Europe midday: Shares slip on global gloom; Grifols up as Gotham cuts stake

European shares were lower on Wednesday as the World Bank warned the war between Israel and Hamas would hit global economic growth, while Yemen’s Houthi rebels fired a barrage of drones and missiles at shipping in the Red Sea, forcing the US and UK navies to shoot them down.

The pan-European Stoxx 600 index was down 0.16% at 476.49 after weaker sessions in the US and Asia.

“Negative sentiment has descended about the prospects for the global economy after warnings from the World Bank about the knock-on effect of conflict in the Middle East,” said Hargreaves Lansdown analyst Susannah Streeter.

“The bank is forecasting that trade and investment will also be stifled by conflict. Although oil has ticked back up with supply issues rearing up again amid fears the Gaza-Israel war will escalate, metals prices have largely fallen back, putting pressure on mining stocks.”

Oil prices gained as fears that the Israel-Hamas war would escalate into a broader conflict, along with continued attacks on shipping by Iran-backed Yemeni Houthi militants on shipping in the Red Sea. Brent Crude was up 0.27% to $77.80 a barrel.

The Yemenis have claimed they are attacking Israeli-linked ships in solidarity with the Islamist Hamas group but the majority so far have been on vessels with no ties to the region.

In equity news, shares in Grifols made ground after the Spanish drug company said it planned to sue hedge fund Gotham City Research over a report questioning the company's debt ratios that sparked a 40% sell off.

Sentiment was also boosted when General Industrial Partners, a joint venture between Gotham and Portsea Asset Management, cut its short position in Grifols to 0.06% from 0.57%.

UK supermarket chain Sainsbury’s fell despite strong Christmas sales and maintenance of annual guidance as analysts noted weakness in its general merchandise and clothing operations.

Dutch insurer NN Group made strong gains after reaching a €360m settlement on a long-running fight over index-linked products. A court last September last year said the company had at various points offered customers insufficient information about the costs linked to its products.

Reporting by Frank Prenesti for Sharecast.com