Europe midday: Shares lose direction after morning boost

European shares slipped into the red at midday following after an earlier boost on the back of a strong performance in the US as regulators granted the Pfizer/BioNTech Covid vaccine full approval.

The pan-regional Stoxx 600 index was flat with most major continental bourses weaker. Germany’s DAX, outperformed, up 0.34% as the economy grew more than expected in the second quarter.

German gross domestic product grew an adjusted 1.6% on the quarter, the Federal Statistic Office said, up from its previous estimate of 1.5% and following a revised first quarter contraction of 2%.

Consumers dipped into record savings piled up during the winter lockdown as Covid-19 curbs were eased and the state maintained its stimulus programme.

“Investors have for the moment reverted to the glass half-full mentality, with buying interest in big tech propelling the Nasdaq to a record closing high,” said interactive investor head of markets Richard Hunter.

He added that sentiment was also buoyed by the Pfizer/BioNTech approval, prompting hopes that the level of inoculations could be accelerated as a result.

“The Delta variant has become a drag on economic recovery generally and measures to mitigate its impact will have positive effects,” Hunter said.

“Indeed, a third monthly drop in business activity in the US showed the effects which the variant is having, although more positive news came in the form of a rise in home sales.”

Traders are also awaiting US Federal Reserve chief Jerome Powell’s speech at the annual Jackson Hole symposium on Friday for direction on the bank’s asset purchases tapering plans.

In equity news, shares in Marks & Spencer rose 4.7% after Berenberg and Credit Suisse raised their price targets.

UK supermarket giant Sainsbury’s weakened, having surged on Monday following a report that US private equity firm Apollo was considering making a £7bn offer for the supermarket chain.