Europe midday: Stocks little changed as investors wade through data releases

European stocks wavered as investors waded through an avalanche of data releases amid growing expectations that the European Central Bank will announce additional stimulus measures on Thursday.

At midday, the benchmark Stoxx Europe 600 index was up 0.2%, while Germany’s DAX was down 0.1% and France’s CAC 40 was flat.

Although hopes of more stimulus were growing, some analysts were a little more sceptical.

“Recent comments from ECB President Draghi would appear to suggest that the ECB could well extend QE, increase the monthly amount and cut rates as well,” said Michael Hewson, chief market analyst at CMC Markets.

“All three of these seem completely at odds to what the economic data is telling us right now. Furthermore the effect of the fall in oil prices is likely to drop out of the inflation numbers in February, giving a further upward boost to the headline CPI numbers while unit labour costs in Europe are also starting to rise again, which suggests that market expectations are running ahead of what the ECB is likely to deliver on Thursday.”

Data releases came thick and fast on Tuesday, starting with China, where figures from the National Bureau of Statistics showed the manufacturing sector contracted for the fourth month in a row, falling to its lowest level in more than three years.

The official purchasing managers’ index slipped to 49.6 in November, marking its lowest level since August 2012 and falling short of expectations for a reading of 49.8.

It was a brighter picture in terms of non-manufacturing, however, with the services PMI coming in at 53.6 from 53.1 in October.

The Caixin manufacturing PMI, which focuses on small enterprises and has a smaller sample than the official numbers, rose to 48.6 in November from 48.3m the previous month, compared with expectations for a reading of 48.3.

German unemployment data was encouraging, showing a bigger-than-expected decline in November, while the unemployment rate dropped to 6.3% from 6.4% - the lowest level since German reunification and better than anticipated.

Manufacturing activity in Germany hit its highest level in three months in November. Markit's PMI rose from 52.1 in October to 52.9, exceeding expectations for a 52.6 reading.

As far as the Eurozone is concerned, manufacturing figures showed the recovery in the bloc gathered pace in November. Markit’s final manufacturing PMI rose from 52.3 in October to 52.8, in line with last month’s “flash” estimate and the highest level since April 2014.

Unemployment in the euro bloc dropped to a three-year low of 10.7% in October from 10.8% in September, compared with expectations for an unchanged reading.

On the corporate front, banks gained ground in London after it emerged that all seven of the UK’s largest banks passed stress tests by the Bank of England.

Lloyds, Barclays and Royal Bank of Scotland were the standout gainers on the FTSE 100, with Standard Chartered and HSBC following close behind.

French hotel group Accor was higher after saying it acquired three hotel asset portfolios from European investors for €284m.

Shares in German utility RWE and UK power company Drax rallied after the European Commission approved the UK government's support for converting the Lynemouth power station from coal to biomass.

On the downside, industrial gases company Linde tumbled after cutting its 2017 profit target.

Zurich Insurance was also on the back after it announced that its chief executive Martin Senn was stepping down.