Europe midday: Stocks mildly higher amid earnings deluge; eyes on Fed

European stocks were in the black following a stabilisation in China’s equity markets and a slew of well-received earnings reports, although gains were muted as investors exercised caution ahead of a rate announcement in the US.

At midday, the benchmark Stoxx Europe 600 was up 0.5%, Germany’s DAX was 0.2% higher and France’s CAC 40 was up 0.4%.

“A raft of positive corporate earnings this morning has delivered a boost for markets,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“However, investors will still be keenly waiting for the Federal Reserve's statement this evening to see if there is any more clarity on whether interest rates will start to rise in September or move later in the year.”

Although Greece was no longer the driving force in markets, investors continued to keep an eye on any news there. The Greek stock market is due to reopen this week following approval from the European Central Bank, having been closed since the end of last month.

The focus on Wednesday was firmly on earnings, as investors sifted through an avalanche of reports.

In London, Barclays was the standout gainer after it posted a 36% rise in first-half pre-tax profit to £1.44bn.

British American Tobacco rallied as investors welcomed a stronger-than-expected rise in first-half profit, although revenue for the period was dented by currency moves.

Hedge fund firm Man Group was also a high riser after its first-half profit beat analysts’ expectations as performance fees nearly doubled.

Tate & Lyle gained after a well-received first-quarter trading update in which the company said its performance was in line with expectations and stuck to its guidance for the full year.

Shares in oil giant Total rose after it posted a better-than-expected second-quarter profit on the back of increased refining margins and accelerated cost-cutting.

Elsewhere, French car maker Peugeot rallied after swinging to its first profit since 2011 on the back of higher prices, a positive product mix and a favourable currency impact.

Luxury-goods maker LVMH Moet Hennessy Louis Vuitton pushed up after posting its best earnings increase in three years.

On the downside, catering company Compass fell sharply. Although it posted a 6.8% rise in organic revenue for the third quarter, it warned that operating profit this year and the next would be dented by restructuring costs.

Schneider Electric was a little lower after it cut its 2015 forecasts for profitability and revenue.

On the macroeconomic front, investors will eye the release of US pending home sales at 1500 BST.

The main focus, however, will be on the Federal Reserve’s rate announcement, which is due after the European close. Although no change in rates is expected until at least September, Chairwoman Janet Yellen’s words will be scrutinised for any further clues on the timing of a move.

Nomura's US economics team expects very little change, with only modest upgrades to the economic outlook.

“While the next few weeks of data will be crucial for the Fed’s decision on whether to increase rates in September, the bar for lift-off as expressed in staff forecasts may be lower than the view of FOMC participants,” said the Japanese bank.