Europe midday: Stocks pare gains as oil slips back

European stocks pared earlier gains as oil prices continued to slip back, but a solid performance from basic resources helped to keep regional indices in the black.

At midday, the benchmark Stoxx Europe 600 index, Germany’s DAX and France’s CAC 40 were all up 0.4%.

The Stoxx 600 basic resources index was up 1.1% as metals prices advanced, but the sub-index for oil and gas slid 0.8% as oil prices declined after data from the American Petroleum Institute showed US crude inventories rose 9.9m barrels last week. This was much higher than the 3.6m barrel increase forecast by analysts.

West Texas Intermediate was down 2.1% to $33.69 a barrel and Brent crude was 1% lower at $36.45.

“Whilst overall sentiment has turned positive, not everybody is convinced fully yet that this move isn't a bull-trap. Besides relatively low trading volumes much of the move of the past couple of days is based on the assumption that major central banks will successfully stabilise global growth and that the US economy won't be going into a recession,” said Markus Huber, senior analyst at Peregrine & Black.

“Because of the move being mostly based on assumptions and speculations so far and less so on hard facts it wouldn't take much to derail the current rally.”

In corporate news, Old Mutual rallied following well-received 2015 results for its South African banking subsidiary Nedbank.

Broadcaster ITV was weaker. Although the company posted a rise in profit and revenue for 2015 and announced a special dividend, analysts noted concerns about the outlook for advertising revenue.

Swedish medical technology company Elekta tumbled after its third quarter earnings missed analysts’ expectations, while Luxottica Group fell after the eyewear maker downgraded its outlook.

Intertek shares slid as the inspection, product testing and certification group said it swung to a loss in 2015.

Still to come on the data front, investors will eye the release of the US ADP employment report at 1315 GMT.

Societe Generale expects the report, which is widely seen as a pre-cursor to Friday’s non-farm payrolls, to show a solid increase of 225,000 private workers in February.

“Though this series has not had the best track record in predicting the Bureau of Labor Statistics’ private payroll series, it should be consistent with our estimate of an increase of 230K private payrolls for Friday’s print," it said.