Europe midday: Economic recovery hopes, calm bonds drive shares

European shares were still higher at midday, driven by hopes of a swift economic recovery, calmer bond markets and the departure of the head of French food company Danone.

The pan-European Stoxx 600 index rose 0.37% in early trade with all regional bourses higher.

"Despite Friday’s push higher for US Treasury yields, the consolidation we are seeing this morning provides a more stable environment for both value and growth to thrive," said IG analyst Joshua Mahony.

"With the Nasdaq having suffered steep losses on Friday, futures point towards a positive start to the week for the recently hard-hit tech sector. The past week has shown how the rotation between value and growth is likely to be a volatile one, and while we are looking at a likely rebound in tech today, there is also a significant chance of another sharp move lower before long."

"Last week's passing of Joe Biden’s $1.9trn stimulus package has helped bolster growth expectations for the year ahead, with Goldman Sachs expecting a 7% rebound in US GDP for 2021. That economic recovery should provide the basis for a strong recovery in pro-cyclical stocks, driven by yields."

"With Goldman Sachs expecting to see yields rise to 2.1% in 2022, a long-term outperformance in value could be on the cards.

Sentiment was also boosted by a surge in China’s factory and retail sector activity in the first two months of the year, beating expectations.

In equity news, shares in Danone jumped 4.5% after the company’s board ousted Emmanuel Faber as its chairman and chief executive due to growing pressure from shareholders.

Flutter Entertainment was up 6.3% as the company confirmed it was mulling a spinoff for its FanDuel unit in the US as it looked to cash in on the growing liberalisation of mobile betting in America.

Shares in carmaker Stellantis gained 3.2% after Deutsche Bank started coverage with a ‘buy’ rating.