Europe midday: Shares hold gains despite weak eurozone survey data

European shares held strong gains at midday on Monday despite another contraction in eurozone business activity.

The pan-regional Stoxx 600 index was up 1.28% with all major bourses higher.

Britain’s FTSE 100 edged ahead as former finance minister Rishi Sunak looked set to become the country’s third prime minister in seven weeks after a theatrical intervention by deposed leader Boris Johnson, whose bid for a return to Downing Street evaporated limply after he fell well short of the threshold of support required to stay in the contest.

Sunak claims to have the support of more than 130 lawmakers. His only rival, Penny Morduant, appeared to be well short of the 100 required to force a vote of the Conservative Party membership - meaning Britain's next prime minister will have been chosen by an electorate of 357 people.

Wall Street rallied on Friday after a report said the Fed will likely debate on a smaller interest rate hike in December.

Eurozone business activity contracted again in October, at the fastest pace in two years, according to a preliminary survey released on Monday.

The S&P Global flash composite output index, which covers both the services and manufacturing sectors, fell to 47.1 from 48.1 in September, coming in below the 50.0 level that separates contraction from expansion for the fourth month in a row. Economists had been expecting a reading of 47.5.

This marked the fastest rate of decline since November 2020. Excluding pandemic lockdown months, the latest reading was the lowest since April 2013.

The eurozone services purchasing managers’ index fell to 48.2 in October form 48.8 in September, hitting a 20-month low. Meanwhile, the flash manufacturing PMI printed at 46.6, down from 48.4 a month earlier and hitting a 29-month low.

In equity news, shares in Philips gained after the Dutch medical equipment maker said it expected to axe 4,000 jobs as it tried to streamline its organisation.

Dutch technology investor Prosus fell 12% after Chinese President leader Xi Jinping's newly unveiled leadership team heightened fears that economic growth will be sacrificed for ideology-driven policies.

Shares in educational publisher Pearson gained 7% after an upbeat third-quarter trading statement.

Reporting by Frank Prenesti for Sharecast.com