Europe midday: Credit Swiss loan stems rout as investors eye ECB

Early enthusiasm over a $54m bailout loan for Credit Suisse from the Swiss central bank faltered slightly by midday as investors waited for the European Central Bank's latest move on interest rates.

The benchmark Stoxx 600 regional index was up 0.40% as investors expressed relief that the bank had accepted the loan of up to 50bn Swiss francs to bolster its wobbling balance sheet. Banking stocks dominated the leaders board on the news with Credit Suisse shares up more than 20%.

Shares in the lender plunged on Wednesday sparked by revelations that it had found "weakness" in its financial reporting and the Saudi National Bank, its largest shareholder, said it would not buy more shares in the bank on regulatory grounds.

Focus will now turn to the European Central Bank’s interest rate announcement later in the day. The ECB faces the dilemma of sticking to its planned 0.5% rise to continue fighting inflation or finding a compromise to preserve financial stability.

“It looks increasingly likely that policymakers will opt for a watered-down decision of a 0.25% hike, mindful that going to hard right now, could intensify the banking sectors woes,” said Hargreaves Lansdown analyst Susannah Streeter.

In other equity news, Polymetal shares fell as the miner decided to forego dividend payments for 2022 in order to preserve flexibility in navigating what it termed "a highly volatile and uncertain external environment".

But the outfit's boss, Vitaly Nesis, sounded an upbeat note, saying: "We start 2023 from a position of relative strength and expect the resumption of free cash flows and a reduction in net debt over the course of the coming year."

The precious metals miner reported a surge in operating costs due to the sanctions against Russia, which resulted in a drop in profits, negative free cash flow and a higher net debt position.

Deliveroo shares fell despite an upbeat outlook on profits after the company narrowed losses in 2022.

Reporting by Frank Prenesti for Sharecast.com