Europe midday: Stocks hit by trade concerns, first rise in German unemployment in 2 years

Stocks across are the Continent are moving lower, tracking the losses seen overnight on Wall Street and in the wake of a surprisingly weak reading on the German jobs market.

Investor caution was also in evidence in the sovereign bond market, with investors continuing to seek out the relative safe haven of government bonds, helped by somewhat surprising remarks from a top European Central Bank official, who appeared to hint at a significantly more 'dovish' policy stance.

"Stock markets in Europe are firmly in the red as a combination of trade and political uncertainty has chipped away at investor confidence," David Madden at CMC Markets UK told clients.

"The trade standoff between the US and China rumbles on, and in light of the recent escalation in trade tensions, dealers aren’t holding out much hope for an agreement soon."

As of 1156 BST, the benchmark Stoxx 600 was down by 1.22% to 371.30, alongside a fall of 1.09% to 11,895.76 for the German Dax and a retreat of 1.56% to 5,229.57 on Paris's Cac-40.

Brent crude oil futures for front month delivery were also lower, falling by 2.56% to $68.35 a barrel on the ICE.

Overnight, various Chinese press reports said the country might use its influence in the rare earths market to hit back at US companies amid the two countries' growing trade war.

Data showing the first increase in German unemployment in nearly two years also dented sentiment.

According to Germany's Federal Labor Agency, unemployment in the country jumped by 60,000 in May (consensus: -8,000), pushing the jobless rate up by a tenth of a percentage point to 5.0%.

Longer-term debt across the euro area periphery was also being sought out by yield-hungry investors, in part after Bank of Finland chief, Olli Rehn, said he would not change the ECB's price stability mandate 'per se', while adding that "my view is that 2% is not a ceiling and inflation can deviate in both directions".

Rehn also sits on the ECB's Governing Council.

Echoing investors's concerns and perhaps Mr. Rehn's as well, ECB vice president, Luis de Guindos, said that "weaker than expected growth and a possible escalation of trade tensions could trigger further falls in asset prices."

Arcelor Mittal cracked on Wednesday after the steelmaker said it would slash output at its plants in France, Germany and Spain in response to weaker demand, triggering the largest one-day share price drop since 2017.

French retailer Casino was also under pressure, after its management decided to skip a dividend, following a downgrade from debt rating agency Standard&Poor's, in order to conserve cash.

Porsieben Sat was going the other way, adding 4% in a down market on news that Italy's Mediaset had taken a €340m stake in the telecoms outfit.

In broker note action, analysts a Morgan Stanley revised their target price for Airbus higher, from €125 to €150, ahead of the "likely" launch of its single-aisle A321XLR at the Paris Air Show.