Europe midday: Shares hold ground ahead of ECB policy meeting

European shares held their ground at midday as investors awaited the European Central Bank meeting for any indication on how it viewed rising bond yields.

The pan-European Stoxx 600 index was up 0.18% with little to drive the market after a rally on Wall Street, boosted by the passing of the $1.9trn US fiscal stimulus package.

"There appears to be little caution in European markets ahead of today’s ECB meeting, a day after European indices clocked up more strong gains," said IG analyst Chris Beauchamp.

"The Dax remains on course for more new record highs, while the FTSE MIB has once again moved above 24,000, the fifth such move in the past decade. In London the FTSE 100 continues to languish below recent highs, its rebound from the lows of February stalling once again, a sharp contrast to the enthusiasm for stocks seen in Europe and the US."

"The ECB meeting will be a key determinant of market direction in the near-term now that the US stimulus bill has been passed – investors will be hoping that the bank will address the rise in bond yields and flag its ability to cope with any sudden rise in inflation, although the lack of any coordinated fiscal stimulus in the eurozone to compare with the US makes these concerns less relevant for European assets."

In equity news, shares in French power group EDF rose jumped 6.22% after Finance Minister Bruno Le Maire reportedly said there will be no break-up of the company as negotiations between Paris and Brussels over an overhaul of the company enter a final stage.

Rolls-Royce edged up 0.9% as the aircraft engine-maker stuck to its forecast to burn through less cash this year after posting a worse-than-expected 2020 loss.

Shares in UK supermarket group Morrisons were up 0.3% despite a halving in profits due to extra Covid costs.

"The shares have held their ground this morning, despite the lack of any good news. Proclaiming performance will be better this year compared to last is hardly a groundbreaking statement, and even the surge in online sales is a mixed blessing, being a high-cost business," said IG's Beauchamp.

"Despite the notable rallies of the past year, the shares have repeatedly stalled around 190p. While this represents some upside to the current price it is hard to see what will drive them much higher over the longer term."