Europe midday: Stocks up as investors shrug off weak German sentiment, trade war woes

European stocks were firmly in the green by Friday afternoon as investors shrugged off a weak reading on German consumer sentiment and concerns about trade relations between the US and China.

At 1510 GMT, the benchmark Stoxx Europe 600 index was up 0.7% to 358.06, Germany's DAX was 1.6% higher at 11,309.87 and France's CAC 40 was 1.1% higher at 4,925.85.

Meanwhile, Sino-US relations remained in focus as investors digested conflicting signals.

US Commerce Secretary Wilbur Ross warned that the US and China were "miles and miles" away from ending their trade dispute. However, he also said that there was a fair chance that China will get a trade deal. Meanwhile, Trump's economic advisor Larry Kudlow said the US president is optimistic on trade talks.

In corporate news, Ericsson gained as it said fourth-quarter losses narrowed, while French car maker Renault rallied after appointing deputy chief executive officer Thierry Bollore as its new CEO.

Elsewhere, Swiss fragrances manufacturer Givaudan was in the red as it posted a drop in 2018 net income, while Swedish telecom company Telia was trading lower after its fourth-quarter earnings missed expectations.

The positive mood came despite a downbeat reading on German consumer confidence, as the Ifo business climate index fell to 99.1 this month from 101.0 in December, missing expectations for a reading of 100.6.

The current assessment index ticked down to 104.3 in January from a revised 104.9 the month before, beating expectations of 104.2. Meanwhile, the expectations index slid to 94.2 from 97.3 in December, versus expectations for a reading of 97.0.

The sub-index for manufacturing fell to 11.2 this month from 14.9 in December, the services index declined to 24.5 from 27.0 and the construction and retail trade gauges slipped to 20.0 and 4.6 from 29.3 and 9.2, respectively.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Whatever optimism we had left about the eurozone economy is steadfastly being destroyed by the incoming data. This is a horrible start to the year for German business sentiment, driven principally a plunge in the expectations index to its lowest level since the chaos during the sovereign debt crisis in 2011 and 2012.

"We don’t have any qualitative details in this report, but the message is increasingly clear; weakness in external demand and rising geopolitical uncertainty are now weighing severely on German business confidence. Across sectors, the main declines were recorded in manufacturing and construction, though the level of both remains solid. The services index also slipped, as did confidence among wholesale traders."