Europe midday: Stocks struggle to cling onto gains

European stocks were struggling to cling onto gains by midday, as investors weighed up the prospect of further easing by central banks against post-Brexit uncertainty, although equities were on track for a positive finish to the week.

The benchmark Stoxx Europe 600 index was flat, Germany’s DAX was up 0.2% and France’s CAC was 0.1% higher.

Financial stocks were among the worst performers after European Central Bank sources refuted claims that the central bank was considering abandoning its capital key for quantitative easing purchases.

In London, the FTSE 100 was 0.3% firmer while the more domestically-focused FTSE 250 was 0.1% lower.

At the same time, oil prices reversed course. West Texas Intermediate was down 0.4% at $48.15 a barrel and Brent crude was 1.8% lower at $49.68.

Stocks had kicked off the session on the front foot, supported by comments from Bank of England governor Mark Carney, who on Thursday hinted at the prospect of further interest rate cuts over the summer following the UK’s decision to leave the European Union.

"The Committee will make an initial assessment on 14 July, and a full assessment complete with a new forecast will follow in the August Inflation Report," Carney said.

"In August, we will also discuss further the range of instruments at our disposal."

Mike van Dulken, head of research at Accendo Markets, said: “While markets like the idea of more stimulus from any major central bank, they especially like the idea that a weak GBP sterling keeps the USD strong and thus fends off the Fed from a rate rise for a good while longer.”

Investors in Europe also digested data out of China on Friday that showed the manufacturing sector weakened, but the services sector improved.

The Caixin manufacturing purchasing managers' index, a private gauge of factory activity, dropped for the third month in a row to 48.6 in June from 49.2 in May, missing expectations for it to remain unchanged. A reading below 50 indicates contraction.

China’s official manufacturing PMI fell to 50.0 in June from 50.1 the previous month, in line with expectations.

Meanwhile, data from the National Bureau of Statistics showed China’s official non-manufacturing PMI, which covers services such as retail and real estate, improved to 53.7 from 53.1 in May.

In corporate news, AstraZeneca was a little lower after saying it has entered into agreements to support its strategic focus on three main therapy areas - respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology.

BHP Billiton pushed higher despite saying that its plans to settle claims over the 2015 Samarco mine disaster had suffered a major blow after a Brazilian court reinstated a AUD$8bn public civil claim.

On the macroeconomic front, data from Eurostat showed the Eurozone unemployment rate nudged down in May to its lowest level since July 2011. The unemployment rate came in at 10.1%, down from 10.2% in April and 11% in May 2015, and in line with expectations.

Unemployment in the EU-28 group of countries declined to 8.6% in May from 8.7% the month before and 9.6% in May 2015. This was the lowest rate recorded in the EU-28 since March 2009.

Elsewhere, eurozone manufacturing growth rose to a six-month high in June, according to Markit, although it warned that the data was gathered before the UK’s decision to the leave the European Union.

Markit’s final Eurozone purchasing managers’ index for June came in at 52.8, up from the flash estimate of 52.6 and May’s reading of 51.5, with growth in new orders and production accelerating to the fastest in the year so far.