Europe midday: Stocks shake off early losses to trade higher with ECB in focus

European stocks shook off early losses to trade higher on Monday, as investors looked ahead to Thursday’s rate announcement from the European Central Bank.

At midday, the benchmark Stoxx 600 index was up 0.4%, France’s CAC 40 was 0.7% firmer and Germany’s DAX was up 1%.

European equity markets got a boost last week after ECB chief Mario Draghi indicated that the bank was ready to act to boost inflation.

“Focus this week will be on the ECB meeting on Thursday, and what new measures the ECB will take to maintain inflation in line with its medium-term target,” said Societe Generale, which expects the bank to announced a broad set of measures, including a 10 basis points deposit rate cut and more asset purchases.

“With expectations set high, the risk of disappointment is also high. On the data side, inflation will likely see a moderate rise while final PMIs should point to resilient growth. In the US, we expect a string of upbeat figures that will support Fed tightening in December, with non-farm payrolls at 225,000 and unemployment at 4.9%.”

On the corporate front, BHP Billiton was under pressure after it emerged that Brazilian authorities will demand £3.5bn from the miner, Vale and their Samarco joint venture for the tailings dam burst on 5 November.

Aberdeen Asset Management was in the red after the investment house revealed that its full year profits were hit by a slump in Asia and emerging markets equities.

Dutch insurer Delta Lloyd was also on the back foot after it announced a €1bn rights issue and said it will not pay a final dividend this year.

On the upside, Deutsche Lufthansa rallied after reaching an agreement with trade union Verdi on the wages and pensions of its ground staff and personnel.

Data released earlier by Destatis showed German retail sales unexpectedly fell in October, missing analysts’ expectations.

Retail sales slipped 0.4% compared with forecasts for a 0.4% increase. On the year, they rose 2.1%, falling short of expectations for a 2.9% gain.

Still to come on the macroeconomic front, Chicago PMI is at 1445 GMT while US pending home sales are at 1500 GMT.