Europe midday: Stocks in the red as focus shifts to payrolls report

European stocks edged lower amid disappointment over the European Central Bank’s latest policy measures, as investors looked ahead to the release of key US jobs data.

At midday, the benchmark Stoxx Europe 600 index was down 0.3%, while France’s CAC 40 and Germany’s DAX were both 0.5% weaker.

“There was always the possibility that expectations surrounding yesterday’s ECB meeting were going to be extremely difficult to fulfil and investors paid the price of an ECB president who over promised in his recent rhetoric and under-delivered,” said Michael Hewson, chief market analyst at CMC Markets.

“A deposit rate cut of 0.1% to -0.3% was always going to disappoint and the failure to expand the monthly amount only served to highlight that the ECB was scraping the barrel of top quality assets to buy.”

He added that the decision to expand the pool of assets available to buy local government debt only reinforces that perception but in reality was probably the only option available to policymakers if they wanted to stretch out the duration of the programme until March 2017 to the tune of €60bn a month.

On Thursday, Fed chairwoman Janet Yellen said in a testimony before Congress that economic data show conditions are strong enough to withstand a rate hike later this month.

With that in mind, investors will be eyeing the all-important non-farm payrolls report for November which is due at 1330 GMT, along with the unemployment rate and trade balance figures for October.

“With the markets being wrong footed by Draghi and pushing the Euro higher while sending shares in to a tailspin, investors will be nervously waiting for this afternoons jobs report from the US in the hope of some reprieve,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor. “However, with the expected number being pretty optimistic while Janet Yellen appears gung ho for a rate rise this month, investors may be left disappointed as we head in to the weekend break.”

Data released earlier by Destatis showed Germany’s factory orders for October beat expectations.

Factory orders gained 1.8% month-on-month in October, snapping a three-month losing streak and exceeding expectations for orders to grow 1.2% in the period after an upwardly revised 0.7% fall in August.

Corporate news flow was scarce on Friday.

Berkeley Group surged in London after raising its dividend despite a drop in first half profit.

AXA rallied after the insurer set a range for its solvency ratio under the European industry's new capital rules, which it said would enable it to pay out higher dividends and invest in the business.

Sandvik slid after JP Morgan downgraded the stock to ‘underweight’ from ‘neutral’ and cut its target price.

Costa Coffee and Premier Inn owner Whitbread was also under the cosh after Barclays downgraded it to ‘equalweight’ from ‘overweight’.