Europe midday: Stocks reverse early losses on trade news, Italian bonds recover

Gains in stockmarkets on the other side Channel are gaining momentum, amid what appear to be less negative headlines around the ongoing trade talks between China and the US and perhaps also Brexit.

The above are helping to offset the impact from slightly more hawkish remarks on Wednesday morning out of European Central bank chief economists Peter Praet.

Critically, Italian sovereign bond markets found a bid, completely reversing early selling that saw the country's risk premium widen to 253 basis points, up from where it closed on Tuesday, at 240.

Commenting on the latest moves in financial markets, David Madden at CMC Markets UK said: "Sentiment is positive in Europe as trade talks between the US and China appear to be making progress. Beijing has offered to buy $70bn-worth of US goods in exchange for having no further tariffs imposed on Chinese imports to the US. President Trump likes to play hard ball and it seems his tactic is working.

"Later today, the Italian Chamber of Deputies will vote on the new coalition. The anti-establishment parties want to raise public spending while cutting taxes in a bid to stimulate the economy. Italy is already heavily indebted, and further borrowing could weigh on investor confidence."

Against that backdrop, the benchmark Stoxx 600 was edging up by 0.03% or 0.10 points to 386.99, alongside a 0.50% or 63.72 points advance of the German Dax to 12,847.38.

It was Spain's Ibex 35 however that was pacing gains, adding 0.83% or 84.30.

German, Spanish and Italian shares were all near their session highs, with the latter having recovered from an early bout of selling.

French stocks on the other hand were acting as a drag come midday, having reversed early gains, with Paris's Cac-40 off by 0.03% or 1.81 points at 5,458.81.

Milan's FTSE Mibtel was also in the red, trading lower by 0.21% or 42.31 points to 21,707.81; however, at the start of trading they had fallen as low as 21,416.49.

Overnight, reports had emerged that Beijing had offered to boost its purchases of US goods by between $25bn and $75bn in 2018.

On the economic front, all eyes were on the ECB's Praet, who told an audience in Frankfurt that "it was clear" that the Governing Council would have to "assess" whether enough progress had been made to recommend a gradual unwinding of the monetary authority's asset purchases.

In other news, INE reported Spain's industrial production at up by 1.9% higher year-on-year in April, which was considerably weaker than the 5.1% rise that markets had forecast.

Meanwhile, in Ireland, the Central Statistics Office reported that the rate of unemployment dipped by a tenth of a percentage point in May from the previous month's level, to 5.8%.