Europe midday: Stocks bound ahead, extending gains

Stocks across the Continent were extending their rebound in later afternoon trading stoked by news of further stimulus Stateside and after the release of a much stronger-than-expected reading on US retail sales.

Overnight, the US Federal Reserve announced that it would start purchases in corporate debt markets, even as reports out of Capitol Hill indicated that a $1.0trn infrastructure spending package was in the offing.

Some analysts in the City noted that the timing of the US central bank's latest move might be suspect given recent sharp falls and heightened volatility on Wall Street.

However, for IG chief market analyst, Chris Beauchamp: "Equity rallies are a side effect, and not the chief object, of these central bank moves, but the mantra 'do not fight the Fed' is still as powerful as it ever was."

As of 1420 BST, the benchmark Stoxx 600 was up by 3.42% to 365.11, alongside a 3.83% advance for the German Dax to 12,368.11 while the FTSE Mibtel added 4.35% to 19,795.38.

Banks were still faring best, rising by 5.06% as a group on the Stoxx 600, together with a 4.5% rebound in Travel&Leisure.

In Europe volatility was also in retreat, with the VStoxx gauge for the Euro Stoxx 50 down 12.51% to 32.60.

Also boosting investor sentiment, the latest figures from the Commerce Department showed that US retail sales surged at a 17.7% month-on-month pace in May (consensus: 7.4%).

Economic news out of the euro area was light but also positive.

According to Eurostat, Eurozone hourly labour costs accelerated to a 3.4% year-on-year pace during the first quarter, up from 2.3% at the tail-end of 2019.

"This isn’t pretty, but far better than the collapse in nominal GDP, indicating that workers’ income was shielded, relatively speaking at least," said Claus Vistesen at Pantheon Macroeconomics.

"We suspect the Q2 data will provide further evidence to this effect."

In parallel, the ZEW institute reported a 12.4 advance in its gauge of economic sentiment for Germany to reach 63.4.

Nonetheless, expectations for earnings remained "stronly negative" for export-oriented sectors like automotive and mechanical engineering, as well as for the financial sector.

Forecasts for information technologies, telecommunications and consumer-oriented services on the other hand remained "fairly positive".