Europe midday: German stocks breakout to six-month highs on services data, trade news

Investors are pushing stock prices to multi-month highs on reports of continued progress in US-China trade talks and after better-than-expected readings on euro area services sector activity.

Commenting on the former, Michael Hewson at CMC Markets UK called attention to the divergences between countries seen in the services data, with a pick up and strength seen in Spain, Germany and also Italy, but not in France.

"Nonetheless investors have taken this as yet more positive hooks to hang on the decent start we’ve seen so far this month, as we start Q2, led by the Italian FTSEMib which has risen over 20% from its December lows," Hewson said.

Chinese vicepremier Liu He was set to arrive in Washington on Wednesday for the next round of talks with his American counterparts, with an agreement on the final 10% of the deal - mostly revolving around implementation and enforcement measures - said to still be pending.

As of 1316 BST, the benchmark Stoxx 600 was adding 0.64% to 387.51, alongside an advance of 1.18% to 11,894.08 for the German Dax to a near six-month high.

Milan's FTSE Mibtel meanwhile was climbing 0.99% to 21,733.95 and teetering on the verge of entering a so-called 'bull' market after rallying by over 20% since its December lows, which itself was admittedly its lowest mark in two years.

Spain's Ibex 35 was also moving higher, racing up 1.25% to 9,480.40.

In parallel, the yield on the benchmark 10-year German bund was bounding higher by six basis points to 0.01% and front month Brent crude oil futures were flirting with the $70 a barrel mark on ICE.

On the economic side of things, IHS Markit's services sector Purchasing Managers' Index for March was revised up from a preliminary reading of 52.7 to 53.3.

That was better than the consensus forecast for no revision and February's print of 52.8.

Germany's services PMI improved from 55.3 to 55.4, reaching the strongest level since September, and Spain's from 54.5 to 56.8, its best reading since February 2018.

But according to IHS Makit chief business economist, Chris Williamson, downside risks to the Eurozone economy had "intensified".

"Unless manufacturing pulls out of its downturn the overall pace of economic growth will likely weaken in the second quarter as the malaise spreads to the service sector," Williamson said.

"In this respect, with forward-looking indicators from the manufacturing sector suggesting goods production will fall further in the coming months."

On that note, a separate gauge tracking only output in from both German manufacturing and services ebbed to a level of 51.4 in March, its weakest for 69 months.

Santander was in the headlines in the middle of the week, committing to €20.0bn of investments on digital and improving its technology over the next four years and an eventual €1.2bn reduction in its annual costs.