Europe midday: Banks give Old Continent a boost

European stocks were holding near their best levels of the session as investors chose to focus on the reduced immediate threat to Italy's banking system after Rome stepped in to wind-down two ailing lenders at the weekend.

As of 1137 BST, the benchmark Stoxx 600 was higher by 0.79% or 3.08 points to 390.70, alongside gains of 0.80% or 101.95 points in Germany's Dax to 12,835.45 and a rise of 1.03% or 54.09 points in the French Cac to 5,320.90.

The Stoxx 600's gauge of lenders' shares was near the top of the leaderboard, rising 1.38% to 180.15 on the back of the news.

Intesa San Paolo made off with the good assets of Banca Popolare di Vicenza and Veneto Banca after receiving €5.2bn in fresh funding and guarantees from Rome, with officials having offered to provide up to €12bn in further guarantees if needed to cover bad loan losses at the two banks.

"There are still questions still hanging over the Italian banking sector, but for now investors are content with the Continent’s financial health," said David Madden, market analyst at CMC Markets UK.

Nonetheless, some of the news in the background on Monday was less than positive.

In its latest annual report, the Bank for International Settlements issued a stark warning, saying the build-up of debt in emerging markets might derail the global economic recovery.

In parallel, reports indicated Turkey was getting ready to dispatch as many as 1,000 soldiers to Qatar following Turkish president Recep Tayyip Erdogan's criticism of the multiple concessions asked of the Persian Gulf country by its neighbours, led by Saudi Arabia.

On a cheerier note, America's trade representative, Robert Lighthizer, said talks between the US and the European Union to finalise the Transatlantic Trade and Investment Partnership would resume after the German elections.

Business confidence in Germany, the euro area's economic powerhouse, improved in June, according to the IFO institute, whose closely-followed index rose from 114.6 to 115.1 (consensus: 114.4).

"Overall, the June IFO is consistent with strong activity in the German economy in H1 17, but weaker growth in H2. We believe that this is in line with our real GDP forecast of 0.5% in Q2 17, which we expect to slow to 0.4% in Q3 and Q4 17," said Barclays Research's Tomasz Wieladek following the release of the data.

Still on the economic calendar for Monday, French jobseekers data for May was set for release at 1700 BST.

Investors were also watching for any remarks from European Central Bank president Mario Draghi or other Governing Council members out of the ECB forum on central banking in Sintra, Portugal.

During the US session, the focus would be on the latest US durable goods orders data at 1330 BST.

Italian banks, Nestle in focus

Intesa San Paolo was one of the top gainers in Europe after having taken over the good assets of Veneto Banca and Banca Popolare di Vicenza for €1.0 at the weekend after receiving €5.2bn in funding and guarantees from Rome.

Nestle was close behind after activist investor Dan Loeb's hedge fund, which had a $3.5bn stake in the foods maker, prodded the company to sell assets and leverage up in order to finance share buybacks.

In response to media reports that its Hinkley Point C nuclear power project was facing budget overruns of between €1.0bn abnd €3.0bn, EdF said it was conduction a comprehensive review the results of which would be published when it was complete.

Germany's Allianz agreed to sell 90% its stake in private lender Oldenburgische Landesbank to US private equity outfit Apollo for €300m.

Altice said it was holding exploratory talks with Spanish media outfit Prisa about a possible bid for Media Capital.