Europe midday: Stocks drift lower as strategists sound cautious note

European stocks continued to trade slightly lower come midday, as traders digested the latest geopolitical news, including the tragic events in London at the weekend, amid caution from some top-ranked strategists.

As of 1145 BST the benchmark Stoxx 600 was down by 0.13% to 392.05, alongside a retreat of 0.83% for the FTSE Mibtel to 20,754.41 and losses of 0.57% in France's Cac-40 to 5,312.93.

Germany's Dax was closed for Whit Monday, alongside bourses in Switzerland, Norway, Denmark, Austria, Greece and Ireland.

In parallel, euro/dollar was off by 0.37% to 1.1240.

Front month Brent crude futures on the other hand had turned around, trading lower by 0.38% to $49.76 per barrel on the ICE after Saudi Arabia, Bahrain, the United Arab Emirates and Egypt announced the suspension of air and sea travel to and from Qatar.

Officials in Riyadh cited Qatari support of "terrorist groups aiming to destabilise the region" as the reason for the move.

Acting as a backdrop, strategists at JP Morgan recommended clients stick with a defensive stance in their portfolios, pointing to the risk of a sharp correction in US equities, a phase of significant de-risking in China and the risk of political concerns around Italy coming to the fore sooner than expected.

On the economic front, IHS Markit´s composite euro area output index was steady at 56.8 points in May and in-line with a preliminary estimate.

However, the survey compiler's euro area services business activity index printd at 56.3 for May. That was down from a reading of 56.4 for April but ahead of a preliminary estimate of 56.2.

According to Chris Williamson, Chief Business Economist at IHS Markit, those survey readings added to evidence of continued strong economic growth in the single currency bloc during the second quarter.

"So far in the second quarter the PMI surveys are running at levels indicative of 0.7% GDP growth in France and Germany, with nearly 1% being signalled for Spain and 0.5% in Italy," he said.

Still on the economic calendar for Monday were the US ISM non-manufacturing index and factory orders data, both at 15:00 BST.

Societe Generale announced it would launch an IPO of its car leasing arm, ALD Automotive.

Spanish lender Banco Popular was again on the backfoot ahead of a meeting with European Central Bank officials the next day to discuss its current situation.