Europe midday: Periphery stocks lead gains after debt upgrades

Periphery stocks are pacing gains following sovereign debt upgrades for Greece and Spain, amid news that delegates from Germany's SPD party voted to start formal talks with the CDU/CSU on creating a grand coalition in the country.

At 1300 GMT, the Athens Stock Exchange's general index was up by 1.12% to 857.05, together with a 1.04% advance for Spain's Ibex 35 to 10,587.60.

After the close of markets on Friday, Standard&Poor's raised its rating on Greece's long-term sovereign debt to B with a positive outlook.

The announcement came ahead of a regularly-scheduled meeting of euro area finance ministers, on Monday, at which they were expected to assess Greece's compliance with the terms of its bailout package. A positive assessment might see the so-called Eurogroup sign off on about €6.7bn of new loans to Athens.

Spanish assets also got a boost after Fitch Ratings raised its view on that country's sovereign debt by one notch to A-, with a stable outlook.

Elsewhere, the benchmark Stoxx 600 was edging higher by 0.18% or 0.73 points to 401.63, alongside an advance of 0.12% or 15.49 points to 13,450.65 for the German Dax, while the Cac-40 was 0.24% or 12.83 points higher at 5,538.67.

"Equities have made a negative start to the week (yes it is possible) as investors weigh up the US government shutdown (another vote 5pm UK). At the same time we get opening gambits from the World Economic Forum in Davos, await more on German coalition talks and prepare for results from HP, Halliburton and Netflix. The USD is on the back foot again, helping commodities, with the threat of central bank bullishness round the world overshadowing a hiking Fed.

"This and suggestions of a special Brexit deal helps GBP, hampering the FTSE, while a strong EUR hurts the DAX," said Mike van Dulken at Accendo Markets.

Meanwhile, in Germany, at the weekend SPD delegates voted to begin formal negotiations with their main political rivals from the CDU/CSU.

However, any deal would yet need to be put to a vote before all of the party's members before it could be implemented. Hence, there was still a risk that new elections would be called.

No major economic reports were scheduled for release on Monday in Europe or the US.

In corporate news, French drug-maker Sanofi offered $11.6bn on Friday evening for US rival Bioverativ, sending its shares sharply lower.

Deutsche Telekom's finance chief told Boersen Zeitung the company would keep its promise to raise dividends in 2018 and thereafter.

Further south, Atlantia and Hochtief continued to manoeuvre to gain the upper hand in their ongoing battle to take control of Spanish toll-road operator Abertis.

On Friday, Atlantia said it would call a shareholder meeting to vote on changes to its bid for Abertis.

According to Bloomberg, Airbus was negotiating with British Airways the possible sale of new A380 jets.

In notable broker recommendations, analysts at Credit Suisse cut their earnings per share estimates for Spanish lender BBVA in 2018 and 2019 by 7% and 10%, respectively, but upped their target price on its stock from €6.7 to €7.5.