Europe midday: Investors wary other shoe about to drop

European stocks are near their worst levels of the day as investors wait for the proverbial 'other shoe' to drop in Washington.

"Traders will be reluctant to open up new long positions while there is talk of Trump being impeached. I would classify today as a risk-off session as traders appear to be in wait-and-see mode. There are bargains to be had out there but dealers would be taking on excessive risk by buying in now," said David Madden, market analyst at CMC Markets UK.

Against that backdrop, Reuters reported that former national security adviser Michael Flynn and other Trump advisers sent at least 18 calls and e-mails to Russian officials or related people during the last seven months of the presidential elections.

At 1200 BST the Stoxx 600 was down by 1.05% to 387.04, alongside a drop of 0.93% for Germany's Dax to 12,513.95 and a retreat of 1.86% in the FTSE Mibtel to 20,883.40.

The euro on the other hand was on the backfoot, giving back a little of the previous day's advance. Euro/dollar was trading down by 0.27% to 1.1137.

A widely-followed gauge of volatility in equities on the other hand was continuing to move higher as investors bought protection against downside risks.

The VStoxx index of volatility for the Eurostoxx 50 was putting on 13.76% to 18.36.

Wall Street endured steep losses the day before as events on Capitol Hill took many investors by surprise.

Oren Klachkin at Oxford Economics was of a broadly similar view, telling clients that: "increased congressional attention on the administration's interactions with Russia and the FBI puts Congress' fiscal stimulus agenda at risk. In the near-term, this will lead to some market repricing of the expected Trump "bump" to the US economy. However, the greater risk for markets and the economy is that this leads to an impeachment process."

Unemployment in France was steady at 9.6% during the first quarter of 2017 on an ILO basis, according to INSEE.

Still on the economic calendar for later on Thursday, were initial weekly US unemployment claims figures due out at 1330 BST, alongside the Philly Fed's manufacturing sector gauge for May and the Conference Board's index of leading economic indicators for the month of April at 1500 BST.

Drug-maker Merck was slightly on the backfoot even after reporting a 14.5% jump in core earnings for the first three months of the year.

Spain's incumbent telecoms operator Telefonica was lower despite analysts at Goldman Sachs having raised their target price on the shares of €11.6, up from €9.90 previously.