Europe midday: Stocks trim gains after German court questions ECB bond buying

Stocks across the Continent were modestly higher come midday but were trading off their best levels after Germany's Constitutional Court called into question some aspects of the European Central Bank's main bond purchase programme.

In a long-awaited decision, the court gave the ECB three months to explain the rationale behind its government debt purchase programme, or PSPP, under which it had bought nearly €2.19trn of bonds since 2014.

Analysts in the City appeared to be a little divided as to the implications of the ruling.

Among those views, according to Holger Schmieding at Berenberg, the decision might lead the ECB to shift towards bond purchases in the secondary market under one of its other programmes, the OMT, but if countries such as Italy wanted to call on it for help, that would carry "conditionality".

Against that backdrop, as of 1229 GMT the benchmark Stoxx 600 was up by 1.95% to 334.85, alongside a 1.29% advance on the German Dax to 10,600.02 while the FTSE Mibtel was putting on 0.59% to 17,135.08.

Rising on the back of the German court's decision, the yield on the benchmark 10-year Italian government bond was 15 basis points higher to 1.91%.

Euro/dollar was knocked down 0.69% to 1.0832 alongside.

Front month Brent crude oil futures on the other hand were climbing 7.8% alongside to $29.30 a barrel on the ICE, amid 'market talk' of economies reopening and US oil storage facilities filling up less quickly.

The Stoxx 600's oil and gas sector sub-index was in turn rising 4.88%.

Spanish oil major Repsol and sector peer Total were high-flyers on Tuesday following the release of their second quarter numbers.

On the economic front, the number of officially unemployed in Spain jumped by 7.97% in April from the month before to hit 3.831m.

At the euro area level meanwhile, Eurostat reported that producer prices in the single currency bloc fell at a month-on-month pace of 1.5% in March (consensus: -1.3%).