Europe midday: Basic Resources pace gains at the start of the week

Stocks are holding higher, with the gains seen on Wall Street last Friday apparently offsetting uncertainty ahead of the Italian parliamentary elections scheduled for next Sunday.

Investors also seemed care free ahead of the results of a postal vote by members of Germany's centre-left SPD, on whether to approve a coalition deal with Angela Merkel's CDU/CSU, due on 4 March.

Stoking buying interest in stocks, according to some market watchers, the US Federal Reserve's semi-annual monetary policy report to Congress, published on Friday, appeared to be noticeably less hawkish than some market participants had expected, weighing on government bond yields and putting a big bid into the S&P 500 as a result.

Against that backdrop, as of 1254 GMT, the benchmark Stoxx 600 was 0.57% or 2.19 points higher to 383.38, alongside an advance of 0.42% or 52.27 points to 12,535.41 for Germany's Dax and a gain of 0.59% or 31.42 points to 5,349.05 on the Cac-40.

In parallel, the yield on the benchmark 10-year Bund was little changed at 0.66%, albeit after a six basis point plunge on Friday, while euro/dollar was 0.24% higher to 1.2324.

Commenting on the outlook for the Italian political landscape following next Sunday's vote, analysts at Barclays Research told clients: "We think the spectre of political instability could cast a long shadow, as a future coalition government may group together several political parties with very different views on critical subjects such as fiscal policy, structural reform implementation and the relationship with European partners and authorities."

The economic calendar was quite sparse at the start of the week, with the main event scheduled for Monday being a speech from European Central Bank president Mario Draghi's to the European parliament at 1300 GMT.

Basic Resources was among the strongest segments in the market, with the Stoxx 600 sector gauge adding 1.53% to 486.47 on the back of a 0.19% dip in the US dollar spot index to 89.71 and amid sharp gains in Chinese steel futures on reports that the Chinese city of Tangshan might extend output curbs from March to November.

Meanwhile, at the individual level, Bank of Ireland said it was set to restart paying dividends after posting full-year underlying profits of €1.1bn, but shares fell.

"Excluding [a 44% jump in non-busienss income], adj. PBT was 18% above UBSe on loan loss write-backs of €44m, partly offset by a 6% NII miss. Net write-backs reflect the improving economic conditions in Ireland, which is good, but we don’t expect this to be extrapolated with BoI guiding to a 20bps of LLPs in 2018," commented analysts at UBS.

Stock in Thales was slightly lower as well, even after clinching a AUD$1.2bn contract to provide air traffic management services Down Under.

Further East, shares in Germany's Daimler were lower despite news that China's Geely had built up a nearly 10% stake in the carmaker.

Also in Germany, contrary to media reports, Innogy had no plans for a sale to either of its main rivals, Spain's Iberdrola or Italian outfit Enel, the company's management said on 23 February.