Europe midday: Stocks climb back after early losses

Stocks are climbing back from early weakness triggered by disappointment over the outlook for prompt passage of US tax reforms.

As of 1350 GMT, the benchmark Stoxx 600 was dipping by 0.07% or 0.27 points to 389.80, alongside just a 0.02% gain on the German Dax to 13,184.94, while Italy's FTSE Mibtel was adding 0.16% or 37.29 points to stand at 22,678.73.

Meanwhile, the euro-dollar cross was ahead by 0.08% to 1.1651.

From a sector standpoint, automobile makers were among the weakest areas of the market, with the Stoxx 600 gauge of auto&parts manufacturers holding 0.88% lower at 605.12

Europe's main equity benchmarks were nevertheless still on track for their worst weekly showing since August after the US Senate's proposed tax reform plans showed that it wanted to push a cut to the country's main corporate tax rate into 2019.

"An early bounce in stocks has fizzled out this morning, confirming that risk-off sentiment remains dominant. The twists and turns in Congress regarding the administration's tax plan are hard to follow, but the overall impression is that we won't get much progress on reform before the Thanksgiving recess begins. For a market that had invested great hope in the plan, this is a heavy blow.

"The rally had been looking increasingly precarious, as breadth deteriorated over the past week, with yesterday’s drop an inevitable consequence of underlying weakness," said Chris Beauchamp at IG.

Italian industrial output shrank by 1.3% month-on-month in September, according to ISTAT, led by a fall in manufacturing production of 1.3% and underwhelming economists who had forecast a drop of 0.3%.

Friday's data also largely eliminated almost all of the up-side risk to Barclays's forecast for GDP growth of 0.4% quarter-on-quarter for the three months to September.

To take note of, a decision from Standard&Poor's on Italy's sovereign debt rating was expected after the market close.

French industrial production on the other hand was marginally stronger than forecast during that same month, INSEE said, rising by 0.6% on the month (consensus: 0.5%), which Barclays said pointed to GDP growth of 0.5% on the quarter continuing over the last three months of 2017.

On the corporate front, insurer Allianz reported a 17% drop in third quarter net income to €1.6bn, which was in-line with analysts' forecasts, alongside a €2bn share repurchase programme.

Steel pipe manufacturer Vallourec lifted its financial guidance for 2017 again on the back of higher oil and gas sales Stateside and cost cuts.