Europe midday: Stocks rise amid China stimulus hopes

European stocks pushed higher on Tuesday, taking their cue from gains in Asia as soft Chinese data prompted hopes of more stimulus from Beijing.

At midday, the benchmark Stoxx Europe 600 index was up 1.9%, while France’s CAC was 2.4% firmer and Germany’s DAX was up 2.1%.

Italy’s FTSE Mib was also in the black, but gains were less spectacular as banks such as Banco Popolare and Monte dei Paschi came under heavy pressure again after the European Central Bank requested data on their bad loan portfolios.

Shares in Asia ended in the black, with China’s Shanghai Composite up 3.2% and Hong Kong’s Hang Seng 2.1% firmer.

Figures showed China’s economy grew 6.8% in the fourth quarter from the previous year, down from 6.9% in the third quarter and marking its slowest growth since 2009.

Full-year growth, meanwhile, fell to 6.9%, which was it lowest level since 1990 and a touch below expectations.

Industrial production was up 5.9% in December year-on-year, just shy of economists’ expectations for a 6% increase.

Retail sales for December also disappointed, up 11.1% on the year, down from 11.2% in November.

“While these numbers are slightly disappointing they don’t point to a sharp slowdown, however it does raise the question as to what further steps to stimulate the economy policymakers will take in the coming weeks,” said Michael Hewson, chief market analyst at CMC Markets.

Oil prices rebounded from recent lows, even as the International Energy Agency warned that prices will fall further as the market remains oversupplied until at least late 2016.

West Texas Intermediate was up 2% at $30.01 a barrel while Brent crude was 4.9% higher at $29.95.

The IEA said on Tuesday that Iran’s return to the market is unlikely to be offset by production cuts from other countries.

On the corporate front, Renault was on the front foot on news that the French car maker will recall more than 15,000 vehicles to bring them in line with emissions standards.

Unilever advanced as its full year sales beat expectations, although the company warned of tough times ahead.

German online clothing retailer Zalando was a high riser after posting 30% growth in fourth quarter revenue.

In London, Prudential gained after the insurer said its solvency capital ratio was 190% at end-June, a little better than expected.

Novozymes slumped after the Danish enzyme maker cut its longer-term sales forecasts.

Investors digested macroeconomic releases

German investor confidence came in a little better than expected, according to the latest survey from the ZEW Center For European Economic Research in Mannheim.

The index of investor and analyst expectations fell by 5.9 points to 10.2 in January, following two consecutive increases. Still, the reading was ahead of economists’ expectations for 8.2.

The index for current expectations improved slightly, however, rising 4.7 points to 59.7 and beating expectations for a reading of 54.

Elsewhere, figures from Eurostat showed Eurozone inflation improved in line with expectations in December, driven by higher prices charged at restaurants and cafes.

Earlier, data showed consumer prices in Germany were unchanged in December from the previous month, and up 0.2% on the year.

Still to come, investors will eye the NAHB housing market index in the US at 1500 GMT.