Europe midday: Stocks extend gains as oil prices recover

European stocks pushed higher on Wednesday, extending earlier gains as oil prices recovered and investors sifted through some well-received corporate news.

At midday, the benchmark Stoxx Europe 600 index was up 1.5%, Germany’s DAX was 1.7% higher and France’s CAC 40 was up 1.9%.

Oil prices reversed early declines to trade higher as investors kept a close eye on developments in Tehran, where oil ministers from Venezuala, Iraq and Iran will meet to discuss an agreement to freeze output levels.

On Tuesday, Russia, Saudi Arabia, Venezuela and Qatar agreed to cap oil output at January levels – contingent on Iran and other producers agreeing to it – but this did little to boost prices as market participants had been expecting a production cut.

By Wednesday, it was beginning to look as though Iran would be fairly uncooperative.

Shargh daily newspaper quoted the country’s OPEC envoy, Mehdi Asali, as saying: “Asking Iran to freeze its oil production level is illogical... when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices."

West Texas Intermediate was up 2.2% at $29.68 a barrel while Brent crude was 2.8% stronger at $33.08. This helped to push the Stoxx 600 oil and gas index up 1.1%.

Despite the upbeat tone in markets and the recovery in oil, analysts were sceptical.

“For the deal to have any teeth, Saudi Arabia in particular needs to be willing to cut output, not least to offset the increased supply still to come from Iran,” said Capital Economics.

It said that while the deal was important at face value, with the four countries already signed up accounting for around a quarter of world production, there were reasons to be cautious.

Capital Economics pointed to the fact the deal is dependent on others joining, and that its success also depends on Russia playing its full part.

Finally it argued that even if total OPEC output can be capped at its January level, this would still be “exceptionally high”.

On the corporate front, French bank Credit Agricole advanced after outlining plans to simplify its ownership structure.

Schneider Electric was also on the front foot. Although the company posted a drop in 2015, it also announced that it would speed up its share buyback programme.

Glencore rallied after it secured early refinancing of a $8.45bn loan facility.

Anglo American surged after Credit Suisse and Deutsche Bank lifted their target prices on the stock.

AstraZeneca nudged higher after announcing that it has won fast-track US regulatory approval for a particular application of its most promising cancer drug, Durvalumab.

Sainsbury’s was on the front foot after Exane BNP Paribas upgraded the stock to ‘outperform’ from ‘neutral’.

On the downside, ABN Amro lost ground after its fourth quarter profit missed expectations.

There are no major Eurozone data due, so eyes will be on the US, where housing starts and building permits are at 1330 GMT. Industrial production is at 1415 GMT, while the latest Federal Open Market Committee minutes are due after the European close at 1900 GMT.