Europe midday: Stocks come off lows

Stocks are extending their steep declines from the previous session but have come off their lows of the session as some analysts argue that the immediate escalation in global trade tensions has not been as bad as feared.

Also giving the main shares indices a lift was better-than-expected readings on US durable goods orders and new home sales for the month of February.

Overnight, the White House had opened the door to tariffs on at least $50bn of Chinese-made goods, alongside other measures, although in a somewhat unexpected move it left the door open to negotiations with Beijing, even as China responded to previous American levies on steel and aluminium with its own $3bn-worth of measures on American goods.

That prompted analysts at Nomura to tell clients, "Taken altogether, trade risks remain a point of concern for our economic outlook. However, the weakening steel and aluminium tariffs, softer-than-expected Section 301 announcement against China, and a slightly brighter outlook for NAFTA indicate that perhaps trade tensions are not quite as high as previously assumed."

On the other hand, despite the measured response from China and Washington's somewhat less aggressive than expected stance, according to Bloomberg Stephen Roach, Morgan Stanley's ex-chief economist, said: "China's response is surprisingly modest in light of the US actions, suggesting there could be a good deal more to come.

"As America's third largest and most rapidly growing export market and as the largest foreign owner of Treasuries, China has considerably more leverage over the U.S. than Washington politicians care to admit."

As of 1400 GMT, the benchmark Stoxx 600 had more than halved its losses to trade lower by 0.53% or 1.94 points to 367.22, alongside a fall of 1.19% or 145.24 points to 11,954.61 on the German Dax and a retreat of 0.98% or 49.30 points to 5,116.73 on the Cac-40.

Also weighing on sentiment was another change in the US administration's top ranks, with the White House replacing national security adviser HR McMaster with John Bolton, one of the more controversial proponents of the Iraq war.

Offsetting that drag, the US Commerce Department reported that orders for durable goods in the US jumped by 3.1% last month (consensus: 1.6%), while sales of new homes dipped by 0.6% to an annualised pace of 618,000 (consensus: 620,00) alongside upwards revisions to January's data.

No major economic releases were expected on the Continent on Friday.

Still ahead for later in the session were speeches from Minneapolis Federal Reserve chief Neel Kashkari at 1430 GMT and the Boston Fed's Rosengren at midnight.