Europe midday: Dear, oh dear, shares fight back after morning losses

European shares clawed their way into positive territory at midday on Thursday, after opening lower for the seventh consecutive session, although UK bond market turmoil and the precarious position of UK Prime Minister Lizz Truss were still at the forefront of investors' minds.

The pan-European Stoxx 600 index was down by 0.6% in early deals. The mood was also dampened further after more Russian missile strikes on Ukrainian towns.

Markets are looking for any sign of stability in the UK gilt markets after a day when British Prime Minister Liz Truss said she would not cut public spending, despite the government pledging billions in unfunded tax cuts.

Her poor standing among her own MPs, some of whom are reportedly moving to depose her already, seemed to be echoed by King Charles, who said: "Back again? Dear, oh dear" upon greeting her at his weekly audience with the PM.

Meanwhile, the Bank of England said it would stop its emergency bond-buying on Friday as it adopted a “see who blinks first” approach to the pension funds dumping government debt to meet cash calls from lenders - a panic sell sparked by the government's ill-received tax-cutting agenda.

"Dear oh dear, anyway… The King pretty much summed it up for us all with those words to Liz Truss. Back to the Treasury and Chancellor Kwasi Kwarteng says any market volatility next week would be down to the Bank of England, saying any instability 'is a matter for the governor'," said Markets.com analyst Neil Wilson.

”This is extremely unhelpful and points to the fiscal and monetary sides being at odds with each other. I am no fan of Bailey – too slow, too arrogant, not prepared to take the time to communicate well; but Kwarteng is a danger."

"Bailey is attempting to assert independence by sticking to this Friday deadline (a bluff?). Kwarteng knows that everyone knows the instability is down to the Budget, despite some shocking gaslighting from certain corners of the political spectrum and, far worse, certain commentators. So he wants to shift the blame for what is likely to come."

In economic news, German inflation surged to 10%, official data showed, the highest rate since the country’s reunification.

According to Destatis, the Federal Statistical Office, the annual consumer price index was 10% in September, compared to August’s rate of 7.9%. The figure was in line with both initial estimates and consensus. The month-on-month rate was 1.9%.

US CPI data is expected to show annual inflation hit 8.1% in September, the lowest reading in seven months and the third consecutive monthly decline.

In equity news, computer chip stocks fell after as chip-making technology supplier Applied Materials cut its profit estimates, citing US export restrictions to China.

Shares in Ladbrokes owner Entain rose after the gambling firm posted an uptick in third-quarter net gaming revenue and added that online gaming revenue for the fourth quarter was expected to rise, thanks in part to the World Cup.

Low-cost airline easyJet as the carrier said it expected to report annual pre-tax losses of £170m -£190 million, reflecting the summer chaos at UK and European airports where staff shortages led to cancellations amid surging post-pandemic demand.

Reporting by Frank Prenesti for Sharecast.com