Europe midday: Stocks off best levels, EU's Malmstrom vows to stand-up to bullies

Stocks across the Continent are holding higher but have come down a tad after the US president said on Monday he wants the European Union to eliminate the "large" tariffs and barriers that discriminate against his country's farmers and manufacturers.

That followed an inconclusive round of talks at the weekend between EU trade commissioner Cecilia Malmstrom and her American counterpart, with Brussels failing to win assurances that it will be exempted from US tariffs on steel and aluminium.

Indeed, at a Saturday rally ahead of a special election in Pennsylvania to choose one of the state's representatives, Donald Trump reiterated a threat to impose tariffs on imports of luxury German cars, prompting Malmstrom to vow to "stand up to bullies".

Against that backdrop, as of 1232 GMT the benchmark Stoxx 600 was ahead by 0.27% or 1.02 points at 379.26, alongside a 0.41% or 50.90 point jump on the German Dax to 12,397.78.

Out on the periphery meanwhile, Spain's Ibex 35 was rising by 0.37% or 34.20 points to 9,720.60.

No major economic releases were scheduled for Monday, although party leaders of Italy's PD were also set to meet starting from around 1400 GMT to analyse their poor electoral result and to decide whether to start coalition talks.

On that note, Michael Hewson, chief market analyst at CMC Markets UK, said: "While US markets appear to have recovered some of their mojo, the same cannot be said for markets in Europe which are struggling to rebound meaningfully from their recent lows.

"Concerns abound with respect to the political backdrop in Europe with Italy now replacing Germany as a potential pressure point. There is also the fact that recent economic data has shown that the vibrant growth story of the past few months in Europe may well be starting to slow, at precisely the time that the European Central Bank is looking at easing off the monetary accelerator."

In a similar vein, on Sunday UniCredit chief economist Erik Nielsen expressed concern at the potential negative implications for growth of a trade war and the populist shift seen in the last Italian elections.

Nevertheless, he said: "And monetary policies will not remain super-accommodative indefinitely. The Fed is now signaling that they may be eying four (rather than three) hikes this year, and on Thursday, the ECB toughened their language as part of their communication leading to an end to QE around the end of this year. In my assessment, it is not likely that a forthcoming economic slowdown will be prevented by a reversal of the presently ongoing monetary policy normalization among the major central banks."

M&A was the chief factor behind gains in Germany's top flight index as shares of E.On, RWE and Innogy leapt higher after the former two of those companies unveiled a complex cross shareholding plan that would see RWE recover some renewable energy assets, with both companies contributing the necessary financing in order to buy out Innogy's retail investors.

At the pan-European level meanwhile, the Stoxx 600 utility index was climbing 1.27% to 279.36.

In other company news, a consortium including Air France-KLM, Delta Air Lines and India's Jet Airways was reportedly looking into making a bid for Air India. The news came on the heels of French President Emmanuel Macron's visit to New Delhi at the weekend.

Corporate activity was also in the headlines in the UK, with Melrose sweetening its bid for GKN from £7.4bn to £8.1bn.