Europe midday: Shares rally as chipmakers surge

The pan-regional Stoxx 600 was up 0.19%. Germany's DAX was flat after after first quarter GDP was revised lower to -0.3% from 0%, following a contraction of 0.5% in the previous quarter, landing Europe’s largest economy in a technical recession over winter.

“The reluctance of households to buy was apparent in a variety of areas,” the German statistics office said, with consumers spending less on food and beverages, clothing and footwear, and furnishings.

In the US the talks on agreeing a debt ceiling dragged on, with Republicans trying to extract spending cuts from the Biden administration in return for a deal that would stop a default.

"Rating agency Fitch has placed the US AAA rating on negative watch, citing concerns about the looming US debt ceiling deadline. In 2011, S&P cut the US rating to AA-plus, which triggered a major market sell-off," said Interactive Investor analyst Victoria Scholar.

"The Democrats and Republicans have yet to find common ground and reach a deal, with hopes that the stalemate will finally end in the days ahead so that a catastrophic US default can be averted. However time is ticking, prompting a bout of market nervousness as the deadline draws closer.”

In equity news, Johnson Matthey fell as lower metals prices and inflation hit annual profits.

European chipmakers gained after the world's most valuable manufacturer in the sector Nvidia Corp forecast quarterly revenue more than 50% above Wall Street estimates, and said it was increasing supply to meet surging demand for its artificial-intelligence chips

Shares of BE Semiconductor, ASM International and ASML Holdings all surged on the news.

Reporting by Frank Prenesti for Sharecast.com