Europe midday: Stocks in the red but basic resources recover

European stocks slipped on Thursday as investors kept an eye on commodity markets and looked ahead to next week’s interest rate decision from the Federal Reserve.

At midday, the benchmark Stoxx Europe 600 index and Germany’s DAX were both down 0.3% while France’s CAC 40 was 0.2% weaker.

In London, the FTSE 100 was down 0.4% after the Bank of England kept interest rates and the asset-purchase programme unchanged at 0.5% and £375bn, as widely expected.

"Investors are staying vigilant overall and they surely do not feel comfortable to jump back in with their full appetite,” said Naeem Aslam, chief market analyst at AvaTrade.

“The reason is doubtless that we have the Fed decision next week and this could be the first time in nearly 10 years that the Fed could be raising rates. Although, it is very much priced in the market, however, you can never underestimate the volatility element which it is going to bring.”

Meanwhile, Barclays said in a European equity strategy note that investors were going into 2016 with very little faith in the future.

“While European equities feel like a consensus ‘long’, overseas inflows have moderated considerably and euro-area households still have over 34% of their financial assets in cash. Risk appetite is depressed: ‘quality’ trades on a recessionary-scale premium, while both ‘value’ and ‘growth’ are discounted. Unusually, Europe’s best growth stocks trade on the same multiple as those with more mediocre prospects – more evidence of investors’ lack of faith in the future,” the bank said.

In corporate news, Premier Inn and Costa owner Whitbread slumped as investors were left disappointed by signs of weakness at the Costa division after the company’s interim management statement.

French hotel group Accor was on the back foot after announcing a $2.9bn acquisition.

Shares in Zara owner Inditex were lower despite the company saying that net profit rose 20% in the first nine months of the year.

On the upside, Glencore rallied after outlining a new cost-cutting programme and new debt reduction forecasts.

Chemicals company Syngenta rallied as news of a possible merger between Dow Chemical and DuPont sparked hopes of a renewed flurry of takeover bids for European firms.

Lloyds Banking Group shares popped higher after the bank said it has won an appeal to buy back high-interest bonds early.

EDF rocketed after the French utility company lifted its 2015 profit target.