Europe midday: Stocks headed for weekly loss, Spanish assets sold

North Korea's diplomatic response to the US decision to pull-out of a planned 12 June summit is buoying markets, helping to offset political tensions in the euro area periphery.

Also delivering a boost to investor sentiment was a slightly better-than-expected reading on German business confidence for the month of May.

Against that backdrop, as of 1134 BST the benchmark Stoxx 600 was seeing a dip of 0.18% or 41.87 points to 22,708.72, alongside a jump of 1.03% or 131.98 points to 12,987.07 for the German Dax, while the Cac-40 was up by 0.59% or 32.77 points to 5,581.14.

Despite Friday's gains in those indices, stocks on the Continent were headed for their first weekly loss in two months.

Indeed, Italian stocks were still on the back foot as investors continued to shy away from the country's sovereign debt, while in Spain a no-confidence vote against the Prime Minister appeared to be paving the way for early elections.

Thus, the FTSE Mibtel was down by 0.87% or 196.41 points to 22,552.67, while Spain's Ibex 35 was retreating 2.04% or 204.0 points to 9,792.0.

The euro/dollar was also trading lower, falling 0.41% o 1.1674.

Longer-term Spanish bonds were also under heaving selling pressure, pushing the yield on 10-year notes up by nine basis points to 1.48%.

On a more positive note, the closely-followed IFO German business confidence index printed at 102.2 for May and was unchanged from the month before (consensus: 102.0).

Nevertheless, economists were wary of calling a bottom, given the ongoing protectionist trade winds that were blowing.