Europe midday: Stocks drop on German data, ahead of Yellen speech

European stocks pushed lower as traders took some money off the table ahead of an eagerly-awaited speech by Federal Reserve Chair Janet Yellen and following disappointing German data.

At midday, the benchmark Stoxx Europe 600 and Germany’s DAX were down 0.8%, while France’s CAC 40 was off 0.7%.

At the same time, oil prices were a touch firmer. West Texas Intermediate was up 0.2% to $46.87 a barrel while Brent crude was 0.1% higher at $49.09.

Investors digested news that German business confidence unexpectedly deteriorated in August.

The Ifo Institute’s business climate index fell to 106.2 from 108.3 in July, missing expectations for a reading of 108.5.

The expectations index dropped to 100.1 from 102.1, falling short of forecasts of 102.5.

Finally, the index of current conditions missed estimates of 114.9, printing at 112.8 from 114.8 in July.

“The German economy has fallen into a summer slump,” the Ifo said.

Stephen Brown, European economist at Capital Economics, said: “August’s sharp fall in the German Ifo survey points to a slowdown in German economic growth.

“Both the current conditions and expectations balances of the Ifo survey fell, suggesting not only that growth might have decelerated in Q3, but also that conditions are unlikely to pick up over the later stages of the year.”

Market participants were also jittery ahead of Yellen’s speech at the Fed’s annual symposium at Jackson Hole, Wyoming, on Friday as they look for clues on the timing of an interest rate hike.

Dave Jeal, head of investment products at stockbroker Interactive Investor said: “The interest rate move is pretty certain to be up and should already be priced into markets. And to a degree it is - but the market is only pricing in a 28% chance of a rise in September. However some Fed members are signalling that a rise is far more likely than the market thinks. A real disconnect has developed.

“Will Yellen's remarks remove the uncertainty, or will she hedge her bets? With the US election in November, if rates don't move now, the Fed is unlikely to be able to move much before the year end.”

In corporate news, Handelsbanken edged lower after it sold its voting stake in investment-holding company AB Industrivarden.

Offshore drilling company Seadrill was on the back foot after reporting a 31% drop in net profit in the three months to the end of June.

On the upside, German market research firm GFK surged following a media report that its majority owner is considering a merger or a sale.

Supermarket chain operator Ahold Delhaize was in the black after better-than-expected second-quarter earnings.

Building materials group CRH was higher as it lifted its half-year dividend a touch after making more progress with its deleveraging and reporting the early stages of an economic recovery in Europe.

Still to come on the macroeconomic calendar, US durable goods orders and initial jobless claims are at 1330 BST. Markit’s US services purchasing managers’ index is at 1445 BST.