Europe midday: Stocks edge up but oil prices retreat

European stocks edged higher on Tuesday, recovering from the previous session's losses as data from the European Commission showed eurozone economic sentiment remained steady in November, but gains were capped by worries about oil ahead of the OPEC meeting in Vienna.

At midday, the benchmark Stoxx Europe 600 index, France’s CAC 40 and Germany’s DAX rose by 0.03%, 0.54% and 0.07%, respectively.

Italy's FTSE MIB was the standout gainer, up 0.95%, as it bounced back from heavy losses on Tuesday when the country's bank shares took a battering amid concerns about the upcoming constitutional referendum.

Prime Minister Matteo Renzi has said he would resign if the proposals are rejected, which would lead to political uncertainty. Market participants are worried that this would make the task of sorting out banks' non-performing loan issues even more difficult.

"These gains seem to have stemmed from the euro giving up much of the ground it took back yesterday, the currency spooked by the increasing likelihood that Italy will vote ‘No’ to Mario Renzi’s constitutional reforms on Sunday,” said Spreadex financial analyst Connor Campbell.

Oil prices retreated as the Indonesian energy minister said he was "not optimistic" that an output deal will be agreed at the OPEC meeting in Vienna on Wednesday. West Texas Intermediate and Brent crude fell by 1.8% and 1.6% to $46.25 and $47.49 a barrel, respectively.

Meanwhile, basic resources were among the worst performers, with the Stoxx 600 sub-index for the sector down 0.85% as metals prices fell.

On the data front, the European Commission’s headline economic sentiment index edged up to 106.5 in November from a revised 106.4 in October, missing economists’ expectations for a reading of 107.0. The EC said the virtually unchanged sentiment resulted from a mild deterioration in industry confidence and stable readings in services, which offset more upbeat assessments of construction and retail trade managers, as well as consumers.

In corporate news, Actelion dived after earlier gains. The stock had been higher following a report the Swiss biotech company was not actively considering selling itself but rather weighing a deal to link up with Johnson & Johnson.

Deutsche Lufthansa reversed losses after it lost a German court bid to prevent pilots from resuming strikes on Tuesday in a labour dispute that has caused thousands of flight cancellations this month.

BT Group edged lower after Ofcom ruled it must legally separate from its Openreach infrastructure arm due to its failure to satisfy the regulator's competition concerns.

BT made a move late on Monday to try and prevent the enforced spin-off with the appointment of a former director of the telecoms regulator, Mike McTighe, as chairman of Opeanreach but this seems not to have proved sufficient.