Europe midday: Stocks extend modest bounce following PBoC moves

Stocks across the Continent remained modestly higher come midday following moves overnight by China's central bank that some traders said showed that it was pushing back on weakness in the country's currency, the yuan.

The US dollar was slipping by 0.20% to 7.0459 as of noon, with Marshall Gittler at ACLS Global saying the move was on the back of the People's Bank of China's move to calm the markets.

But other analysts were being more cautious, with CMC Markets's chief market analyst, Michael Hewson, saying: "Nonetheless, while Asia markets were able to finish higher and markets here in Europe are building on yesterday’s gains there remains little prospect of a swift resolution to the current impasse between the US and China, as the People’s Bank of China fixed the yuan above the 7.00 level for the first time since 2008.

"This means that for this rebound to gain further momentum we would need to see evidence of a softening of the rhetoric around trade, and a willingness on the part of both parties to dial back their current positions."

As of noon, the benchmark Stoxx 600 was adding 0.97% to 372.18, alongside a 0.87% rise for the German Dax to 11,751.33 while the FTSE Mibtel was adding 0.80% to 20,704.28.

Gains on the Milan bourse came despite a report in Corriere della Sera that deputy Prime Minister, Matteo Salvini, had threatened to topple the government unless the PM, Giuseppe Conte, replaced various cabinet members, including finance minister Giovanni Tria, who was seen as an obstacle to Salvini's spending proposals.

In parallel, a bounce in oil prices was losing fuel, with front month Brent crude futures up by just 1.25% to $56.9 a barrel on the ICE.

Overnight, the People's Bank of China set the daily fixing for the yuan's exchange rate against the US dollar at 7.0039, which was stronger than the 7.0156 that market participants had been anticipating, albeit weaker than that set the day before and above 7.0 for the first time since 2008.

Stronger than expected readings on Chinese export and import data for July were also boosting sentiment, with the figures revealing a shift in Chinese exports to countries other than the US, including in Europe.

The latest economic data out in the Eurozone meanwhile was a tad mixed.

Spain's national statistics office, INE, reported a 0.2% month-on-month dip in industrial output with production estimated at up by 1.8% year-on-year (consensus: 0.8%).

Versus the previous month, output of durable consumer goods and capital equipment was strongest.

In France, the central bank's manufacturing confidence index slipped from a reading of 95.5 for June (consensus: 96.0) to 95.0 in July.

Banque de France also forecast that the euro area's second largest economy would grow at a quarter-on-quarter clip of 0.3% over the three months ending in September.

Steelmaker Thyssenkrupp was in the headlines afer the company cuts its forecast for adjusted full-year earnings before interest and taxes from a range of €1.1-1.2bn to €800.0m and opened the door to selling multiple units and hence breaking up its conglomerate structure.

Also out of Germany, Siemens Healthineers announced a takeover offer for American surgical firm, Corindus Vascular Robotics, for $1.1bn.