Europe midday: Stocks rebound from last week's losses

European stocks rose, rebounding from last week’s losses as investors digested dovish comments from European Central Bank president Mario Draghi and got to grips with the prospect of a Federal Reserve rate hike this month.

At midday, the benchmark Stoxx Europe 600 index was up 1.2%, Germany’s DAX was 1.8% higher and France’s CAC 40 was up 1.5%.

Sentiment was underpinned as last Friday’s bumper nonfarm payrolls report all but guaranteed a December rate hike, removing any uncertainty over the timing from the market. The report showed the US economy added 211,000 jobs in November, beating expectations.

At the same time, investors were reassured by comments from European Central Bank chief Mario Draghi, who said last week that quantitative easing was unlimited.

“Equity markets have started the week higher, as investors shrug off last week's post-ECB disappointment and buy into Mario Draghi's no limit promise from Friday - playing catch-up on the hope and expectation that global central banks will do what it takes to support and manage their divergent monetary policy in a way to minimise risk to the markets,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

Stocks fell last week as investors were left disappointed with Draghi’s latest policy measures, but JPMorgan Cazenove said in an equity strategy note on Monday that it expects equities to regain their footing around the turn of the year.

It pointed to stabilisation in China, robust Eurozone and US activity, and said the first Fed hike should be taken positively.

However, the bank went on to recommend that investors sell any rallies.

In corporate news, Saint-Gobain was on the front foot after the French building materials group received anti-trust approval from all the relevant authorities to buy Switzerland’s Sika AG.

Elsewhere, pharmaceutical company Novartis was in the black following positive results for a leukaemia treatment drug.

On the downside, shares in Electrolux tumbled after its agreement to buy General Electric’s appliance business fell through.

Energy-related stocks slid on Monday, with the Stoxx 600 oil and gas index down 1.3% as oil prices fell after the OPEC meeting failed to lead to production cuts. Brent crude was down 0.7% to $42.72 a barrel while West Texas Intermediate was off 1.4% at $39.42.

On the macroeconomic front, the Sentix investor confidence index for December rose to 15.7 from 15.1, missing expectations for a reading of 17, but marking the first increase after two consecutive declines.

Figures released earlier showed industrial production in Germany grew 0.2% month-on-month in October, missing forecasts for a 0.8% rise.

Total output excluding energy and construction increased by 0.7%, led by a 2.7% month-on-month jump in the production of capital goods, while that of intermediate and consumer goods declined by 1.1% and 0.1%, respectively.