Europe midday: Markets mixed as oil spills lower, Fed meeting eyed
European stocks were mixed at lunchtime on Tuesday as markets steadied following the weekend's attacks on Saudi oil processing facilities, while investors remained cautious ahead of Wednesday's US Federal Reserve policy decision.
At 1202 BST, the pan European Stoxx 600 index down 0.2% at 388.88 as Germany's Dax dropped by 0.2% to 12,361.85 and France's CAC 40 rose by 0.1% to 5,606.01.
Oil prices retreated from sharp gains made in the previous session, with Brent Crude down 1.69% to $67.87 a barrel and West Texas Intermediate down 1.74% at $61.82, after the US tapped its Strategic Petroleum Reserves, although prices remained far higher than last week.
Craig Erlam, market analyst at Oanda, said: "It's clear who the US believe is to blame for the attack, despite the Houthi rebels claiming responsibility but how they respond is yet unknown. We'll also learn in the coming days just how quickly the Saudis can get lost production back online and whether stocks will be called upon to fill the void.
"There's a lot of unknowns at the moment which is why we're seeing oil holding onto these gains."
Investors were also keeping an eye on Wednesday's meeting of the US Federal Reserve, with consensus expectations of a 0.25% cut to interest rates now viewed as less likely amid improved economic data and a thawing in US-China relations.
Joshua Mahony, market analyst at IG, said: "Markets fully expect a rate cut tomorrow, with the prospect of higher oil prices pointing towards further economic weakness given the drain on consumer spending and business margins."
"However, with the ECB now embarking on an open-ended QE programme, the comparative between the two sides could see the dollar rally if the FOMC continue to point towards a short-lived period of easing from the Fed."
Meanwhile, London's FTSE 100 was up by 0.2% at 7,332.82 as investors waited for the Supreme Court to rule on the legality of Prime Minister Boris Johnson's prorogation of parliament in the run-up to the Brexit deadline, with a decision expected on Thursday or Friday.
In macroeconomic news, the ZEW institute's economic sentiment index for Germany, which tracks analysts' expectations, improved to -22.5 in September, up from -44.1 in August and ahead of an expected reading of -32.2.
However, the current situation index fell to -19.9 in September from -13.5 the month before, missing expectations for a reading of -15.0 and marking the lowest reading since May 2010.
In corporate news, retailer Zalando led the Stoxx 600 lower as Kinnevik, its largest investor, sold 13.13m shares, or a 16.0% stake, in the German e-commerce retailer.
Stock in Swedish lawnmower firm Husqvarna followed close behind as its newly unveiled aims for 4-5% sales growth from 2020 underwhelmed investors.
Cembra Money Bank led the index's risers after analysts at Credit Suisse upgraded the Swiss lender from 'neutral' to 'outperform'.