Europe open: Stocks erase early losses on US-China trade hopes

European stocks have mostly reversed early losses to trade higher after China delivered a bigger than expected boost to short-term liquidity for the country's financial system and thanks to positive 'market chatter' regarding the upcoming review by Washington and Beijing of their phase one trade deal.

Analysts were nevertheless cautious giving the rising number of Covid-19 cases across the Continent which it was feared might stymie the economic recpvery.

"There appears to be an increasing nervousness, despite the gains of the last 100 days, that for all of the optimism over recent economic re-openings, that economies are reaching the limits of what they can do, without increasing the risk of a surging second wave of cases, as we head towards the autumn months," said Michael Hewson, chief market analyst at CMC Markets UK.

As of 0932 BST the pan-European Stoxx 600 was edging up by 0.11% to 368.48, alongside a 0.09% advance for the German Dax to 12,912.01.

The Cac-40 was also higher by 0.05% to 4,964.14, but the FTSE Mibtel remained lower by 0.49% at 19,929.04 and the Ibex 35 was down 1.11% to 7,075.90.

Overnight, the People's Bank of China injected 700bn yuan via one-year loans into the country's financial system, which was more than forecast.

More important perhaps, in the background some analysts were arguing that the delay in the US-China review of the progress made thus far on implementing their trade agreement, which had originally been scheduled for 15 August, did not necessarily mean that obstacles to its implementation had arisen.

On the back of the news out of China, it was the Stoxx 600 sector gauge for Basic Resources that was pacing gains, climbing 1.44% to 414.95.

In deal news, French drug-maker Sanofi closed a $3.4bn all-cash deal to acquire Principia Bipharma, the US developer of treatments for multiple sclerosis and various autoimmune disorders.

There little by the way of fresh economics news out of Europe, although investors were keeping an eye on political developments in Belarus following large protests in response to the government's crackdown on opposition supporters accusing it of rigging the last presidential elections.

On the Covid-19 pandemic front meanwhile, German finance minister, Olaf Scholz, proposed extending subsidies to preserve jobs from one year to two, at a projected cost to the taxpayer of €10bn.