Europe midday: Stocks mostly higher, Italian issues fall after IMF highlights risks

Stocks are holding higher as traders assess the more dovish policy stance of central bankers in the US and on the back of a slight ebbing in trade tensions.

The day before, Federal Reserve chairman, Jerome Powell, said that policymakers were watching developments on the trade front closely and would act as needed, feeding hopes of multiple rate cuts over the back half of 2019 - but some analysts expressed caution.

"Given the market now expects around 3 cuts over the next year, a dramatic change from the expectations of six months ago, investors have probably gotten a little ahead of themselves; the Fed probably isn’t going to react right away, or even in the medium-term, unless things get worse or start to move in that direction," said IG's Chris Beauchamp.

As of 1225 BST, the benchmark Stoxx 600 was up by 0.47% to 374.41 while the Dax was adding 0.40% to 12,018.56.

The FTSE Mibtel on the other hand had caved in, retreating by 0.77% to 20,072.68.

Milan's FTSE Mibtel on the other hand was falling 0.77% to 20,073.73 after the International Monetary Fund said Italy's debt situation posed a major currency to the single currency bloc and that a disciplinary procedure against Rome was justified.

Elsewhere on the economic front, euro area services put in a better-than-expected showing in April, with IHS Markit's PMI for the space printing at 52.9 for May (Preliminary: 52.5) versus 52.8 in April.

In Spain, services sector activity slipped to its slowest since late-2013, although conditions in Italy were again the toughest.

French and German services PMIs on the other hand recorded faster growth, but overall the survey data was pointing to GDP growth of only 0.2% quarter-on-quarter.

And as Chris Williamson at IHS Markit pointed out: "The survey also brought further signs that companies are having to increasingly compete on price to sustain sales growth, dampening inflationary pressures to the lowest for two-and-ahalf years."

Still ahead for later in the day, euro area retail sales and produce price data for April are both scheduled for release at 1000 BST.

Stateside meanwhile, the ISM institute's factory sector Purchasing Managers' Index was scheduled for release at 1500 BST and the US Federal Reserve vice chairman Richard Clarida was due to deliver a speech at 1445 BST.

Shares of Fiat dipped amid reports that Renault's board, given resistance from joint-venture partner Nissan, had postponed its decision on the proposed tie-up.

In Spain meanwhile, Cellnex inked an agreement to purchase the marketing and operating rights for 220 BT high towers in Britain for the next 20 years.