Europe midday: Stocks edge higher as oil prices recover

European stocks edged higher on Wednesday as oil prices recovered, although luxury stocks were under pressure following disappointing news from Richemont and Hermes.

At midday, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was 0.4% firmer and France’s CAC 40 was 0.1% higher.

At the same time, oil prices rebounded from heavy losses on Tuesday. West Texas Intermediate was up 0.6% to $45.17 a barrel and Brent crude was up 0.4% at $47.30.

IG’s Joshua Mahony said: “Markets are beginning to show signs of stabilisation, following on from a surge in volatility sparked on Friday. The heightened sensitivity to Fed rhetoric should cool as we enter a blackout period ahead of next week’s policy meeting.”

In corporate news, Bayer pushed higher following reports that US seeds company Monsanto has accepted a sweetened takeover offer from the German chemicals and drugs firm of $128 a share.

Construction group Galliford Try was in the black as it hoisted its dividend 21% after posting a record annual profit thanks to strong growth at its housebuilding and regeneration units.

Elsewhere, Compass Group gained ground after JPMorgan Cazenove upgraded the stock to ‘overweight’ from ‘neutral’.

On the downside, however, luxury stocks were under the cosh, with Richemont in the red after the Cartier maker said operating profit in the first half was likely to drop by 45%. Meanwhile, Hermes was also weaker after saying it was abandoning annual sales growth forecasts from 2017 as a result of the uncertain trading environment.

Telecommunications company Sky nudged a touch lower after saying it has invested £1m in the Drone Racing League (DRL), which includes a distribution deal to show the league on the Sports Mix channel from October.

FTSE 250 homeware retailer Dunelm was little changed after reporting a rise in full-year profit and revenue as it grew its market share despite increasing competition, and lifted its dividend.

On the data front, figures from Eurostat showed industrial production in the 19 countries that share the euro was down 1.1% from June compared to a 0.8% rise the month before and missing expectations for a 0.9% fall.

The production of capital goods declined by 1.7%, while energy production was 1.4% lower and durable consumer goods production fell 0.7%. The production of intermediate goods was down 0.5% while production of non-durable consumer goods was unchanged.

On the year, industrial production in the euro bloc was 0.5% lower, which was ahead of analysts’ expectations of a 0.7% drop.

In the EU-28 group of countries, industrial production fell 1% on the month and 0.1% on the year.