Europe midday: Stocks higher despite wary fund managers, Autos&Parts lead

The pace of buying on the Continent is picking up on the back of an unexpectedly strong reading on analyst sentiment towards Germany, helped by some positive headlines around Brexit and US-China trade talks.

According to Germany's prestigious ZEW Institute, confidence in the outlook for the euro area's largest economy improved sharply in March, and the latest reports indicated that Brussels was set to give the British Prime Minister some breathing space to try and get her proposed Brexit deal across the line.

And yet, the results of Bank of America-Merrill Lynch's global fund managers' survey, which were also published on Tuesday, showed that they continued to be very wary of owning European shares. Nevertheless, according to BofA-ML's chief investment strategist, Michael Hartnett, investors' bearishness had a 'silver lining'.

"Despite rising profit expectations, lower rate expectations and falling cash levels, stock allocations continue to drop. There is simply no greed to sell in equities."

Against that backdrop, as of 1245 GMT, the benchmark Stoxx 600 was up by 0.76% to 385.02, alongside a 1.07% gain to 11,782.86 for Germany's Dax while the Cac-40 had changed course and was advancing 0.51% to 5,440.18.

To take note of however, some traders cautioned that trading volumes were low.

Sector-wise, Autos&Parts was the strongest segment in the market, with the corresponding gauge for the sector on the Stoxx 600 running up by 2.51% to 506.04.

Meanwhile, euro/dollar was putting on 0.11% to 1.13520 while front month Brent crude oil futures were advancing by 0.63% to $67.97 a barrel on the ICE.

Versus the pound, the single currency was little changed, recovering from a bout of selling that ensued following reports that the EU was set to give Parliament time for another vote on the government's plans for withdrawing from the bloc, while leaving the door open to an extension of Article 50, as needed, to smooth the UK's exit from the bloc.

In economic news, ZEW's economic confidence index for Germany rose by 9.8 in March to reach -3.6 (consensus: -11.0), helped by improved sentiment towards that economy's medium-term prospects following recent positive developments on Brexit and US-China trade, the institute said in a statement.

On a relate note, overnight the US Secretary of Agriculture, Sonny Perdue, told Bloomberg TV that China might triple its purchases of US farm goods as part of any trade agreement.

Significantly too, investors were readying themselves for a spate of central bank policy decisions around the world over coming days which some observers believed would point to a more 'dovish' stance going forward.

Somewhat ironically, if anything, a stronger-than-expected reading on UK employment for January released earlier appeared to point towards exactly the opposite in the case of the Bank of England.

Shares of Wacker Chemie recovered from early weakness after the German specialty chemicals maker told shareholders to expect a big drop in core earnings for its first quarter on the back of lower prices on the polysilicon which it supplies to solar cell manufacturers.

It was a similar story for French telecoms outfit Iliad which by midday had largely erased a 7% drop that ensued after the outfit reduced its cash-flow target for 2020 in France on the back of increased spending on marketing and said it might hive off some of its mobile assets.