Europe midday: Stocks waver as Britain starts process to leave EU

Europe stocks wavered on Wednesday as investors avoided making big bets as Britain prepared to start formal divorce proceedings with the European Union.

At midday, the benchmark Stoxx Europe 600 index was down 0.14% to 376.77, Germany’s DAX rose 0.32% to 12,188.31 and France’s CAX was flat at 5,049.33.

In currency markets, the euro was down 0.27% versus the dollar to 1.0785 and 0.15% weaker against the pound at 0.86713.

Meanwhile, Brent crude was up 0.5% to $51.59 per barrel and West Texas Intermediate rose 0.35% to $48.54.

British Prime Minister Theresa May signed a letter on Tuesday evening to trigger Article 50 of the Lisbon treaty which will start a two-year clock on negotiations to leave the trading bloc. The country’s EU ambassador, Sir Tim Barrow will hand deliver the letter to Donald Tusk, the president of the European Council, at about 1220 BST.

Tusk will make a statement at 1230 BST and he will then meet with senior members of the European Parliament in the afternoon to discuss Brexit. Around the same time May will give a speech to the British Parliament.

Jasper Lawler, senior market analyst at London Capital Group, said: “Theresa May’s letter purportedly contains some details on the UK’s negotiating position. Although the ‘hard’ and ‘soft’ Brexit debate has largely passed, there is still some leeway as to how ‘hard’ it will be.

“To us, it is not the UK’s position that matters. That the EU has put the UK’s exit fee as top of the negotiating agenda instead of trading relationships is telling. Economically it makes sense for the EU to negotiate a fair deal, but politically its agenda is very different.”

He said that the EU would want to make Britain the poster child for how bad it is to leave the bloc and that it was likely that Britain would come away with no deal and trade based on World Trade Organisation rules.

On the data front, French consumer confidence was stable in March with INSEE's index unchanged at 100.0 as expected. However, a sub-index tracking whether it was a good time to make big purchases fell by six points to a reading of -7.0, an eight-month low.

In corporate news, BHP Billiton was up 1.3% after its iron ore chief Edgar Basto warned that the supply of low-cost seaborne iron ore is expected to grow faster than demand, but assured that company is well-positioned to continue to grow value and shareholder returns.

Holiday tour operator TUI slipped 0.62% after it said winter 2016/17 and summer 2017 were trading in line with expectations and reiterated its guidance of at least 10% growth in group underlying EBITA in 2016/17.

Akzo Nobel fell 0.61% after Dutch daily FD reported that US activist hedge fund Elliott Advisors had garnered the support of 25% of the chemical company's shareholders to engage in takeover talks with US rival PPG Industries.