Europe midday: Stocks reel after EU slashes growth forecasts

Stocks across the Channel are reeling after the European Union's executive arm slashed its near-term forecasts for economic growth across the bloc, even as traders paused for breath given recent strong gains in stockmarkets.

In its Winter Forecasts, the European Commission cut its projection for euro area-wide growth in 2019 from 1.9% to 1.3%.

Although for 2020 it saw the pace of expansion bouncing back to 1.6%, the markdowns to projections for growth in Italy and Germany in 2019 were quite significant, with that for the former going from 1.2% to just 0.2% and for the latter from 1.8% to 1.1%.

Commenting on the market backdrop, Michael Hewson, CMC Market UK's chief market analyst, said: "European equity markets underwent a bit of a pause yesterday after Tuesday’s strong gains, while US markets also underwent a small bout of profit taking after several days of gains. The lack of any further detail on US, China trade talks would appear to suggest the prospect of progress is likely to be fairly limited in the short term."

"With three weeks to go until a new round of tariffs is due to kick in, this has to be a slight concern, and could limit further strong gains in the short term."

As of 1316 GMT, the benchmark Stoxx 600 was down by 0.82% or 2.99 points at 362.53, alongside a drop of 1.64% or 183.70 points to 11,141.02 for the German Dax and a 0.89% or 44.75 point fall on the Cac-40.

Elsewhere on the economic front, Germany's Federal Office of Statistics reported that industrial output in the Eurozone's largest economy shrank at a clip of 0.4% month-on-month (consensus: 0.8%), although past data was revised higher by a combined 0.6 percentage points.

Similarly, over in Spain, the national statistics office said that in December industrial output dropped by 1.4% on the month, led by declines in consumer goods durable of 5.0% and of 2.5% in capital goods

Meanwhile, in France, the seasonally adjusted trade deficit for December printed at -€4.65bn, which was down from a reading of -€4.8bn for the previous month (consensus:-€4.0bn).