Europe midday: EZ PMI lifts mood but shares still red

European stocks trimmed losses at midday as positive survey data from the eurozone helped to lift the subdued mood amid another dump of corporate earnings and ahead of the European Central Bank’s rate-setting meeting on Thursday.

The pan-European Stoxx 600 index was down 0.17% at 496.55. Investors were also digesting China’s plans to target a gross domestic product growth target of “around 5%” for 2024 and lift defence spending by 7.2%.

“Market momentum stalled in the US in the immediate absence of any more economic clues, although the remainder of the week looks likely to plug that gap,” said Interactive Investor head of markets Richard Hunter.

“Federal Reserve Chair Jerome Powell is set for a two-day testimony to Congress, during which he is likely to double down on the central bank’s data dependent policy. The most recent data has placed a large question mark on the shorter term future for interest rates, with the economy continuing to confound and possibly even in a position to avoid a recession which had previously been taken as read.”

Meanwhile, business activity in the eurozone's key services sector picked up to a seven-month high in February, according to a survey published on Tuesday.

The HCOB eurozone Services PMI Business Activity Index came in at 50.2 from January's 48.4, while the composite output index rose to 49.2, its best for eight months. A figure below 50 indicates contraction.

Producer-price deflation in the single currency bloc cooled in January, as the drop in energy prices was significantly less than the previous month.

Industrial producer prices were 0.9% lower over the month, in line with the monthly decline in December, but down 8.6% on January 2022, compared with a revised 10.7% decrease in December.

Economists however were expected smaller declines of 0.1% month-on-month and 8.1% year-on-year.

In equity news, shares in Inchcape slumped almost 9% after the UK automotive company said it expects growth to moderate in the coming year.

Thales rose almost 7% after the French defence contractor reported higher annual profits and sales.

Reporting by Frank Prenesti for Sharecast.com