Europe midday: Stocks give back gains as oil prices slide

European stocks were mostly lower, giving back earlier gains as oil prices slid below $35 a barrel and nervousness set in ahead of this week’s rate Federal Reserve rate decision.

At midday, the benchmark Stoxx Europe 600 index was down 0.2% and Germany’s DAX was 0.4% weaker, but France’s CAC 40 was clinging on to positive territory, up 0.2%.

Stocks had opened with solid gains, bouncing back from last week’s losses as investors digested an encouraging reading on Chinese industrial production that came out over the weekend, but the buoyant mood proved to be short-lived.

Figures released by the National Bureau of Statistics on Saturday showed industrial output in November grew more than expected, suggesting Beijing’s efforts to boost the economy may be filtering through.

Industrial production was up 6.2% from a year earlier, beating expectations of a 5.7% increase.

Oil prices continued to slide after the International Energy Agency said last week that global oversupply could worsen next year.

West Texas Intermediate was down 1.8% to $34.98 a barrel, falling below $35 for the first time since 2009, while Brent crude was 2.3% lower at $37.05.

The Stoxx 600 oil and gas index was down 0.9%.

This week will be crucial as it looks set to mark the first Fed rate hike in almost a decade.

“All signs point to a first move in the Fed’s target rate since November 2008,” said Societe Generale.

“Efforts will be placed on communication this time around, as the Fed will need to carefully harmonize market expectations with their own forecasts. As we saw with the ECB, it is easy to disappoint, so communication will have to play a key role. Nonetheless, we expect Yellen to strike the right balance.”

On the corporate front, Old Mutual and Investec surged as the rand gained ground following the appointment of a third finance minister in South Africa.

The shares fell sharply last week after finance minister Nhlanhla Nene was sacked, pushing the rand to record lows.

Pharmaceuticals giant AstraZeneca was in the black after confirming that it is exploring potential strategic options with biotech company Acerta Pharma BV.

Vestas Wind rose following the weekend’s climate deal, while Nordex also rallied.

Shares in BG Group rose but Shell slipped after the merger between the companies received unconditional clearance from the Chinese Ministry of Commerce.

On the data front, industrial production in the Eurozone rose 0.6% in October from the previous month, according to data released by Eurostat.

The figure surpassed economists’ expectations of a 0.3% rise, while industrial production on the year rose 1.9%, also beating estimates.

“A strong start to the fourth quarter for manufacturing in the euro area,” said Pantheon Macroeconomics.

“Assuming no further change over the quarter, production will rise 0.2% quarter-on-quarter in Q4, up slightly from 0.1% in the third quarter. This estimate is very uncertain at this point in the quarter, but looks reasonable based on leading indicators.”