Europe midday: Losses for banks after Fed decision, poor data weigh on sentiment

Stockmarkets across the Continent are giving up their early gains, weighed down by losses in lenders' shares as some analysts express surprise, when not overt criticism, at the degree of dovishness shown by the US Federal Reserve overnight.

Investor sentiment was also being weighed down by poor economic data out of Italy and Germany, even as they waited for any headlines out of the second round of trade talks between US and Chinese officials in Washington DC.

"The Fed meeting lit a rocket under stocks yesterday, pushing the Dow back above 25,000 once more, and we have seen more gains in Europe so far this morning," said Chris Beauchamp at IG.

"However, a shockingly-bad German retail sales figure, which recorded its worst monthly fall since early 2007, has dampened sentiment and increased existing worries that the Eurozone is headed into a much softer economic patch."

Yet like their peers in the States on Wednesday evening, shares of European lenders were also lower, with the corresponding Stoxx 600 sector gauge down by 1.46% to 139.46 as of 1030 GMT.

From a bird's eye view meanwhile, the benchmark Stoxx 600 was edging up by 0.11% or 0.41 points to 358.92, alongside a gain of 0.05% or 5.08 points to 11,186.74 for the German Dax.

But the FTSE Mibtel was down by 0.54% or 107.03 points to 19,662.76.

To take note of, longer-term government bond yields across the euro area were all moving lower.

Economists had been expecting Italy to fall into recession at the end of 2018, but not quite as emphatically, with ISTAT reporting that GDP in the euro area's third-largest economy shrank by 0.2% quarter-on-quarter over the three months to December.

On a similar note, Germany's Ministry of Finance reported that retail turnover in the Eurozone's so-called growth engine collapsed at a month-on-month pace of 4.3% in December.