Europe midday: Stocks nudge up amid earnings avalanche, BoJ disappointment

European stocks edged higher on Friday as investors mulled over a disappointing policy announcement from the Bank of Japan, a deluge of earnings and a series of data points.

At midday, the benchmark Stoxx Europe 600 index was up 0.3%, Germany’s DAX was 0.4% higher and France’s CAC 40 was 0.1% firmer.

At the same time, oil prices retreated. West Texas Intermediate was down 1% at $40.73 a barrel and Brent crude was down 1.3% at $42.14.

The BoJ kept interest rates steady at -0.1% on Friday but said it would increase its purchases of exchange-traded funds to an annual pace of Y6trn from Y3.3trn. It also doubled the size of a lending programme for local companies to $24bn.

IG’s Joshua Mahony said: “The fact that the BoJ undershot market expectations should come as no surprise given the lessons learnt from both the BoE and ECB meetings this month. The BoJ has used every weapon bar the helicopter and there is going to come a time when the BoJ takes stock to consider whether their policies are even making a difference.”

The Stoxx 600 banks index was up 2.4% as market participants braced for the results of stress tests on 51 banks later on Friday from the European Banking Authority.

Meanwhile, corporate news kept investors busy on Friday. BBVA was on the front foot after it reported a 58% jump in second-quarter profit that beat expectations.

Kering was higher after the French luxury goods company’s first-half earnings surpassed estimates, while Group Casino nudged up as the supermarket operator said first-half net profit rose to €2.58bn from €79m the year before.

Shares in Swiss bank UBS were in the black after it posted a drop in second-quarter profit that was better than analysts had expected.

Steel maker ArcelorMittal rallied as it posted better-than-expected second-quarter numbers and reaffirmed its outlook for 2016.

On the downside, Eni slid after the Italian oil and gas company said it swung to a loss in the second quarter.

Safran fell as it first-half results disappointed, while pharmaceutical group Sanofi was also in the red after saying sales and profit declined in the second quarter.

Barclays was higher. Although the bank posted a drop in first-half profit, the results were better than expected.

Consumer goods group Reckitt Benckiser was in the red after it reported a drop in first-half pre-tax profit but a rise in revenue, as it reaffirmed its full-year net revenue target at the lower end of its guidance range.

Pearson was also on the back foot after the education company’s first-half sales and revenue missed consensus estimates.

British Airways and Iberia parent International Consolidated Airlines flew lower after cutting its 2016 profit outlook.

Investors also digested a raft of economic releases from Eurostat.

According to a preliminary flash estimate, eurozone gross domestic product grew 0.3% in the second quarter compared to 0.6% growth the previous quarter, in line with consensus forecasts.

On the year, GDP was up 1.6%, also in line with expectations and compared to 1.7% growth the previous growth.

The eurozone unemployment rate was unchanged in June from May at 10.1%, remaining at the lowest rate recorded in the bloc since July 2011. On the year, it was down from 11% in June 2015.

Elsewhere, inflation in the eurozone came in higher than expected for July, according to a flash estimate, hitting 0.2% - its highest level since the end of last year - and up from 0.1% in June. Economists had pencilled in a 0.1% increase.

Prices were led higher by food, alcohol and tobacco, which increased 1.4%, while services prices rose 1.2%. Energy prices dropped 6.6% following a 6.4% decline the month before.

Core inflation – which strips out energy – was steady at 0.9%.