Europe midday: Stocks extend bounce into second day ahead of Fed

The bounce in European stocks extended into a second day, helped by positive results out of US tech giant Apple overnight and with investors looking out to the US central bank's policy meeting on Wednesday evening.

Nonetheless, reports released overnight showed that the death toll in China from the nCoV coronavirus had continued to climb, reaching 132, and for the moment investors appeared to be looking past such worrisome news headlines.

Yet analysts like Oanda's Craig Erlam believed markets' "resilience" could soon be tested, despite the welcome distraction of US corporate earnings.

"The knee jerk reaction on Monday was strong but with British Airways now cancelling trips to and from China, film premiers being cancelled, shops closing and internal travel plummeting, it seems entirely justified and probably not severe enough," Erlam said in a research note sent to clients.

As of 1256 GMT, the benchmark Stoxx 600 was ahead by 0.47% to 419.52, alongside a gain of 0.20% to 13,350.26 for the German Dax and an advance of 0.59% to 24,170.08 on the FTSE Mibtel.

According to economists at Nomura, the annualised rate of growth in China's gross domestic product might slow in the first quarter of 2020 by more than the two percentage points seen during the 2003 SARS epidemic.

However, once the virus was contained, pent-up demand could drive a V-shaped recovery, they said.

Meanwhile, front month Brent crude oil futures were climbing 0.585% to $59.86 a barrel on the ICE.

In the background, the latest earnings from US heavyweights Apple, GE, Mc.Donalds and AT&T all pleased, but those of Boeing and chip-maker AMD both fell short of forecasts on the Street.

On the economic front, the latest monthly survey results showed that consumers across the euro area's three largest economies - France, Germany, and Italy - were in a more buoyant mood in January and February.

In the case of Germany, consultancy GFK's sentiment index rise from a reading of 9.7 for January to 9.9 in February (consensus: 9.6).

Nevertheless, for Claus Vistesen at Pantheon Macroeconomics, it remained to be seen whether the upturn in the German index would stick.

More generally, fears around the new coronavirus in China were likely to weigh on the consumer mood over the first quarter of 2020, Vistesen added.

Still ahead for later in the session, were quarterly updates from a raft of US corporate heavyweights, including Microsoft and Tesla in the evening.

And at 2000 GMT, the Federal Reserve would announce its policy decision and while no changes were anticipated, some analysts were wary that might it modify its guidance for its purchases of short-term government debt, which they believed could potentially sap the strength in stocks.

In October, the Fed announced that it would start purchasing so-called T-bills at a pace of $60.0bn each month through April, in a bid to smooth out tensions in short-term funding markets.