Europe midday: Stocks recover from early selling, helped by dovish central banks

Stocks on the Continent are flashing green, with investor sentiment a tad firmer on the back of helpful comments from US central bankers and expectations for a dovish result to Thursday's meeting of policymakers at the European Central Bank.

European equities had started the session weaker, with technology issues caught in Monday's downdraft in the US technology space after American regulators agreed to look into possible anti-competitive behaviour by the country's tech giants.

Nevertheless, analysts were being cautious, with Credit Suisse strategist Andrew Garthwaite having removed the day before his tactical overweight on global equities.

"Tariffs are now being used by the US administration as a political rather than an economic tool, something which greatly increases the risk of escalation and an economic policy mistake," he told clients.

"Could auto tariffs in Europe be used to open up the EU agricultural market, or to force Europe to spend more on defense? Compromise still our central case."

The benchmark Stoxx 600 was up by 0.39% to 371.95, alongside a gain of 0.28% to 5,256.12 for the Cac-40, while Milan's FTSE Mibtel was adding 1.24% and trading at 20,123.56.

And the German Dax had managed to reverse earlier losses to trade higher so that as of 1306 BST it was climbing by 1.16% to 11,929.78.

Boosting Italian issues, earlier Prime Minister Giuseppe Conte warned that he would step down if the two ruling parties, the League and Five Star movement, did not stop squabbling.

Nonetheless, a few hours afterwards League leader, deputy prime minister Matteo Salvini, flush with his success at the ballot box at the last European elections, threatened that "there would be a problem" if the current impasse remained in 15 days' time, ANSA reported.

In the background, overnight the head of the US Federal Reserve bank of St.Louis, James Bullard, had openly broached the possibility that the US economy might soon need an interest rate cut.

And a weaker than expected reading on Eurozone consumer prices was feeding expectations of a dovish European Central Bank policy meeting next Thursday.

According to Eurostat, year-on-year the headline rate for Eurozone CPI fell from 1.7% in April to 1.2% for May (consensus: 1.4%), while printing at 0.8% at the core level (consensus: 1.0%).

For later in the session, the head of the Federal Reserve chairman, Jerome Powell, was set to deliver a speech at 1445 BST.

In a separate report, the EU's statistical agency said that the rate of unemployment in the single currency bloc had fallen from 7.7% for March to 7.6% in April (consensus: 7.7%).