Europe midday: Stocks maintain gains after Monday's losses

European stocks were still firmly in the black by midday on Tuesday, having slumped a day earlier amid worries about the deepening energy crisis.

The benchmark Stoxx Europe 600 index was up 0.6%, while Germany’s DAX and France’s CAC 40 were 1% and 0.4% firmer, respectively.

Victoria Scholar, head of investment at Interactive Investor, said: "European bourses have opened modestly higher after Monday’s slump with the FTSE 100 lagging behind the DAX and the CAC.

"There are reports that an EU gas price cap is being considered to offset the surge in gas prices after Russia closed access for Europe to the critical Nord Stream 1 pipeline. In the UK, Liz Truss gets set to be formally appointed prime minister today with markets concerned about the inflationary impact of her pledges to cut taxes and spend to tackle the energy crisis.

"US markets get set to play catch up today after Monday’s Labor Day holiday. After three weeks of declines, US futures are pointing to a higher open with the Nasdaq Composite on track to snap its first six-day losing streak since 2019."

On the macro front, the latest figures from Destatis showed that German factory orders fell 1.1% on the month in July following a revised 0.3% drop in June, and versus expectations for a 0.2% fall.

On the year, orders were down 13.6% in July following a revised 9% decline in June and versus expectations of a 6.1% fall.

New orders in the domestic sector fell 4.5%, while eurozone orders were down 6.4% on the previous month. However, the volume of new orders from the non-euro area rose 6.5%, while total foreign orders grew 1.3%.

The producers of capital goods saw a 0.2% drop on the month in July. Intermediate goods makers saw new orders rise 1.5%. Consumer goods orders declined 16.9%. Destatis said this was mainly due to a 23.6% slump in the volume of new orders for the manufacture of pharmaceutical products.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "A sharp fall in German factory orders in July will add to fresh concerns about the resilience of Europe’s largest economy in the face of the deepening energy crisis.

"Business confidence was already evaporating and with the Nord Stream pipeline of essential gas closed indefinitely, optimism is set to seep away further amid worries of potential energy rationing ahead."

In equity markets, shares of Belgian automobile distribution company D’Ieteren surged after the release of well-received first-half results, while Credit Suisse was in focus after agreeing to sell its global trust business.

UK housebuilder Berkeley rose as it said it was on track to meet full-year profit guidance despite a "volatile" operating environment.