Europe midday: Stocks reverse early gains amid pandemic worries

Stocks in Europe have given back early gains despite reports that US lawmakers were preparing a further $1.0trn round of fiscal stimulus.

Weighing on investor sentiment were concerns around a possible second wave of the the Covid-19 pandemic, as Spain's Prime Minister, Pedro Sanchez, labelled the UK's new quarantine requirements for travellers from his country "disproportionate".

Sanchez's comments came as German health officials advised against travel to three Spanish regions, Aragon, Catalonia and Navarre, and fresh unemployment figures revealed the mounting toll on employment from the pandemic.

The head of of Germany's health regulator, the Robert Koch institute, Lothar Wieler, also sounded a wary note on rising case numbers in Germany, which had hit 3,600 over the preceding week.

Against that backdrop, as of 1231 BST the benchmark Stoxx 600 was dipping 0.23% to 365.29, alongside a 0.49% drop for the German Dax to 12,775.61, although the Spanish Ibex 35 was managing to hold its head above water, edging up 0.13% to 7,179.5.

Commenting on the recent increase in Covid-19 cases in Spain, CMC Markets UK's Michael Hewson said: "This rise in cases, and subsequent quarantine is particularly bad news for Spain, which has seen its summer and tourism economy ravaged by the virus. With tourism so vital to Europe’s weakest economy, there is a fear that any rebound will be so weak as to be almost unnoticeable."

On that note, earlier, Spain's national statistics office, INE, reported that the rate of unemployment in the country jumped from 14.41% in the first quarter to 15.33% in the second (consensus: 16.5%), as the number of employed fell by 6,73% quarter-on-quarter or by a further 1.074m.

Also on Tuesday, the European Central Bank called on lenders within the single currency bloc not to pay dividends or buy back shares until January 2021 at the earliest.

Elsewhere on the pandemic front, Pfizer and BioNTech said they were aiming to submit for regulatory approval of their Covid-19 vaccine candidate in October.