Europe midday: Stocks edge higher as miners, energy issues advance

European stocks edged higher on Monday, helped by strength in the basic resources and energy sectors as oil prices advanced.

At midday, the benchmark Stoxx Europe 600 index was up 0.2%, Germany’s DAX was 0.3% higher and France’s CAC 40 was up 0.4%.

At the same time, oil prices pushed higher on reports that Russia and Saudi Arabia had agreed to cooperate to stabilise prices. In a statement at the Group of 20 meeting in China, the oil producers said they would set up a working group to monitor the market and draft recommendations to ensure its stability.

West Texas Intermediate was up 2.9% to $45.71 a barrel and Brent crude was 2.9% firmer at $48.19. The Stoxx 600 oil and gas index gained 1.3%.

IG’s Chris Beauchamp said: “Although the US is out of the picture for Labor Day, that has not led to a particularly quiet morning for oil. Saudi Arabia and Russia hinted at an impending statement that raises hopes of a production freeze.

“Eager oil traders took the chance to buy the commodity once again, with the result that more than half of the losses of the previous two weeks were recovered in the space of a few hours.”

Better-than-expected data out of China was also helping to underpin the mood somewhat. The Caixin services purchasing managers’ index nudged up to 52.1 in August from 51.7 in July. This helped to boost the mining sector, pushing the Stoxx 600 basic resources index up 1.3%.

In corporate news, Zodiac Aerospace was under the cosh after a profit warning, while Hugo Boss slumped as UBS downgraded the stock to ‘sell’.

Altice was in the red after the telecoms group made an offer for the outstanding 22.25% shares of SFR it does not already own.

Retailer Marks & Spencer edged lower after it announced proposals to cut around 925 jobs as it looks to make savings following a detailed review.

GlaxoSmithKline nudged up after tests of one of its respiratory drugs found a statistically significant reduction in the rate of attacks suffered by chronic obstructive pulmonary disease (COPD) patients compared to when they receive the standard treatment.

On the data front, business activity in the eurozone slipped in August, according to data released on Monday.

Markit’s final composite purchasing managers’ index – which combines the services and manufacturing sectors – fell to 52.9 in August from 53.2 in July and was down a touch from the flash estimate of 53.3.

The services PMI fell to 52.8 from July’s 52.9 and the flash estimate of 53.1.

Market said the slowdown was centred on Germany, where output growth fell to its weakest pace in over three years. However, France, Italy, Spain and Ireland all saw rates of increase accelerate since July.

Chris Williamson, chief economist at Markit, said: “It’s clearly disappointing to see the final PMI has come in weaker than the initial flash estimate. While the overall picture is one of steady but sluggish 0.3% growth in the third quarter, the revised figures indicate that the economy is losing rather than gaining momentum.

Elsewhere, retail sales in the 19 countries that share the euro rose more than expected in July.

Retail sales were up 1.1% on the month following a 0.1% drop in June. On the year, retail sales were up 2.9%.

Sales of automotive fuel were up 1.8% in the eurozone, while sales of food, drinks and tobacco increased 1.1% and non-food products sales were up 0.4%.

On the year, sales of non-food products were 3.2% firmer, while automotive fuel sales were 2.2% higher and food, drinks and tobacco sales were up 1.8%.