Europe midday: Stocks rise but DAX underperforms as VW emissions scandal widens

Most European stocks rose on Wednesday, with sentiment underpinned by the latest comments from European Central Bank chief Mario Draghi, although German markets underperformed as Volkswagen skidded.

Draghi said at a forum on banking supervision that the central bank remains ready to act to maintain support for the Eurozone.

“Markets have been enthused by another big hint of further monetary stimulus from ECB president Mario Draghi,” said Jasper Lawler, market analyst at CMC Markets.

“Draghi reiterated that the level of monetary accommodation will be reviewed in December while emphasising that the governing council is willing and able to use all instruments at its disposal.”

At midday, the benchmark Stoxx Europe 600 index was up 1% and France’s CAC 40 was 0.9% higher. Germany’s DAX was down 0.2%, however, as Volkswagen shares tumbled after the beleaguered German car maker admitted the diesel emissions scandal also included petrol engines.

Elsewhere on the corporate front, Marks & Spencer rose as it reported a mixed first half. The retailer posted an increase in underlying pre-tax profit as strong food offset weak clothing sales, but statutory half-year profit fell to £170.7m from £225.6m the year before.

UK insurer Legal & General advanced after posting a 14% rise in net cash generation for the first nine months of the year as it said it is ahead of its target to deliver £80m of operating cost savings this year.

Glencore was a high riser after the commodities giant noted “significant progress” on plans to cut net debt to the low $20bns by the end of 2016 and increased output from its mines.

Barry Callebaut was under the cosh after the maker of bulk chocolate cut its mid-term volume growth forecast and highlighted the difficult cocoa market this year.

Data released earlier showed the Eurozone services sector expanded at a slightly slower pace than initially expected in October.

The final reading of Markit’s purchasing managers’ index rose from September’s four-month low of 53.7 to 54.1 last month, slightly below the 54.2 flash estimate released last week.

The reading means the index has now remained above the neutral 50.0 mark since August 2013, as business optimism in the 19-country block remained largely positive.

Meanwhile, the Eurozone composite PMI rose from 53.6 in September to 53.9 in October, slightly below the 54.0 flash estimate.

Meanwhile, figures from Eurostat showed Eurozone producer prices fell at the fastest pace since the turn of the year in September.

The producer price index for the domestic market dropped 3.1% year-on-year following a 2.6% decline in the previous month. The figure, however, was smaller than the 3.3% drop analysts had expected.

Still to come, investors will eye the release of the US ADP employment report at 1315 GMT, trade balance figures at 1330 GMT and ISM non-manufacturing is at 1500 GMT.