Europe midday: Stocks unchanged ahead of US rate hike; Dutch election eyed

European stocks were largely unchanged on Tuesday as investors priced in a US interest rate hike, while the Dutch election loomed.

At midday, the benchmark Stoxx Europe 600 index was down 0.16% to 374.05, Germany’s DAX was flat at 11,989.33 and France’s CAC 40 fell 0.22% to 4,988.72.

Meanwhile, Brent crude was up 0.67% to $51.70 a barrel and West Texas Intermediate was 0.57% firmer at $48.68.

In currency markets, the euro was down against the dollar to 1.0633 and up 0.52% versus the pound at 0.87639.

The polls open on Wednesday in the Netherlands, marking the first of three key elections this year in Europe.

Tensions between the Dutch and Turkish governments have escalated after Turkey’s Prime Minister announced political sanctions against the Netherlands, while Turkish EU minister Omer Celik said that Turkey should consider reviewing the migration deal with the European Union.

Analysts at Rabobank said that a review of the migrant deal could have “game-changing implications for the German elections later in the year and potentially for the French presidential election this spring”.

Dutch Prime Minister Mark Rutte’s popularity has improved since the diplomatic spat with Turkey, according to recent opinion polls against far-right candidate Geert Wilders.

On the data front, eurozone industrial production grew 0.9% in January from December, less than the expected 2% growth.

The production of capital goods rose by 2.8% and energy by 1.9%, while production of non-durable consumer goods fell by 0.7%. Both intermediate goods and durable consumer goods declined 0.4%.

Compared with January 2016, industrial production increased 0.6% in the eurozone, falling short of expectations for 0.9% growth. In the EU-28 group of nations, industrial production was up 0.5% on the month and 1.3% on the year.

Spanish and German inflation rose to five-year and four-year highs respectively in February which, according to analysts at Monex Europe, showed the eurozone’s continuing impressive macroeconomic performance over the last few months.

This comes after European Central Bank president Mario Draghi did not dismiss the possibility of an interest rate hike last week in case price indices get close to the ECB’s 2% target.

Investors were also pricing in a 25 basis point interest rate hike by the US Federal Reserve to between 0.75% and 1% on Wednesday, and looking for signs for the next hike, possibly in June.

In corporate news, Euronet was up 0.93% after the electronics payment company made a $1bn bid for US rival MoneyGram. MoneyGram’s shares soared 21.72% in pre-market trade.

Antofagasta edged up 0.7% as it said higher metals prices and lower cash costs helped push full year earnings before interest, tax, depreciation and amortisation up 78.7% to $1.6bn.

RWE gained 6.19% after Bloomberg reported that France's Engie was preparing a bid for the German utility’s renewable energy business Innology.