Europe midday: Basic resources lead the rally on China export figures

European stocks racked up healthy gains on Wednesday, with basic resources leading the charge after encouraging Chinese trade data.

At midday, the benchmark Stoxx Europe 600 index was up 2%, Germany’s DAX was 2.1% firmer and France’s CAC 40 was up 2.5%.

Oil prices were in the red, however, as investors worried that Sunday’s producer meeting in Doha would do little to curb overproduction. Comments by oil minister Ali al-Naimi in Saudi-owned al-Hayat newspaper also weighed, as he reiterated his country's position that an outright production cut was not an option.

West Texas Intermediate was down 1.2% to $41.67 a barrel and Brent crude was 0.9% lower at $44.30.

“European equity markets are rallying strongly, led by mining stocks, after Chinese exports increased by an unexpectedly strong year-on-year gain of 11.5% in March, suggesting that the economic situation in both China and its export markets is better than had been anticipated,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“As well as supporting Asian equity markets, which have now seen six straight days of gains, the stronger reading is vindication for the recent rally in commodity prices.”

The Stoxx 600 basic resources index surged 4.8% after data showed China’s yuan-denominated exports rose 18.7% in March compared to the same month a year ago.

Yuan-denominated imports, meanwhile, fell 1.7% on the year compared with an 8% decline the previous month and giving a trade surplus of 194.6bn yuan.

In dollar terms, exports grew 11.5% to $160.8bn after dropping 25% in February, beating consensus forecasts for a 10% rise.

Still, analysts warned that the improvement was partly down to a seasonal upturn.

With the focus on China, weaker-than-expected Eurozone industrial production figures for February came and went with little fuss.

Output was down 0.8% versus expectations of a 0.7% drop. On the year, production was 0.8% higher, missing economists’ forecast of a 1.2% increase.

In corporate news, insurer AXA was on the front foot amid reports the company was in talks to sell most of its UK life insurance and wealth investment units.

On the downside, supermarket chain Tesco was sharply lower after saying it swung to an annual pre-tax profit of £162m following a record loss the previous year but issuing a cautious outlook statement.

Shares in Mr Kipling and Oxo owner Premier Foods tumbled in London as US-based McCormick & Co. said it did not intend to make an offer for the company.