Europe midday: Markets rangebound ahead of upcoming risk events

European stock markets were trading flat by Friday lunchtime, having erased earlier losses, though trading was rangebound with investors cautious ahead of number of key events in the coming weeks.

Nervousness ahead of next week's UK Budget and the all-important US non-farm payrolls report, as well as ongoing uncertainty surrounding the US elections in November, were all acting to keep a lid on risk appetite on global financial markets.

The Stoxx was more or less flat at 518.74 by 1300 CEST, with gains in Frankfurt and Milan outweighed by losses in London, Paris and Madrid.

Economic data was relatively thin on the ground on Friday, with the German IFO sentiment gauge the only major release, which showed that business sentiment improved for the first time in six months.

According to the IFO Institute, the closely followed Business Climate Index rose to 86.5 in October, up from 85.4 in September. The consensus forecast was for a smaller uptick to 85.6. The current assessment indicator improved to 85.7 from 84.4, while the expectations gauge rose to 87.3 from 86.4.

Earnings mixed

Mercedes-Benz was in reverse after the German car and truck maker reported a third-quarter net profit of €1.72bn, down from €3.72bn a year earlier and well below the €1.93bn expected by the market. Car margins sank to just 4.7% from 12.4% the year before on the back of softer pricing and weaker sales of higher-margin models.

Also lower was Remy Cointreau after the French drinks group cut its full-year revenue forecast following a 16% plunge in fiscal second-quarter sales to €317m, missing analysts' estimates. The company blamed weak conditions in China and poor demand in the US.

In London, NatWest jumped after raising its full-year income forecasts after a strong third quarter in which profits jumped 35%. The banking group said it now expects to achieve a return on tangible equity above 15%, up one percentage point on previous guidance, while adjusted income should come in at £14.4bn, compared with an earlier forecast of £14bn.

Elsewhere, French pharma giant Sanofi impressed with its third-quarter profits, while Italian energy group Eni was subdued after cutting its earnings guidance for the year.