Europe midday: Shares head towards flatline after early optimism on banks

European shares headed towards the flatline on Tuesday as US futures indicated a weaker start on Wall Street.

The pan-European Stoxx 600 index gave up early gains to be 0.07% higher at was up 0.59% at 1045 GMT, with all major bourses higher. Investors traded on optimism that the banking crisis caused by the failures at Silicon valley Bank and Credit Suisse had been contained.

"The purchase of large chunks of Silicon Valley Bank's assets by First Citizens has steadied nerves but some caution is set to remain about potential repercussions," said Hargreaves Lansdown analyst Susannah Streeter.

"With contagion limited for now, hopes that the debacle will have less of an impact on global growth have ticked up a little. Reports that the flow of deposits from smaller lenders to larger banks in the United States has slowed also appear to have helped sentiment.

In equity markets, Softcat surged after saying it expects the outturn for the full year to be "slightly ahead" of previous estimates following outperformance in the first half.

Ocado shares slipped fell 5%, despite the online grocer and technology group reporting that Ocado Retail - its 50:50 joint venture with Marks & Spencer - saw a jump in first-quarter revenues and that it remained on track to return to sales growth and profitability.

The online grocer said retail revenues rose 3.4% in the 13 weeks to 26 February, to £583.7m, with average orders per week ahead 3.6% year-on-year at 381,000.

M&S shares also gained on the news.

BA and Iberia owner IAG flew higher after an upgrade to 'buy' from 'neutral' at Redburn, while Bellway shares rose as the UK housebuilder unveiled a £100m share buyback despite a fall in interim profits.

Reporting by Frank Prenesti for Sharecast.com