Europe midday: Single currency slips on news from Germany, Spain

European stocks were trading on a mixed note following a weak showing for Germany's two mainstream political parties in elections held at the weekend, amid news of possible delays in the approval of the Spanish government's 2018 Budget Law, which sent the single currency scurrying lower.

Commenting on the result of the German elections, Holger Schmieding at Berenberg said coalition talks between Angela Merkel's CDU/CSU would be "difficult" after her party lost over eight percentage points of the ballots in comparison to 2013.

Although most of those votes went to the Freedom Party, the CDU/CSU also did quite poorly versus the right-wing Alternative for Deutschland in Bavaria.

Against that backdrop, as of 1204 BST, the German Dax was up by 0.23% or 29.10 points at 12,622.57, but alongside a dip of 0.17% or 8.90 points to 5,272.39 for the French Cac-40.

Spain's Ibex 35 on the other hand was lower by a heftier 0.86% to 10,228.50 amid reports that Spain's Basque nationalist party might withdraw its support for the central government in its attempts to gain parliamentary approval for the country's 2018 budget due to events in Catalonia.

Meanwhile, euro/dollar was down by 0.62% to 1.1878.

According to Kathleen Brooks, Research Director at City Index, the German vote showed that populism was alive and well in Europe, although she expected the resulting weakness in the euro - possibly down to 1.1650 - to be "relatively muted".

Spain on the other hand was now the "bigger risk" in so far as the illegal referendum planned for 1 October increases the risk that the country might secede, she said.

"Thus, if the Catalonia referendum goes ahead we expect this to be a disruptive event for the euro, with the potential for a sharp decline of up to 5% initially in the single currency if the separatists win," Brooks said.

Economic data also disappointed at the start of the week, with the IFO institute reporting that its widely-followed business confidence gauge for Germany fell from a reading of 115.9 for October to 115.2 in September (consensus: 116.0).

Still on the economic calendar for later in the session, European Central Bank chief Mario Draghi was scheduled to speak before the European parliament at 1500 BST.

Stateside, the market spotlight on Monday was to be on Fedspeak, with New York Fed chief William Dudley set to take to the podium at 1330 BST, followed by his opposite number at the Chicago Fed at 1740 BST and Minneapolis Fed president Neel Kashkari just before midnight.

On the corporate front, France's Alstom and German rival Siemens were reportedly studying a combination of their rail activities.

In notable changes to broker recomemdations, analysts at Berenberg upgraded Wacker Chemie from 'hold' to 'buy' and raised their target for the stock from €112 to €135.

For its part, in a research note entitled "Why Airbus is materially mispriced", Barclays hiked its target on shares of Airbus from €86 to €110.

Hellman & Friedman announced its intention to buy Nets A/S for $5.3bn (£3.93bn).