Europe midday: Stocks gain on talk of China stimulus, 'dovish' ECB

Stock markets across the Continent are rising sharply with hopes for further economic stimulus in China helping to offset the chilling effect from the ongoing US-China trade stand-off.

Nevertheless, US Commerce Secretary Wilbur Ross appeared convinced that Washington and Beijing would be able to reach a deal, telling broadcaster CNBC: "Eventually, this will end in negotiation [...] Even shooting wars end in negotiations."

"At the G20, at most it will be ... some sort of agreement on a path forward, but certainly it’s not going to be a definite agreement," he reportedly added.

Against that backdrop, as of 1500 BST the benchmark Stoxx 600 was ahead by 0.81% to 381.35, alongside a jump of 1.21% for the German Dax to 12,190.28, while the FTSE Mibtel was adding 0.78% to 20,645.33.

Shares in Auto & Parts companies were doing especially well, with the Stoxx 600 sector gauge adding 1.87% to 479.89, while that for firms in the Basic Resources was up by 1.0%.

In another boost to sentiment, in remarks made to journalists earlier in the session, European Central Bank governing council member, Olli Rehn, said all options were on the table should further monetary stimulus be needed, including further changes to its so-called 'forward guidance' or tiered interest rates.

Just as well perhaps, giving the rapidly deteriorating investor sentiment.

According to the Sentix institute, investors were already gearing up for a recession in Germany and activity in the euro area was seen as only slightly positive, with the single currency bloc immersed in a slowdown.

Sentix's investor sentiment index for Germany retreated from a reading of 7.9 in May to -0.7 for June, marking its lowest level since March 2010.

Novo Nordisk shares were on the front foot, gaining on the back of poor test results for one of competitor Eli Lilly's diabetes drugs.

Hugo Boss was also wanted after analysts at Morgan Stanley bumped up their recommendation for the shares from 'underweight' to 'equalweight'.