Europe midday: Banks pace the advance as stocks bounce back; Yellen eyed

European stocks racked up solid gains on Wednesday, with banks surging ahead following heavy losses in the previous session, as investors looked to Federal Reserve chair Janet Yellen’s testimony before Congress.

At midday, the benchmark Stoxx Europe 600 index was up 2.1%, Germany’s DAX was 2.3% higher and France’s CAC 40 was up 2%.

Banks were the standout gainers following a dismal performance on Tuesday, with the Stoxx 600 index for the sector up 5.3%.

Deutsche Bank led the charge, surging nearly 14% on media reports the lender is considering a bond buyback. Shares in the bank slid on Tuesday despite assurance that its balance sheet was “rock solid”.

Energy shares also boosted overall markets, with the sub index for the sector up 1.2% as oil prices advanced. West Texas Intermediate was up 2.2% at $28.56 a barrel and Brent crude was 2.3% higher at $31.03 a barrel.

It wasn't all good news, however, as investors sifted through a raft of disappointing earnings.

Luxury brand Hermes was on the back foot after reporting a slowdown in 2015 sales growth.

Shares in Moller-Maersk tumbled after the Danish container shipping company said its underlying results for 2016 are likely to be significantly lower.

ARM Holdings, which designs chips for Apple, was also under the cosh after posting a rise in full year pre-tax profit and sales but noting a slowdown in the smartphone market.

Heineken nudged a touch lower after its full year sales numbers came in just below analysts’ expectations, but Carlsberg rallied as its fourth quarter numbers surpassed estimates.

Akzo Nobel was in the red after the specialty chemicals company's fourth quarter earnings missed consensus views.

With no major data releases due later in the session, investors will eye Yellen’s testimony before Congress at 1500 GMT.

Societe Generale said it will receive heightened attention given the recent market volatility and growing concerns about the US growth outlook.

“The FOMC has already signalled its unease about tighter financial conditions in the last FOMC statement by removing the assessments that risks were balanced and effectively putting the outlook on watch for a potential downgrade,” the bank said.

“We expect Chair Yellen to deliver more of the same. These are highly uncertain times that require the Fed to be nimble and data dependent. With the next FOMC meeting still five weeks away, Yellen will probably keep her cards close to the chest in terms of the policy outlook.”