Europe midday: Stocks dip amid trans-Atlantic trade frictions

Shares on the Continent were off their best levels come midday, amid concerns that trade frictions with the US might worsen and as the euro gained in value following the 'dovish' signals from the US central bank chief the day before.

Overnight, and ahead of a vote in the French Senate on a proposed digital services tax, Washington said it would study whether the new legislation was targeted at American technology giants, such as Google, Amazon.com and Facebook.

In parallel, Germany’s transatlantic coordinator warned that Europe should prepare for US tariffs over aircraft subsidies, the Nordstream 2 gas pipeline and European car imports over the next few months.

Against that backdrop, as of 1312 BST, the benchmark Stoxx 600 was still up by 0.06% to 387.40, but the German Dax had reversed course and was down by 0.30% to 12,336.29, while Milan's FTSE Mibtel was ahead by 0.50% to 22,155.34.

Gains in the single currency were also hampering the advance in the region's main stock market gauges, with euro/dollar rising by 0.28% to 1.12820.

On Wednesday, Federal Reserve chairman, Jerome Powell, told a panel of US lawmakers that there were risks that prices might persistently undershoot the central bank's inflation target and that the labour market was not running hot.

Financial markets were caught a bit by surprise by the Fed's 'dovishness', so that 'market chatter' on Thursday morning was again centred on whether rate-setters might even cut the target range for the Fed funds rate by 25 or 50 basis points when they next convened to decide on policy on 30-31 July.

The ECB policy meeting minutes on the other hand were, if anything, perhaps slightly less dovish than anticipated.

They showed that policymakers were open to taking more "strategic" decisions might be warranted should "the environment of too low inflation continue to prevail" and that policymakers "needed to be ready and prepared to ease the monetary policy stance further".

However, in the minutes the ECB also broached the possibility that "technical factors" might be impacting on the information content of market-based measures of inflation expectations, although it warned against any complacency.

Economic data was otherwise mixed, with Germany's Federal Office of Statistics marking up its preliminary reading for harmonised consumer prices in the euro area's largest economy in June.

The year-on-year rate of German harmonised CPI was revised higher to show an advance of 1.5%, instead of the 1.3% gain that had been initially calculated.

Further south, in France, INSEE confirmed that harmonised CPI rose at a 1.2% year-on-year clip, versus 0.9% in May.