Europe midday: Equity markets edge higher

European stocks edged tentatively higher after a flat start, with the UK in focus again as Theresa May takes over from David Cameron as Prime Minister.

At midday, the benchmark Stoxx Europe 600 index was up 0.4%, Germany’s DAX was 0.2% higher and France’s CAC 40 was 0.5% firmer.

At the same time, oil prices retreated after a stellar performance on Tuesday. West Texas Intermediate was down 1.3% at $46.20 a barrel and Brent crude was 1.6% weaker at $47.68. Data from the American Petroleum Institute on Tuesday also weighed on prices, after it showed US crude inventories rose by 2.2m barrels in the week to July 8 to 523.1m, versus analysts' expectations for a 3m barrel drop.

Rebecca O'Keeffe at Interactive Investor said: “The last few weeks have seen markets rally strongly as investors assume the most positive outcome for assets, with limited Brexit risks combining with the investor assumption that global central banks will do whatever it takes to ease market concerns and stimulate the market - including the view that the Fed will not hike rates any time soon. In effect, this has created a situation where the global equity market has been operating on the premise that they can have their cake and eat it too!”

In corporate news, pharmaceuticals giant AstraZeneca was trading a little higher after saying it has entered into an agreement with Sandoz and its affiliates to resolve litigation relating to Faslodex (fulvestrant).

Luxury retailer Burberry was in the black despite reporting declines across all three its regions, which led to a 3% like-for-like drop in retail sales in the first quarter.

Alstom was higher after the French train maker posted a 9% rise in quarterly sales, while UniCredit shares gained ground after the bank sold minority stakes in two of its units.

French hotels group Accor rallied after announcing late on Tuesday that it will separate its HotelInvest unit and sell a stake in the subsidiary.

Poundland surged 12% after it agreed South Africa’s Steinhoff Holdings could buy the remaining shares in the London-listed discount retailer it does not already own for 222p per share in cash, valuing it at £597m.

French supermarket operator Groupe Casino was on the back foot after saying second-quarter sales were up 3.8% on a like-for-like basis.

Housebuilder Barratt Developments was also weaker, caught up in a sector-wide slump despite saying full-year pre-tax profit would rise around 20% to £680m.

Data released earlier by Eurostat showed eurozone industrial production fell 1.2% in May from April versus expectations of a 0.8% decline. Energy production fell 4.3%, capital goods slid 2.3% and durable consumer goods output was down 1.4%.

Meanwhile, figures for April were revised up to show a 1.4% increase from a previous estimate of 1.1%.

Compared with May 2015, industrial production in the eurozone was up 0.5%, missing expectations for a 1.4% jump.