Europe midday: Stocks reverse losses on Eurozone PMIs

European stocks reversed early losses to push higher as encouraging Eurozone manufacturing figures helped to offset mixed Chinese data.

European indices had kicked off the session on a slightly weaker note following the release of fairly uninspiring Chinese manufacturing figures, but by midday, the benchmark Stoxx Europe 600 was up 0.4%, France’s CAC 40 was 0.6% higher and Germany’s DAX was 1% firmer.

The Caixin China manufacturing purchasing managers’ index rose to 48.3 in October from 47.2 in the previous month. Although this was a slight tick higher and better than analysts’ expectations for a nudge up to 47.5, it remained in contractionary territory, below 50.

China’s official manufacturing PMI, which was released on Sunday, missed expectations at 49.8, unchanged from the previous month and also below the 50 threshold that separate contraction from expansion.

Still, the mood was lifted after Markit’s purchasing managers index for Eurozone manufacturing came in at 52.3 for October, up from a five-month low of 52.0 the previous month and a touch above the flash estimate of 52.0.

“While the numbers weren’t great, they did provide more cause for optimism than was expected. It would appear that concerns over Chinese and emerging market demand may be overblown, which is particularly good news for Germany which has strong trade ties with the region,” said Craig Erlam, senior market analyst at Oanda.

“The data is certainly more encouraging than the preliminary releases would have had us believe.”

On the corporate front, HSBC was in the red. The bank posted a better-than-expected 32% rise in third-quarter pre-tax profit thanks to its cost-cutting programme and reduced fines, but adjusted pre-tax profit fell short of estimates.

Budget carrier Ryanair reversed opening losses to trade a little higher. The company reported a 37% rise in first-half profit after tax and said full-year net profit will be towards the upper end of its guidance range. However, analysts also pointed to news that ticket prices will be broadly flat this quarter and could fall 4% between January and March.

Shire slipped after announcing that it has agreed the $5.9bn acquisition of Dyax Corp, which is a US-based specialist focused on hereditary angiodema.

Compass Group was under pressure after Credit Suisse downgraded the stock to ‘underperform’ from ‘neutral’.

On the upside, Commerzbank shares rallied after the German lender posted better-than-expected third-quarter profit.

Still to come, investors will eye the release of US construction spending and ISM manufacturing at 1500 GMT.