Europe midday: Stocks edge lower amid uninspiring German, French data

At midday, the benchmark Stoxx Europe 600 index and France’s CAC 40 were down 0.4%, while Germany’s DAX was off 0.3%.

At the same time, oil prices retreated after surging in the previous session when data from the US Energy Information Administration showed crude inventories fell by 14.5m barrels in the week ended 2 September. Analysts had been expecting a gain of 225,000 barrels.

West Texas Intermediate was down 1.6% to $46.86 a barrel while Brent was 1.7% weaker at $49.16.

IG’s Joshua Mahony said: “European markets are continuing where they left off, with the downbeat sentiment driven by ECB inaction dampening expectations of further easing in forthcoming meetings.

“Coming just a day after the ECB decided to hold off on any fresh stimulus, today’s deterioration in German exports highlights the ongoing struggles that even the biggest and the best face in the eurozone.”

Stocks fell on Thursday after the European Central Bank left its benchmark refinancing rate at 0% and disappointed investors by making no changes to its trillion-euro bond-buying programme.

German trade data from Destatis did little to lift the mood on Friday, as it showed the country’s trade surplus was lower than expected in July as exports slid.

Adjusted for seasonal swings, the trade surplus declined to €19.4bn from a revised €21.4bn in June. Economists had been expecting a surplus of €22bn.

Exports fell 2.6% on the month, which was the worst decline in almost a year and missed expectations of a 0.3% increase.

Meanwhile, imports declined 0.7% on the month, missing forecasts of a 0.8% jump.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics said the data was “horrible” and July was “a write-off for the German economy”.

“The data are sending a clear signal that momentum of external demand declined over the summer.

“These data are unnerving, but the initial shock in the UK over Brexit and the VW dispute with its suppliers— which curtailed production and shipment – likely added to the weakness on exports in July, and we expect a rebound in August. In addition, if the US economy rebounds, as we expect, in Q3 it also should support German exports.”

French industrial production figures were no cheerier, showing a 0.6% drop in July from June versus estimates of a 0.3% rise.

Chinese inflation figures were also in focus, as consumer price inflation rose 1.3% in August from a year earlier, down from July’s 1.8% and marking the lowest level since October 2015. It was also weaker than the 1.7% jump expected by economists.

The country’s producer price index fell 0.8% in August from a year ago, which was more or less in line with expectations and compared to a 1.7% fall in July.

On the corporate front, Monte Paschi di Siena nudged lower after Fabrizio Viola, the chief executive of the world’s oldest bank, resigned.

Pub companies were in focus in London. JD Wetherspoon rallied after posting a 12.5% jump in full-year pre-tax profit to £66m. It was a different picture for Greene King, however, whose shares slid after it reported a strong start to the year but sounded a cautious note on the impact of the Brexit vote.

Luxury retailer Burberry was under pressure after Goldman Sachs removed the stock from its Sustain Focus List, highlighting the company’s subdued outlook.