Europe midday: Stocks hold at session highs as traders eye newsflow out of China

Stocks are bouncing back after China and the US agreed at the weekend on the need for a nuclear free Korean peninsula.

At of 1222 BST, the benchmark Stoxx 600 was up by 0.89% or 3.31 points at 375.45, alongside a rise of 0.99% or 49.48 points for the Cac-40 to 5,110.47 and an advance of 1.10% or 132.98 points to 12,147.65 in the German Dax.

In parallel, the FTSE Mibtel was ahead by 1.32% or 282.33 points to 21,636.04.

Helping the Dax, strategists at Deutsche Bank raised their stance on German stocks from 'underweight' to a small 'overweight', pointing to the fact that then current interest rate differentials argued for euro/dollar to trade closer to 1.10.

The broker also downgraded its recommendation on Italian and Spanish equities to 'underweight' and 'benchmark', respectively, on expectations that slower economic growth in coming months would weigh on those two countries markets, both of which were heavily weighted towards financials.

With traders' angst at least momentarily relieved, the VStoxx index of volatility on the Euro Stoxx 50 was down by 13.10% to 16.78 points.

But not everyone was fully convinced.

"I don't think this signifies a belief that relations between the two countries will suddenly improve, it's more a case of no news being good news and that will likely continue for as long as it lasts. The problem is that both sides can be rather unpredictable so things could escalate at any point and trigger another dash for safety," said Craig Erlam, senior market analyst at Oanda.

On Saturday, Chinese president Xi Jinping told Trump in a phone conversation that all sides needed to show restraint and avoid making inflammatory remarks, according to Chinese state television.

Trump and Xi were also reportedly in agreement that North Korea needed to avoid provocative behaviour and on the desirability of ridding the Korean peninsula of nuclear armament.

Following that news, on Monday China moved to implement the trade sanctions against Pyongyang which the UN Security Council had approved earlier in the month.

However, at a press briefing to announce Beijing's move, Chinese foreign ministry spokesman Hua Chunying simultaneously decried US president Donald Trump's intention to sign an executive memorandum on Monday launching an investigation into Beijing's violation of intellectual property laws.

Euro area industrial production fell by 0.6% month-on-month in June (consensus: -0.5%).

Portugal's gross domestic product expanded at a 0.2% quarter-on-quarter clip over the three months to June (consensus: 0.6%).

Energy outfit RWE said it expected to hit the upper range of its forecasts for core and net profits.

Airbus was in talks to sell 48 helicopters to Iran.

Monte dei Paschi di Siena posted second quarter net losses of €3.1bn