Europe midday: Stocks shake off early losses as data and ECB hopes underpin mood

Stocks in Europe shook off early losses as encouraging data and hopes of further easing from the European Central Bank helped to underpin sentiment following heavy losses in China.

At midday, the benchmark Stoxx Europe 600, Germany’s DAX and France’s CAC 40 were all 0.2% higher.

Earlier, the Shanghai Composite suffered its worst drop in three months, tumbling 5.5% as it emerged several brokerages in China were being investigated for alleged violation of securities regulations.

European stocks followed suit at the open but soon clawed their way back up on rising expectations of ECB action and after data from the European Commission showed confidence in the euro bloc hit its highest level in over four years in November.

The EC’s index of executive and consumer confidence rose from an upwardly revised 105.9 in October to 106.1 in November, the highest reading since May 2011.

Meanwhile, investors were looking ahead to the 3 December ECB meeting.

Societe Generale said: “Markets eagerly await the Governing Council’s actions next week to do ‘what it must’ to raise the inflation path. Given the clear communication from key members of the ECB’s executive board over the past month and in the latest minutes, we expect a broad set of measures, including a deposit rate cut and more asset purchases.”

Friday’s session is likely to remain fairly quiet, with thinner volumes than usual as the US market is only open for a half day due to the Thanksgiving holiday.

China was firmly in focus after the securities regulator there said it has launched investigations into the country’s largest stockbroker, Citi Securities Co and its third largest broker, Guosen Securities.

Both brokerages said they would cooperate fully with the investigations – which are part of a broader clampdown on how brokerages finance their clients’ stock purchases – adding that there would be no impact on their current operations.

It was also reported that brokerage Haitong Securities was being investigated. It issued a trading halt in Shanghai and Hong Kong after the market opened without giving any reasons for the move.

Asian markets were also weighed by data showing Japanese inflation fell for the third month in a row in October and figures showing Chinese industrial profits dropped 4.6% in October from a year earlier, marking the fifth consecutive month of decline.

Corporate news flow was scarce on Friday.

Altice shares rallied after the telecommunications company secured the rights to broadcast the English Premier League in France and Monaco for three years.

On the downside, Rio Tinto fell after the miner said it has approved the $1.9bn expansion of its high-quality Amrun bauxite project in Queensland's Cape York Peninsula, with much of the capital expenditure scheduled for 2017 and 2018 and first delivery from 2019.

Anglo American tumbled as it announced the closure of its Drayton coal mine in Australia next year after the New South Wales Planning and Assessment Commission recommended that the government block an expansion of the mine.