Europe midday: Stocks dip further as doubts surface over oil deal

European stocks pushed lower as investors chewed over the production cut agreed by the Organization of Petroleum Exporting Countries on Wednesday and as jitters set in ahead of the Italian referendum on constitutional reform this Sunday.

At midday, indices were in the red across the board with the benchmark index Stoxx Europe 600 down 0.52%, France’s CAC 40 0.57% lower and Germany’s DAX falling 0.71%.

Oil prices were in the black but off highs after members of OPEC decided on a production cut of 1.2m barrels a day to 32.5m barrels from January next year.

Brent crude was up 0.99% to $52.36 per barrel and West Texas Intermediate rose 0.8% to $49.85, as analysts started to doubt whether the supply targets will be achieved.

Meanwhile, investors were also getting nervous ahead of the impending Italian referendum.

IG market analyst Joshua Mahony said: “The OPEC hangover being felt across Europe this morning is a clear indication that whilst yesterday’s announcement was over and above expectations, there still remain a number of hurdles to curing the oversupply evident in the oil market. European markets also have Italian clouds looming, with the referendum providing the most significant risk event ahead despite tomorrow’s US jobs data.”

On the data front, the final eurozone manufacturing purchasing managers’ index came in at 53.7 in November, in line with the flash estimate and up from 53.5 in October according to IHS Markit.

Chris Williamson, chief business economist at IHS Markit, said: “Eurozone manufacturers are enjoying the best improvement in business conditions for almost three years, as the benefits of a weaker currency and strengthening demand helped firms brush off political worries.”

Unemployment in the region declined in October to the lowest rate recorded in the euro bloc since July 2009 according to Eurostat. The unemployment rate fell to 9.8% from 9.9% in September and 10.6% in October 2015.

Pantheon Macroeconomics said it was a “surprising and upbeat headline” but cautioned that big month-to-month movements in these data are often revised.

In China, the official manufacturing purchasing managers' index released earlier came in at 51.7 for November, up from 51.2 in October and ahead of expectations for a reading of 51.0.

On the corporate side, oil giants BP and Shell racked up healthy gains as oil prices rallied. BP was also boosted by an upgrade to ‘outperform’ from ‘neutral’ from Credit Suisse.

Anglo-Swiss miner Glencore was on the front foot after it said its plan to reduce debt as resources prices retreat is near completion, and the company intends to return $1bn to its shareholders next year.

Rio Tinto edged lower after earlier gains as it confirmed that it is cooperating with inquiries from the relevant authorities relating to the impairment included in the company's 2012 accounts in respect of Rio Tinto Coal Mozambique.

The statement followed a press report in earlier in the week stating that the company was facing an investigation by the US Securities & Exchange Commission on the timing of the $3bn in impairment charges.

Swedish medical equipment firm Elekta slumped after its results missed expectations.

TalkTalk was also under the cosh after a downgrade by JP Morgan Cazenove.

Daily Mail & General Trust was in the black as it reported a drop in adjusted pre-tax profit and operating profit but a rise in revenue for the year, with results ahead of expectations overall.

Rolls Royce advanced as it announced plans to cut around 800 jobs worldwide to make savings in its marine business.