Europe midday: Stocks give back early gains, single currency weakening past support

European shares turned lower mid-morning, surrendering early gains after a positive session in Asia overnight amid suggestions that the US could ease tariffs on China.

At 1215 BST, the pan-regional Stoxx 600 index was trading off by 0.53% to 407.11 with all major continental stock market indices lower alongside.

Euro/dollar was notably weaker alongside, dropping 1.2% to 1.0297, threatening a loss of the lows seen in early 2017.

"It will continue to be very difficult for EUR to rally in any meaningful way with the energy picture worsening and risks to economic growth increasing notably," MUFG analyst Derek Halpenny said in a research note sent to clients, Dow Jones Newswires reported.

Halpenny's forecast for euro/dollar in the third quarter was 1.01.

Periphery bond yields on the other hand were well-behaved although front-dated Brent was 2% lower to $111.65 a barrel.

US markets were closed overnight for the Independence Day holiday.

A report that US President Joe Biden was mulling rolling back some tariffs on Chinese imports, as well as news that Chinese Vice-Premier Liu He had a "constructive" virtual dialogue with US Treasury Secretary Janet Yellen over economic co-ordination.

According to the Wall Street Journal, a decision on Washington's tariffs might come as soon the present week, although a spokeswoman for the White House cited by Bloomberg said that no decision had yet been taken.

Investors were also cheered by data showing that China's June services activity growth beat expectations, while those in Japan it expanded at the fastest rate in more than eight years.

S&P Global's euro area services sector Purchasing Managers' Index for June meanwhile was marked up to a reading of 53.0, versus a preliminary reading of 52.8 (consensus: 52.8).

However, that remained well off May's print of 56.0.

In equity news, SAS fell 10% after it filed for bankruptcy and warned that a strike action by pilots had impacted its financial position and liquidity.

Shares in German gas giant Uniper dipped even as the government pondered taking a stake in the firm, which has been forced to buy gas at spot prices due to the war in Ukraine.

Remy Cointreau rose 4% after Jefferies upgraded the French spirits group's stock to 'buy' from 'hold'.