Europe midday: Stocks down on geopolitical worries, tech and basic resources weakest

Stocks are moving lower at the end of the week, weighed down by a spate of mixed readings on the Chinese economy for the month of May and amid heightened tensions in the Persian Gulf.

"Despite the head-turning events in the Middle East, the relationship between China and the US remains the key determinant of market movement given its knock-on effect on global trade and growth," said IG's Chris Beauchamp.

Indeed, Beauchamp and some other analysts appeared to be hopeful that improved US-China trade relations were possible.

As of 1256 BST, the benchmark Stoxx 600 was down 0.68% at 377.74, alongside a drop of 0.88% to 12,062.90 for the German Dax, while the Cac-40 was off by 0.53% to 5,346.80.

Basic Resources firms were weaker on the back of the news out of China, with the corresponding Stoxx 600 sector gauge off by 1.21% to 443.83.

But it was Technology shares that were faring worst, with the Stoxx 600 sector gauge down 1.88% at 463.99 after US chipmaker Broadcom walked back on a previous forecast for a rebound in demand during the second half, citing concerns around international trade and the ban on trading with Huawei.

Data out of China overnight had revealed weaker-than-expected prints for industrial production and fixed asset investment in May, with the former printing at up by 5.0% year-on-year in May, versus a consensus estimate for an increase of 5.4%, and the latter at 5.6% versus the 6.1% anticipated.

Nonetheless, commenting on the FAI figures, Freya Beamish at Pantheon Macroeconomics said: "More positively, secondary industry investment growth ticked up. That won't last in the current trade environment, but we expect an improvement in international trade relations soon."

Retail sales in China on the other hand grew at a year-on-year pace of 8.6% in May (consensus: 8.1%), following a rise of 7.2% in April.

Also overnight, the US accused Iran of being complicit in the previous day's attacks on two more tankers in the Persian Gulf.

Brent crude oil futures were only slightly higher on Friday, adding 0.18% to $61.42 per barrel on the ICE on the back of concerns around the global demand picture.

Reflecting those concerns, in its latest monthly report, the Energy Information Administration cut its forecast for global demand growth in 2019 by 100,000 barrels a day to 1.2m b/d.

Gold on the other hand found a bid and it was sticking, with the August COMEX contract climbing 1.07% to $1,358.10/oz..

On the corporate side of things, stock in Bayer was drifting lower after the chemicals maker announced plans to invest roughly €5.0bn to develop alternatives to the Roundup weedkiller it acquired after its purchase of US rival Monsanto; however, a company spokesman said those funds did not represent new spending.

As expected, the Russian central bank lowered its one-week repo rate by 25 basis points to 7.50%.

The US dollar was at its sesion low of 64.2819 versus the Russian rouble following the move.

For later in the session, monthly retail sales figures covering the month of May are scheduled for release at 1330 BST, followed by a reading on industrial production during that same month at 1415 BST and for consumer confidence in June at 1500 BST.