Europe midday: Shares extend gains; SBB slumps as CFO quits

European shares extended gains at midday on Monday as investors digested a cut in China's key interest rate, while shares in Swedish property developer SBB slumped as the firms chief financial officer quit.

The pan-European Stoxx 600 was up 0.70% in early deals with all major bourses higher.

China's central bank cut the one-year loan prime rate by 10 basis points to 3.45%, versus consensus expectations of a 15 basis points cut.

Meanwhile, the five-year loan prime rate - which affects mortgage prices - was unexpectedly left unchanged at 4.20%. Analysts had been expecting a 15bps cut, especially after the medium-term loan rate was reduced last week.

Energy stocks were higher as lower exports from Saudi Arabia and Russia tightened supply. Total, BP and Shell all made gains.

In equity news, SBB, plagued by an accounting scandal, slumped almost 14% as the firm said CFO and deputy CEO Eva-Lotta Stridh would leave her position.

Novo Nordisk shares were higher after Morgan Stanley lifted its target price on the pharma company.

Adyen was on the slide again after two brokerages downgraded the Dutch digital payments firm days after it missed earnings estimates.

UK housebuilder Crest Nicholson slumped as it lowered annual profit forecasts after a worsening of the housing market amid rising inflation and interest rates.

The company said it expected annual profits to be around £50m in a "challenging" market, down from prior forecasts of £73m, but predicted a fall in interest and inflation rates over the medium term.

Other housebuilders followed suit, with Taylor Wimpey, Persimmon, Barratt Developments, Berkeley and Redrow all sharply lower.

"The Bank of England’s aggressive stream of rate hikes that have made it considerably more expensive to borrow are taking the heat out of the market, forcing buyers to respond to weaker demand by lowering their asking prices," said Interactive Investor head of investment Victoria Scholar.

"Many would-be sellers are choosing not to list their properties at all, given the increased difficulty in achieving their desired selling prices. Stagnation in the housing market is prompting more individuals and families to turn to the letting market instead, pushing rents sharply higher."

Reporting by Frank Prenesti for Sharecast.com