Europe midday: Stocks start February on the front foot

European shares were making a strong start to the month of February on Tuesday following a rally in US tech stocks overnight.

As of 1211 GMT, the pan-European Stoxx 600 index was up 1.18% at 474.39, alongside a 1.08% rise for Germany's Dax to 15,637.28 and a 1.16% gain on the FSTE Mib to 27,125.32.

Euro/dollar was a tad higher alongside, as risk appetite recovered, but 10-year German bund yields were off a bit as were front-dated Brent crude oil futures.

Wall Street shares closed higher after Assistant Secretary for Economic Policy Ben Harris said US inflationary pressures should ease in 2022 due to weaker demand for goods, easing supply bottlenecks and a receding pandemic.

In the background, the heads of the US central bank's San Francisco and Atlanta branches sounded a relatively 'dovish' note, although neither of them wielded a vote on policy in 2022.

There was also some good news to be had out of the euro area with Eurostat reporting that unemployment in the single currency area dropped by one tenth of a percentage point in December to hit a record low of 7.0% (consensus: 7.1%).

IHS Markit's closely-followed factory sector Purchasing Managers Index for January meanwhile confirmed that activity in the sector in the euro area rebounded at the start of 2022, reaching a level of 58.7 versus a print of 58.0 at the end of December. Nevertheless, that was less than a preliminary reading of 59.0 due to downwards revisions for readings on manufacturing activity in Germany.

There were also possible signs in the survey that supply bottlenecks were easing, but Pantheon Macroeconomics pointed out that delays were nevertheless much longer than before the pandemic hit.

In equity news, Swiss banking giant UBS rose to the top of the Stoxx with a 7% rise after posting its best annual profit since the global financial crisis of 2008, as it increased share buybacks and profit guidance.

HeidelbergCement shares edged up following a better-than-expected rise in fourth-quarter sales and earnings prompted the German cement maker to release results ahead of schedule on Monday.

Automaker Stellantis advanced 2% after union sources said the company could cut up to 1,400 jobs in France this year.