Europe midday: Shares hold gains ahead of ECB meeting

European shares held gains at midday, driven by strong corporate earnings and optimism over economic recovery from the Covid pandemic and hopes the European Central Bank would maintain a dovish stance on policy at its meeting later on Thursday.

The pan-European Stoxx 600 index was up 0.93% with all major bourses higher after US and Asian markets rose overnight.

Investors were also eyeing the European Central Bank’s policy decision later in the day, which was expected to pledge more stimulus.

OANDA analyst Craig Erlam said upbeat earnings reports were giving investors a sense of optimism and, while disruptions were likely as a result of the surging Covid Delta variant "the belief remains that the best is yet to come".

"Whether that will be sustained if countries impose tighter restrictions is another thing but for now, optimism remains," he said.

"The ECB meeting has probably been the most eagerly anticipated event this week but whether it will be the game changer the bloc needs seems unlikely. While inflation has returned this year, the permanent nature of it is up for debate and the expectation is that it will fall back again in time, leaving the ECB once again short of its objective."

In equity news, shares in Swedish private-equity firm EQT topped the Stoxx with a rise of almost 13% as it reported a rise in assets under management during the first half of the year.

Travel stocks were also on the rise on hopes of holiday markets opening up for the rest of the summer. British Airways owner IAG, budget carriers easyJet and Ryanair and cruise line operator Carnival all gained.

Shares in Swiss drug maker Roche fell as the company said profit for the first half of the year decreased though sales grew, driven by its diagnostics division.

Consumer goods giant Unilever shares were 5.5% lower after it cut its full-year operating margin forecast due to surging commodity costs.

France’s Publicis climbed 3.5% after forecasting that its financials would make a full return to pre-pandemic levels this year.

Italy’s Monte dei Paschi jumped 5.7% after the lender and its former top investor reached a preliminary accord to settle their legal disputes.