Europe midday: Stocks mixed on Syria, French election concerns

European stocks were mixed on Tuesday as concerns about the situation in Syria and the French election weighed on investors, although German economic sentiment data was better than expected.

At midday, the benchmark Stoxx Europe 600 index was up 0.12% to 381.71, Germany’s DAX fell 0.1% to 12,188.02 and France’s CAC was flat at 5,111.71.

Meanwhile, Brent crude fell 0.12% to $55.91 per barrel and West Texas Intermediate was down 0.15% to $53.

In currency markets, the euro rose 0.19% versus the dollar to 1.0616 and was flat against the pound at 0.85418.

The difference between French and German government debt widened recently on French election jitters as support for far-left candidate Jean-Luc Mélenchon gathered pace.

Ahead of the first round of voting on 23 April, independent centrist Emmanuel Macron and far-right Marine Le Pen are still the frontrunners, but it is increasingly becoming a tighter contest with Mélenchon gaining ground and support for centre-right François Fillon hardening.

“Mélenchon proposes quite a radical political program, including €100bn worth of stimulus, besides reducing the working week from 35 to 32 hours, overhauling the EU and stepping out of NATO. An eventual far-left win is as doubted as far-right Le Pen’s victory”, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

Geopolitical tensions continued to build after North Korea denounced the US deployment of a navy strike group to the Korean Peninsula.

Meanwhile, US President Donald Trump and British Prime Minister Theresa May agreed there is a "window of opportunity" to persuade Russian to ditch its support for Syria's Bashar al-Assad, though this reportedly dismayed the many European leaders who were resisting plans set out by Boris Johnson for more Russian sanctions.

On the data front, the ZEW’s German economic sentiment index rose to 19.5 in April from 12.8 in March, hitting its highest level since August 2015 and beating expectations for a reading of 14.0.

The current situation index pushed up to 80.1 from 77.3 in March, surpassing analysts' forecasts of 77.7.

Hense Florian, an economist at Berenberg, said: “The expected acceleration in German real GDP growth in the first quarter may continue in the second. So far, we expect a normalisation of the rate of expansion back to trend of 0.4% in the second quarter after an acceleration to 0.6% in the first. While the data is just for the first month of the quarter, the ZEW suggests that risks to our call are skewed a little to the upside.

“Twelve days before the French presidential election at least the panellists of the ZEW do not seem to be worried about ‘Frexit’. In fact, expectations for the French economy strengthened by more than in Germany.”

Meanwhile, there was slight setback in the eurozone's economic recovery. Industrial production for the group of 19 countries fell 0.3% in February, compared to the 0.1% expansion predicted. January’s figure was revised down to 0.3% from 0.9%.

Eurozone industrial production rose 1.2% in February year-on-year, an improvement on the 0.6% rise in January, but lower than the 1.9% forecast.

In corporate news, luxury-goods shares were on the front foot after Moët Hennessy Louis Vuitton reported a 15% rise in first-quarter sales. Its shares were up 1.83%.

Christian Dior was 1.15% higher, Compagnie Financiere Richemont rose 1.46%, Burberry Group added 2.16% and Swatch Group was up 2.69%.

Dialog Semiconductor plunged 19.78% after German lender Bankhaus Lampe downgraded the company’s shares to ‘sell’, while Bankia was down 1.03% after Berenberg reiterated a 'sell' rating on the Spanish lender’s shares.

Banco Popular Español extended its losses, sliding 5.04% after the Spanish bank said that it plans to raise more funds.