Europe midday: Stocks turn higher as Italian banks rally

European stocks reversed opening losses to trade higher, with Italy’s FTSE Mib pacing the advance as the country’s bank stocks rallied.

At midday, the benchmark Stoxx Europe 600 index was up 0.8%, Germany’s DAX was 1.2% higher France’s CAC 40 was up 0.7%. Italy’s FTSE Mib was the standout gainer, however, up 1.7%.

Italian banking stocks advanced as investors waited to hear the outcome of a meeting between Italy’s central bank and Treasury officials aimed at potentially setting up a fund to deal with bad loans.

In terms of sectors, basic resources were doing well as investors bet that benign Chinese inflation data would prompt some action by Beijing. The Stoxx 600 sub-index for the sector rallied 2.3%.

Data out earlier in China showed the consumer price index rose 2.3% on the year in March, versus expectations for a 2.5% increase and in line with the previous month’s 2.3%.

The consumer price index fell 0.4% in March from February.

“For an extended period, data from Beijing has repeatedly followed a negative path and this could be the continuing theme as the nation continues to transition away from its manufacturing roots towards the service sector,” said Lukman Otunuga, research analyst at FXTM.

“Despite the mounting concerns over China’s pace of growth, the Shanghai Composite Index received a welcome boost trading +1.65% higher as expectations heightened over further monetary easing by the People’s Bank of China (PBoC) in an effort to attain stability.”

At the same time, oil prices slipped as hopes of an agreement to cap production at the OPEC meeting on 17 April faded.

West Texas Intermediate was down 0.5% to $39.51 a barrel and Brent crude was 0.3% lower at $41.82.

In corporate news, German software company SAP was in the red after cautioning that first-quarter results would be weaker than expected.

In London, Daily Mail & General Trust was in focus after the Daily Mail parent confirmed it was in talks with private equity firms about a possible bid for Yahoo’s assets.

Clothing retailer Next was under pressure after Exane BNP Paribas cut its price target on the stock and said around 25% of the group’s profitability was at risk.

In the US, earnings season will unofficially kick off later on Monday when aluminium producer Alcoa reports its first-quarter results after the closing bell.