Europe midday: Stocks trim gains amid political uncertainty in France

European stock markets had trimmed gains slightly by Tuesday lunchtime but were still trading firmly higher, with the Stoxx 600 index set to close at its highest level in five weeks despite ongoing political uncertainty in France.

Markets were rising for the fourth straight day, with the Stoxx 600 up 0.3% at 515.05 by 1243 CET – its highest level since 29 October – having risen as much as 0.7% earlier on.

France's CAC 40 index, which had surged as much as 1.1% in morning trade, was registering gains of just 0.2% by early afternoon, amid speculation that the government in Paris will collapse with prime minister Michel Barnier expected to lose a no-confidence motion over the budget on Wednesday.

The yield on 10-year French OATs was down 0.8 basis points at 2.903% while yields on 10-year German bunds were up 2.7bp at 2.063%, with the spread between the two rates close to the highest level since 2012.

However, "the market is not willing to push French bonds to breaking point at this stage," said Kathleen Brooks, research director at XTB.

"The eyes of the bond vigilantes remain on France; however, the lack of urgency could be down to the fact that even if the technocratic government led by Michel Barnier does fall this week, the President could pick another one, the Budget can get through parliament using emergency measures by 21st Dec and there cannot be another Parliamentary election until summer 2025."

In other news, oil prices were pushing higher early on ahead of an OPEC+ meeting on Thursday, in which the group is expected to extend output cuts until the end of the first quarter. Brent was up 1.1% at $72.65 a barrel.

Market movers

London's SSP Group was a high riser on the Stoxx 600, jumping 11% after the food service company reported a 35% jump in annual profits as good performances in North America and the UK helped to offset a disappointing performance in Continental Europe.

Irish budget airline Ryanair was also on the ascent after reporting an 11% jump in passenger numbers for November, compared with last year.

Heading the other way was French automotive supplier Forvia after the company announced that CEO Patrick Koller is to step down in March and be succeeded by Martin Fischer from German competitor ZF Group.