Europe midday: Stocks continue to push higher, bank shares in the lead

Stocks on the Continent continued to push higher at the start of the New Year higher following news of central bank easing in China and that the US would sign its phase-one trade deal with Beijing on 15 January.

"Equities have gotten off to a positive start thanks to the announcement by the Peoples Bank of China [...] The update form the PBoC helped Chinese stocks, and that positive sentiment spilled over to Europe," said David Madden, senior market analyst at CMC Markets UK.

Overnight, the PBoC said it would cut the reserve requirement ratio for the country's lenders by 50 basis points, close on the heels of US President Donald's Trump's announcement, two days before, that the phase-one trade deal with Beijing would be signed on 15 January.

Trump also said that he would travel to China to kick-off talks on a second round trade deal, leaving investors waiting on a daily press briefing by China's ministry of foreign affairs, on Thursday, for further possible updates.

By 1153 GMT, the German Dax was up 0.73% to 13,345.92, alongside a gain of 1.23% to 23,796.06 for the FTSE Mibtel, while the Cac-40 was rising 1.04% to 6,040.18 and the Spanish Ibex 35 was 1.22% stronger at 9,665.7.

According to analysts at Danske Bank, with the holidays now in the rear-view mirror, investors would be better able to discern whether recent gains in the euro and pound were 'macro-driven' or just a function of weak liquidity.

"While bond yields have risen almost 50bp since August, equities have continued to rally [...] One big question is whether we will see some reallocation from equities into fixed income in the coming months on the back of the strong equity markets and cheaper bonds," the Danish broker added.

Euro/dollar was drifting 0.28% lower to 1.1189 alongside, while the yield on the benchmark 10-year bund was off by one basis point at -0.19% after earlier rising as high as -0.16%.

The Stoxx 600 bank sector index was 1.74% higher to 145.77, while that for Basic Resources had run up 1.22% to 467.26.

Pacing gains at the individual company level were shares of Commerzbank, Deutsche Bank, AIB Group, Airbus and IAG.

Lifting shares in Airbus was news that the jetmaker delivered 863 aircraft in 2019, putting it well ahead of rival Boeing, which had delivered 345 between January and November due to the grounding of its 737 Max model.

And boosting IAG was an upgrade out of Citi from 'hold' to 'buy'.

Going the other way, shares of Tullow Oil were at the bottom of the pile after the outfit announced that its Carapa-1 exploration well offshore Guyana had delivered a net pay that was lower than pre-drill forecasts.

United Internet, Atlantia, and John Wood Group meanwhile were adding to the losses sustained at the end of 2019.

In economic news, the spotlight was on Madrid, following reports that a minority left-wing coalition government could well be voted in on 7 February, helping to reduce uncertainty - at least in the very near-term.

Against that backdrop, IHS Markit's euro area factory sector Purchasing Managers' Index for December was revised up from a 45.9 to 46.3, although the average fourth quarter reading of 46.4 was a seven-year low, unchanged from the prior quarter.

Stateside, the economic calendar for Thursday was very light, with a reading on initial weekly jobless claims due out at 1330 GMT set to be the main release of the session.

On a similar note, and also coming out of China overnight, survey compiler Caixin's China manufacturing sector PMI slipped from a reading of 51.8 for November to 51.5 in December (consensus: 51.6).

Freya Beamish at Pantheon Macroeconomics said the dip in the China PMI was not really surprising coming as it did after a strong run, although a drop in a sub-index for new orders contained in the same report was 'disappointing'.

CAC 40 - Risers

ST Microelectronics (STM) 24.80 +3.46%

Peugeot (UG) 21.96 +3.11%

Airbus SE (AIR) 134.41 +3.01%

ArcelorMittal SA (MT) 16.01 +2.36%

Valeo (FR) 32.12 +2.27%

ENGIE (ENGI) 14.73 +2.26%

Bouygues (EN) 38.73 +2.25%

Societe Generale S.A. (GLE) 31.69 +2.18%

Kering (KER) 597.46 +2.09%

Credit Agricole (ACA) 13.19 +2.05%