Europe midday: Stocks trim losses, pandemic in focus

Stocks in Europe have come off their earlier lows but are being weighed down by the ongoing headlines around the Covid-19 pandemic, especially in the US.

Also dampening sentiment was a Bloomberg report that US officials had discussed the possibility of punishing banks in Hong Kong, and HSBC specifically, including by destabilising the financial centre's peg to the US dollar.

Nonetheless, that same report said that disrupting the dollar peg had not regained "serious traction", with other proposals included canceling

Those ideas include canceling a U.S.-Hong Kong extradition treaty and ending cooperation with Hong Kong’s police, the person said.

As of 1218 BST, the benchmark Stoxx 600 was down by 0.33% at 367.73, alongside a 0.35% dip for the German Dax to 12,573.62 while the Cac-40 was off by 0.78% to 5,004.03.

To take note of, in the background gold futures were trading above the $1,800/oz. for the first time in almost a decade.

On that note, IG's Josh Mahony said: "The six-week lockdown in Melbourne does ring alarm-bells for traders, as it gives us an insight into the kind of time-frame these localised lockdowns will be dealing with. Gold is the main benefactor of late [...]

"In an age of global monetary and fiscal expansion, it comes as no surprise to see traders reach for fiat assets such as gold to stave off the potential devaluation that comes with swelling central bank balance sheets."

HSBC was a top faller, with its shares dropping by 3%.

Nokia was a big loser, with its shares slumping by 7% after analysts at JP Morgan downgraded their recommendation for the shares from 'overweight' to 'neutral', citing the risk that it US carrier Verizon would reduce its reliance on Nokia as primary supplier of radio access network.

Electrolux was heading the other way after the home appliance maker said its second quarter operating loss would be smaller than feared.

On the economic front, and linked to the global pandemic, in remarks to broadcaster BFM TV, French Prime Minister, Jean Castex, laid out the case for targeted restrictions in response to Covid-19.

"We won’t survive, economically and socially, an absolute and generalized lockdown," he said.

Elsewhere, German economy minister, Peter Altmaier, forecast the economy would begin to grow again starting from October or November.

In Norway, data released on Wednesday showed that the economy grew at a 2.4% month-on-month clip in May after sinking by 4.7% in April and 6.9% in March.