Europe midday: Shares extend gains on improving eurozone sentiment

European shares extended gains at lunchtime on Friday as surveys showed sentiment in the Eurozone picked up as Covid-19 vaccines raised hopes about an economic revival.

The pan-European Stoxx 600 was up 0.24% at 1205 GMT as the mixed European PMI readings offset fears of rising inflation and bond yield considerations.

IHS Markit's flash purchasing managers' index registered 48.1, up from 47.8 in January. February's result was broadly in line with expectations for a reading of 48.1 with 50 marking the difference between growth and shrinkage.

The index was dragged down by a decline in services to a three-month low of 44.7 as restaurants, bars and leisure facilities closed across the currency zone to stem coronavirus infections.

Manufacturing, which is largely unaffected by the latest lockdowns, rose to a three-year high of 57.7 led by Germany, the eurozone's biggest manufacturing nation.

UK shares were slightly lower as PMI readings offset the worst UK retail sales figure since April, with January volumes slumping a worse-than-expected 8.2%.

“The week has been dominated by fears over what rising Treasury yields could do to demand for equities, but we are still some way from a position where yields offer an attractive alternative to stocks,” said IG analyst Joshua Mahony.

“Nevertheless, this week has provided a reminder that 2021 will not simply be a one-way road to recovery and market prosperity, with rising inflation and yields expected to spark plenty of uncertainty over a rebalancing towards bonds and a potential monetary squeeze.”

In equity news, shares in luxury goods maker Hermes rose 4.81% after a recovery in fourth quarter sales.

In other equity news, shares in luxury puffer jacket maker Moncler rose 5.6% as the company reported a recovery in the final quarter of 2020, rising by 8% and beating expectations as soaring revenues in China helped offset a decline in Europe and fallout from the pandemic.

NatWest was in the red after the bank said it was pulling out of the Republic of Ireland, reported a smaller-than-expected annual loss and restored its dividend

The lender swung to a £351m operating pre-tax loss for the year to the end of December from a £4.2bn profit a year earlier as income fell and it set aside more for bad debts during the pandemic. Analysts had on average expected a £418m annual loss.

French carmaker Renault fell 4.8% after posting a record annual loss of €8bn.

Shares in insulation maker Kingspan rose 8.5% after the company has outlined actions it was taking in relation to the “unacceptable conduct” of “a small number of employees” after the Grenfell Tower fire tragedy in London that killed 72 people.

About 5% of the insulation material used on Grenfell’s facade, through which the fire spread, was made up of Kingspan’s Kooltherm K15 product. The rest was supplied by a rival.