Europe midday: Stocks turn lower as oil comes off highs

European stocks reversed opening losses to trade lower in choppy trade as oil prices pared gains and investors digested a disappointing reading on German economic sentiment.

Stocks kicked the session off in the black on positive Asian cues and surging oil prices but by midday, all the major indices were weaker.

The benchmark Stoxx Europe 600 index was down 0.2%, Germany’s DAX was off 0.8% and France’s CAC 40 was 0.1% lower.

Oil prices pared gains after oil ministers from Saudi Arabia, Russia, Qatar and Venezuela meeting in Doha agreed to freeze output on Tuesday, but said the deal was contingent on other producers such as Iran.

Investors had been hopeful a production cut would be agreed.

Saudi minister Ali al-Naimi said holding production at January levels was adequate, adding that other measures to stabilise the oil market could be considered.

West Texas Intermediate was 1.3% higher at $29.81 a barrel and Brent crude was up 1.4% at $33.87. The Stoxx 600 oil and gas index came off earlier highs, trading up 0.6%.

“Market disappointment that production has not been cut, but rather stabilised is causing a widespread sell-off in risk assets,” said IG market analyst Joshua Mahony.

“Whether today is the beginning of another market sell-off remains to be seen, yet with sentiment and confidence in the doldrums, it seems a matter of time before we see the sellers dominate once more."

Uninspiring data added to the downbeat mood, as the ZEW survey showed German investor confidence deteriorated in February, albeit a little less than expected.

The indicator of economic sentiment fell to 1.0 point from 10.2 the previous month, versus economists’ expectations for a reading of 0.

The index that gauges investors’ and analysts’ assessment of the current situation in Germany fell 7.4 points from the previous month to 52.3, missing forecasts of 55.5.

Meanwhile, the indicator of economic sentiment for the Eurozone fell 9.1 points to a reading of 13.6 points, versus expectations for a reading of 10.3. The assessment of the current situation slipped 0.5 points to -8.0.

Pantheon Macroeconomics said : “A marginal beat of the consensus for the expectations index offers scant consolation. This is a poor report, consistent with weakness in the Sentix survey earlier this month. The expectations index is now almost as low as during the aggressive sell-off in Q4 14, which prompted the ECB to throw caution to the wind and launch QE.”

On the corporate front, Anglo American was a touch higher after it reported a pre-tax loss of $5.5bn after $3.8bn of write-downs since the half year, as it unveiled its promised “radical” overhaul of the business to combat crumbling commodity prices.

HeidelbergCement was on the front foot after lifting its savings target by a third to €400m.

Michelin racked up gains after the tire maker reported a 19% jump in full year earnings.

Orange also gained after the French telecoms group said it returned to core profit growth in 2015 a year ahead of plan.

On the downside, Standard Chartered was under the cosh after Investec downgraded the stock to ‘hold’ from ‘buy’.

Vodafone nudged lower after announcing it has agreed with Liberty Global to merge the companies’ operations in the Netherlands.

Still to come on the macroeconomic calendar, Empire manufacturing is due out in the US at 1330 GMT while the NAHB housing market index is at 1500 GMT.