Europe midday: Commission set to rule on French and Italian budgets

The main European equity gauges had slipped into the red come midday amid reports that the European Commission might decide as soon as today whether France and Italy’s budget proposals adhered to EU rules or not.

Investors were also waiting on the latest consumer price data due out Stateside at 13:30, which consensus expected to reveal a decline to a 1.6% year-on-year rate of price increases.

To take note of, on 17 October Barclays Research wrote to clients telling them that they anticipate a 0.5 percentage point decrease in the headline rate of CPI in seasonally adjusted and annualised terms. That is a rare occurrence outside of periods of recession, having only been seen in four quarters over the last 25 years. It may provide a net boost to the country's rate of GDP growth, via increased consumption, worth 0.4 percentage points.

As of 12:00 the Dax Xetra was gaining 0.03% to 8,889.30, Madrid’s Ibex 35 had slipped into the red by 0.06% and the FTSE Mibtel was managing to hold slightly higher by 0.24%.

Acting as a backdrop, market commentary was continuing to concentrate on the possibility of ECB corporate bond purchases.

On Wednesday morning two Belgian dailies reported remarks by ECB governing council member Luc Coene to the effect that: "If we limit ourselves to buying covered bonds and asset backed securities there is a risk that we would pay too high a price. We can prevent that by also buying corporate bonds," the central banker said, adding, "but there is no concrete proposal for that on the table."

China’s benchmark money-market rate, the seven-day repurchase rate, dropped by six basis points to 2.89% overnight. On Tuesday the country’s central bank injected up to 300bn yuan into 11 lenders.

Heineken moves lower after weak sales figures

Swiss engineering group ABB reported better than forecast quarterly earnings of $734m.

Nordea, the largest of Scandinavia’s lenders saw profitability improve to €938m in the third quarter.

Shares of Heineken fell after reporting weaker than projected quarterly sales.

The largest declines on the DJ Stoxx 600 were to be seen in the following industrial groups: Personal&Household services (-1.05%), Basic resources (-0.70%) and Food and beverage (-0.61%).

No significant economic data releases were expected on the Continent on Wednesday.

Crude rises

The euro/dollar was slipping 0.14% to 1.2695.

Front month Brent crude futures were up by 0.68% to $86.81 per barrel on the ICE.