Europe midday: Bank stocks gain on back of possible US deregulation
European stocks were in the green as banking stocks gained on the back of US President Donald Trump considering scaling back the 2010 Dodd Frank act and positive eurozone services PMI data.
At midday, the benchmark Stoxx Europe 600 rose 0.59%, Germany’s DAX was 0.26% higher and France’s CAC 40 was up 0.84%.
Meanwhile, oil prices rose with both West Texas Intermediate and Brent crude up 0.4% to $53.74 and $56.78 per barrel.
Michael Hewson chief market analyst at CMC Markets UK said: “European markets have open higher today ahead of that latest US employment report which is due out later this afternoon, boosted in some part by another set of fairly resilient services PMI data, from German, France, Italy and Spain.
"The mining sector has slipped back this morning after a disappointing Chinese manufacturing survey as well as slight tightening of money market rates by Chinese authorities."
On the upside banking shares have gained a lift on speculation that US President Trump may well sign a new executive order to roll back some of the Dodd Frank regulatory bill, which was enacted in response to the 2008 financial crisis.
The Stoxx Europe Banks 600 Index was up 0.95%.
Investors were also digesting news that China has unexpectedly lifted short-term interest rates. The PBOC raised reverse repurchase agreements by ten basis points to 2.35%.
In other China news, the Caixin manufacturing purchasing managers' index, a private gauge of factory activity, nudged down to 51.0 in January from 51.9 in December. This was below economists’ forecasts of 51.2, but remained out of contraction territory for a seventh straight month.
The figures weighed on basic resources, which are heavily dependent on demand from China, pushing the Stoxx 600 sub-index for the sector down 1.5%.
On the data front, retail sales in the 19 countries that share the euro unexpectedly fell in December, according to the latest figures from Eurostat.
Sales were down 0.3% on the month, missing expectations for a 0.3% increase.
The eurozone economy kicked off the year on a firm footing, with output growth in January maintained at December’s five-and-a-half year high, and job creation at a nine-year high.
IHS Markit’s final composite purchasing managers’ index was unchanged in January from December’s reading of 54.4, but up a touch from the flash estimate of 54.3.
The headline index has been in expansion territory for the past 43 months.
Markit’s final eurozone services PMI printed at 53.7 in January, in line with December and up from the flash estimate of 53.6.
On the corporate side, Banco Popular tumbled after reporting a worse-than-expected yearly loss of €3.5bn on the back of extraordinary provisions and one-off charges to clean up its balance sheet.
German retailer Metro was in the red after posting a drop in first-quarter net profit.
Residential repair and improvements business HomeServe reversed earlier gains as it said it has acquired shareholdings in Checkatrade in the UK and Habitissimo in Spain. The FTSE 250 company purchased a 40% interest in Checkatrade, and a 70% interest in Habitissimo, with the deals being worth a combined £37m.
Insurer Beazley surged after reporting a 3% jump in full-year profit as gross premiums written increased 6% and the company lifted its dividend.
Budget airline Ryanair flew higher as it said traffic in January rose 17% to 8.77m, while the load factor – which gauges how full the planes are – nudged up to 90% form 88%.
Coming up, investors look to the US non-farm payrolls report and unemployment rate at 1330 GMT.