Europe midday: Stocks mostly up on US-China optimism; Ifo in focus

European stocks were mostly higher at lunchtime on Tuesday as investors eyed the next round of US-China trade negotiations and digested a mixed German Ifo survey.

At 1153 BST, the Stoxx 600 was up 0.3% at 390.79, Germany's Dax was flat at 12,345.59 and the French CAC 40 climbed 0.2% to 5,643.00. In London, the FTSE 100 was 0.1% lower at 7,318.24.

Investors were cautiously optimistic about the outcome of renewed US-China trade talks after US Treasury Secretary Steven Mnuchin confirmed the next round of top-level negotiations will take place in two weeks.

Joshua Mahony, market analyst at IG, said: "While stocks are likely to rise in anticipation of a deal, the sense of deja vu also brings scepticism over whether such a deal is there to be made."

Following the release of disappointing eurozone and German manufacturing data in the previous session, market participants were digesting the latest German business sentiment survey from Ifo, which showed a slight improvement in confidence but a deterioration in expectations in September.

The Ifo business climate index rose to 94.6 from 94.3 in August, coming in just above consensus expectations for a reading of 94.5, though the expectations index fell to a decade low of 90.8.

Analysts from Oxford Economics said: "Today’s numbers will certainly feed the debate around Berlin implementing a fiscal package to support the German economy. However, we think that a sizeable fiscal easing in Germany is unlikely in the short-term as the political cost seems too high in the absence of further economic deterioration."

In London, the UK Supreme Court ruled that the government's five week suspension of parliament was unlawful, dealing a severe blow to Prime Minister Boris Johnson's authority and leading to renewed calls for his resignation.

The pound initially jumped on the news, rising to 1.2488 against the US dollar before settling back to 1.2457.

Oanda market analyst Craig Erlam said it was extremely difficult to say whether the ruling will be anything more than a headline maker and added that he would be "very surprised" if Johnson didn't have a backup plan.

Among individual stocks, Umicore was the top riser on the Stoxx 600 after the Belgian firm signed a deal to sell 125,000 tons of nickel-manganese-cobalt cathode materials to South Korean electric vehicle battery maker LG Chem.

German biotechnology outfit Evotec was also on the rise after it formed a drug discovery collaboration with Japan's Takeda Pharmaceutical Company.

Travel company TUI and airlines EasyJet and Lufthansa were all higher following the collapse of competitor Thomas Cook on Monday.

Finally, K+S shares were on the way down as the German chemicals producer said it will cut production of potash fertilizers due to weak demand from China, where a halt has been imposed on imports of the products.