Europe midday: Stocks on the front foot but euro weakens on rise of political risks

European equity markets were on the front foot on Tuesday following a series of corporate earnings, although investors were also concerned about political risks on the continent which dragged the euro lower but boosted the dollar.

At midday, the benchmark Stoxx Europe 600 index was up 0.53% to 363.50, Germany’s DAX was 0.61% firmer to 11,579.49 and France’s CAC 40 was up 0.2% to 4,787.82.

The euro was under pressure amid worries about the political situation in the bloc ahead of several national elections this year. The euro was down 0.72% against the dollar to 1.0674.

While on Monday, European Central Bank president Mario Draghi also said that there was still a need for stimulus in the eurozone despite rising inflation.

In particular, market participants were concerned about growing support for National Front candidate Marine Le Pen, who officially launched her bid for the French presidency on Sunday, saying she wants to ditch the European Union and the euro and close the borders on immigrants.

However, centrist Emmanuel Macron has been gaining ground recently as would-be frontrunner Les Républicains’ François Fillion is embroiled in a scandal.

Analysts at SP Angel said: “French government bond yields are off this morning after hitting the highest level in over a year on Monday on the back of increasing popularity for Le Pen and her comments on a potential referendum regarding the nation’s membership in the single currency zone”.

S&P Global Ratings warned that Frexit could lead to a downgrade of the country’s sovereign debt.

Meanwhile, it has been reported that former French President Nicolas Sarkozy is to stand trial over allegations that he received illegal funding during his 2012 re-election campaign.

In corporate news, oil giant BP gushed 2.19% lower after its fourth-quarter profits fell short of target and the company said cash flow will not increase in 2017 as it hikes its level of disposals and capital expenditure to return the business to growth in the medium term.

French bank BNP Paribas was also down 4.1% as its fourth-quarter profit fell short of analysts’ estimates.

Chip maker AMS surged 19.59% after its fourth-quarter revenue came in at the top end of the company's expectations.

UK and North America passenger transport operator FirstGroup advanced 5.58% as it reported that group revenue in the third quarter rose by 12.8%, benefiting from favourable currency translation but was flat at constant currency. The group said the trend of overall trading and expectations for the full year was unchanged.

Housebuilder Bellway rallied 3.34% as it posted a 6.5% jump in housing completions in the six months to the end of January and said it expects to build 5% more homes this year. Peers followed suit, with Barratt Developments, Persimmon and Taylor Wimpey all in the green.

DCC topped the FTSE 100 as it rose 6.12% after it said it would buy ExxonMobil’s retail petrol business in Norway.

Pandora dropped 5.22% after the Danish jeweller said that it return cash to shareholders and that it expects single digit revenue in the first quarter of 2017.

Statoil declined 2.43% after the Norwegian oil company reported a $2.79bn fourth quarter loss.

Later in the session, the focus will turn to the US, where trade balance figures are due at 1330 GMT.