Europe midday: Stocks gain as oil and metal prices rise

European stocks advanced as oil and metal prices rallied, while the euro rose against the dollar as political instability receded somewhat.

At midday, the benchmark Stoxx Europe 600 index was up 0.08%, Germany’s DAX added 0.34% and France’s CAC 40 was 0.53% higher. However, Italy’s FTSE MIB was down by 0.35% as bank shares in the country came under pressure.

Oil prices also rose amid growing expectations that OPEC will agree a production cut at its meeting later this week. Brent crude increased 2.22% to $47.87 per barrel and West Texas intermediate was 1.99% higher at $47.30. The Stoxx 600 oil and gas index gained 1.69%.

Jasper Lawler, market analyst at CMC Markets, said: “OPEC speculation continues to drive the oil price in the countdown to the November 30 meeting. Iran, Iraq and Russia have made positive utterances about a deal being done in recent days- but they are contributing the least to making it happen. Whether the deal goes ahead rests with Saudi Arabia deciding its own lost market share is a price worth paying for a policy that should- but may not - stabilise the price of oil.”

Metal prices also gained, pushing up the Stoxx 600 basic resources index by 1.99%.

Politics were in focus in Europe as former French President Nicolas Sarkozy conceded defeat after a vote to choose the centre-right candidate, leaving Francois Fillon and Alain Juppe as contenders.

Meanwhile, in Germany, Chancellor Angela Merkel confirmed that she will run for a fourth term in office.

“The confirmation that Angela Merkel is set to run for a fourth term as German chancellor in next year’s election, combined with a Marine Le Pen-damaging victory for Francois Fillon in the first round of France’s right-wing primaries, has given life to the euro this morning,” said Spreadex Financial Analyst Connor Campbell. The euro rose 0.52% against the dollar to $1.064.

President of the European Central Bank Mario Draghi is set to testify before the European Parliament in Strasbourg on Monday and market participants said dovish hints from his speech could send the euro down again in later trading.

On the corporate front, German chip designer Aixtron tumbled after a US regulator moved to stop a planned Chinese takeover of the company.

Italian banks were under the cosh, with Banca Popolare di Milano and Banca Popolare dell’Emilia Romagna both in the red amid worries about political stability ahead of the referendum on constitutional reform next month and concerns about whether lenders can raise the capital they need.

In London, profit warnings weighed on outsourcing group Mitie and plastic and fibre products supplier Essentra.

Meanwhile, GlaxoSmithKline edged lower after saying it has filed a US regulatory submission for a new three-drug inhaler treatment for patients with chronic obstructive pulmonary diseases.

European Central Bank president Mario Draghi is set to speak at 1630 GMT.