Europe midday: Equities turn positive as energy gains offset weakness in leisure after Paris attacks

European equity markets reversed opening losses to trade higher, as strength in the oil and gas sector offset a weak showing in travel and leisure following Friday’s terrorist attacks in Paris.

At midday, the benchmark Stoxx Europe 600 index was up 0.4%, France’s CAC 40 was 0.1% higher and Germany’s DAX was up 0.4%. Early expectations had been for the main European indices to fall between 2% and 3%.

"In a major sign of defiance, equity markets have fallen far less than expected and, outside of tourism and transport stocks, remain resilient. The reasons for this may lie in the collective response by global leaders, with affirmative action against Islamic State potentially providing a new source of support for markets,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

French warplanes launched an assault on Islamic State targets in Syria on Sunday after a series of coordinated terrorist attacks on the country’s capital on Friday night.

The French Defence Ministry said 10 aircraft dropped 20 bombs on facilities used by IS, hitting a command centre, a militant-training facility and an arms depot.

Islamist militant group ‘Islamic State’ has claimed responsibility for the attacks, saying they were payback for France’s air strikes on IS targets in Syria.

The Stoxx 600 travel & leisure index was down 2%, while airline stocks slumped, with Air France KLM, British Airways parent International Consolidated Airlines Group and Deutsche Lufthansa all firmly in the red.

Eurotunnel, which controls the Channel Tunnel, was 4% weaker, while French hotel group Accor slid nearly 7%.

On the upside, though, oil and gas stocks performed well as oil prices pushed higher amid air strikes in Syria, with the Stoxx 600 index for the sector up 2%. West Texas Intermediate was up 1.8% to $41.46 a barrel, while Brent crude was 1.1% higher at $44.97 a barrel.

Elsewhere, Hennes & Mauritz fell after the fashion retailer’s October sales came in short of expectations, while Sonova Holding AG tumbled after the hearing aid maker downgraded its sales and profit forecasts for the year.

In London, Taylor Wimpey was on the front foot after a well-received trading update.

On the data front, investors digested encouraging inflation figures for the Eurozone. The final reading on consumer price index for October showed 0.1% growth year-on-year last month, compared with a previous estimate indicating stagnant growth and with analysts’ expectations for an unchanged reading.

On a month-on-month basis, CPI advanced 0.1% in October, in line with forecast but slightly lower than the 0.2% reading analysts expected.

Still to come on the macroeconomic calendar, US Empire manufacturing is at 1330 GMT.