Europe midday: Stocks mixed with politics in focus in the UK, Italy and Spain

European markets were still trading on a mixed note come midday amid reports that Britain's Conservatives will seek to form a coalition government, thus allowing the UK to see off the threat of new elections while allowing Brexit negotiations to commence on time.

Incoming results suggest a minority Conservative government. We expect greater political instability, with a near-term risk of a second election. Further out, we expect easier fiscal policy and a softer Brexit," Morgan Stanley's Jacob Nell said.

As of 1215 BST, the benchmark Stoxx 600 was lower by 0.10% to 388.74, while Germany's Dax was up by 0.28% to 12,748.64, alongside gains of 0.13% to 5,271.10 for the French Cac-40.

Milan's FTSE Mibtel on the other hand was down by 0.37% to 20,965.16.

Over in foreign exchange markets, the single currency was paring some of its initial gains versus Sterling and was up by 1.11% to 0.8751.

Nonetheless, other analysts were less sanguine.

For Fabrice Montagne and Andrzej Szczepaniak at Barclays Research: "because a hung parliament leaves the Prime Minister vulnerable to small groups of MPs intent on influencing the Brexit negotiations, the risks of a ‘No-Deal’ Brexit resulting from a small group of Conservative MPs blocking the ratification of the final agreement have increased."

Acting as a backdrop, markets were also watching whether Italy's main political parties would manage to thrash out a deal to reform the country's election laws, which might lead to snap elections being called later in the year.

Investors, wary of instability in the euro area's third largest economy, were hoping that would not happen. However, some were speculating that a deal, which fell through the day before, might be renegotiated after the municipal elections scheduled for the next weekend.

Over in Spain, the president of the regional government of Catalonia, Carles Puigdemont, announced he was planning to call for a referendum on independence on 1 October.

In economic news, Germany's trade surplus fell from €25.3bn in March to €18.1bn for April (consensus: €23.0bn).

French industrial production on the other hand shrank by 0.5% month-on-month (consensus: 0.3%).

On the corporate front, Spanish small-cap lender Liberbank was plummeting 28%, apparently on speculation that like Banco Popular it too was facing liquidity problems.

Airbus increased its projection for aircraft deliveries over the next 20 years to 34,899, with a value of $5.3trn.

Air France-KLM reported a 6.1% jump in traffic for the month of May amid a 1.6% percentage uplift in its passenger load factor to 85.7%.

Shares in the more domestic-facing UK-listed companies such as Tesco and Taylor Wimpey weakened on the heels of the surprise election result.