Europe midday: Stocks edge higher on back of trade news

European stocks are continuing to reverse early losses after China's central bank boosted short-term liquidity and thanks to positive 'market chatter' regarding the phase one trade deal between the US and China.

Some analysts were nevertheless cautious giving the rising number of Covid-19 cases which it was feared might stymie the economic recovery on the Continent.

"There appears to be an increasing nervousness, despite the gains of the last 100 days [...] that economies are reaching the limits of what they can do, without increasing the risk of a surging second wave of cases, as we head towards the autumn months," said Michael Hewson, chief market analyst at CMC Markets UK.

As of 1315 BST, the pan-European Stoxx 600 was up by 0.25% to 368.99, alongside a 0.27% advance for the German Dax to 12,935.16.

The Cac-40 was also higher, by 0.14% to 4,969.66, but the FTSE Mibtel remained lower by 0.30% at 19,968.05 and the Ibex 35 was down 0.67% to 7,106.80.

Overnight, the People's Bank of China injected 700bn yuan via one-year loans into the country's financial system, more than analysts had forecast.

More important perhaps, in the background some analysts were arguing that the delay in the US-China review of progress thus far on implementing their trade agreement, which had originally been scheduled for 15 August, did not necessarily mean that obstacles to its implementation had arisen.

On the back of the news from Beijing, the Stoxx 600 sector gauge for Basic Resources that was pacing gains, climbing 1.68% to 415.96.

In deals news, French drug-maker Sanofi closed a $3.4bn all-cash deal to acquire Principia Bipharma, the US developer of treatments for multiple sclerosis and various autoimmune disorders.

Investors were also keeping an eye on geopolitics, both in the Middle East and in northern Europe, in Belarus.

Tehran reacted very poorly to news of a normalisation in diplomatic relations between Iran and the United Arab Emirates.

Newly-elected Belarusian President Alexander Lukashenko was under increasing pressure from large protests triggered by a violent crackdown on opposition supporters who accused him of rigging the last elections to extend his 26-years in power, the BBC reported.

On the Covid-19 pandemic front meanwhile, German finance minister, Olaf Scholz, proposed extending subsidies to preserve jobs from one year to two, at a projected cost to the taxpayer of €10bn.

Elsewhere, the New York Times reported on what appeared to be a growing body of evidence that the human body was capable of mounting lasting immunity to the Covid-19 novel coronavirus.