Europe midday: Stocks gain further on strong manufacturing, labour data

Europe's main equity indices approached monthly highs by midday on Tuesday, buoyed by strong manufacturing and employment data gains.

At noon the benchmark Stoxx 600 was higher by 0.36% or 1.4 points to just over 388, alongside gains of 0.20% to 12,462.33 for the Dax and 0.39% to 5,287.81 for the Cac-40.

Positive sentiment was buoyed by strong purchasing managers' index data from the European manufacturing sector, offsetting soft prints from China, underwhelming reads from the US and frosty Brexit talks between Theresa May and her continental counterparts, said Mike van Dulken at Accendo Markets.

He said investors were keeping in mind Wednesday's US Federal Reserve policy update and Sunday's French election second round run-off.

The European manufacturing data showed the sector expanded at its fastest pace in six years in April, with IHS Markit's PMI coming in at 56.7, up from March's reading of 56.2 and just a tick below the flash estimate of 56.8.

This fuelled one of the largest increases in factory jobs in the 20-year history of Markit's survey.

"The latest survey readings indicate that manufacturing is growing at an annual rate of approximately 4-5%, which should make a significant contribution to overall economic growth," said Chris Williamson, chief economist at Markit.

"Companies are benefitting from the historically weak euro, improved growth in key export markets, rising domestic demand and ongoing central bank stimulus including record-low interest rates."

Later in the session, Eurostat published a report showing little movement in unemployment in March as the headline number remained at lowest its level in more than eight years.

A rate of 9.5% was the same rate as February but down from 10.2% in March 2016, which was above economists' expectations for a tick down to 9.4% but marked the lowest recorded rate in the euro bloc since April 2009.

Meanwhile, oil prices rebounded mid-session, with front month Brent crude oil futures up by 1.1% to $52.10 a barrel on the ICE, while euro/dollar had climbed 0.12% to 1.0912.

Solid continental data helped offset disappointing news from China, as Caixin's manufacturing sector PMI fell from a reading of 51.2 for March to a seven-month low of 50.3 in April (consensus: 51.3).

Shares in Allianz moved higher after the insurance group said it would acquire British water supply company Affinity.

Bayer traded lower after indicating it is seeking approval from US regulators in order to be able to complement dosage options for its stroke prevention pill Xarelto.

Italian eyewear group Luxottica dipped as it reported like-for-like sales down 3.5% in the first three months of the year as it moved to trim discounts and promotions.