Europe midday: Shares hold gains as China data helps rally

European shares held gains on Friday, driven by better-than-expected data from China.

The pan-European Stoxx 600 index was up 0.86% after a strong finish on Thursday when the European Central Bank hiked interest rates again, but signalled that it may pause rises for the time being. All major regional bourses were higher.

A raft of data from China out on Friday showed signs that the world's second largest economy may be stabilising after months of weaker-than-expected economic indicators.

Both retail sales and industrial output smashed expectations in August, though economists were quick to point out that this is unlikely the start of a significant recovery as Beijing still grapples with a property crisis that some fear could spill over into the wider financial sector.

The People's Bank of China made another cut to the reserve requirement ratio – the amount of cash that banks need to have on hand – as it continues to attempt to prop up the real estate market.

Market sentiment was also lifted by the stockmarket debut of computer chip maker ARM, with the shares up 25%.

"The huge enthusiasm around trading suggests there is still very much still appetite for high-growth names, and there’s growing hope that the IPO market will now become more buoyant next year," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"IPO activity is a strong indicator of overall sentiment – people rarely come to market when things are highly uncertain. The timing of the IPO is a clear signal that owner Softbank, which still owns 90% of ARM, wanted to capitalise on the artificial intelligence wave."

On the commodities front, Brent crude oil traded above $94 a barrel, approaching the psychological $100 level.

Games Workshop surged as the Warhammer maker said results for its most recent quarter had come in above expectations.

Reporting by Frank Prenesti for Sharecast.com