take a haircut on their loans.

On the other side of the ledger, stock in oil major Repsol was also on the up after ratings agency Moody's lifted its rating on the company's long-term debt by one notch to Baa1 with a stable outlook.