Europe midday: Stocks extend gains as SAP, VW rally on earnings

At midday, the benchmark Stoxx Europe 600 index was up 0.8%, Germany’s DAX was up 1.4% and France’s CAC 40 was 1.1% firmer.

At the same time, oil prices were little changed, with West Texas Intermediate flat at $44.67 a barrel and Brent crude up 0.4% at $46.83.

Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor said: “European markets are tracking slightly higher as the focus of attention turns to company earnings. With equity markets having rallied so far, so fast there have been signs of recent profit taking, so positive earnings news could provide much needed momentum for the wider market.

“However, with such high expectations already being built into current market levels, any miss on corporate earnings could prove very costly.”

Corporate news helped to underpin the tone on Wednesday. German car maker Volkswagen was sharply higher after the company’s first-half earnings topped estimated, while German software company SAP rallied after its second-quarter results beat analysts’ expectations.

Burberry was a touch higher after the luxury retailer announced a share buyback programme up to a maximum of £100m.

Severn Trent nudged up after the water company said trading in the first half was line.

Precious metals miner Fresnillo eked out small gains after upping its full-year gold production forecast.

On the downside, miner BHP Billiton was under the cosh after releasing a mixed production update, while Eurotunnel was also in the red as it cut its outlook on the back of a weak pound following the UK’s decision to leave the European Union.

On the data front, figures released earlier by the Federal Statistical Office showed Germany producer prices rose 0.4% on the month in June, unchanged from May and beating economists’ expectations of a 0.2% increase.

There are no further eurozone data releases of note due so the next big focus will be Thursday’s European Central Bank rate announcement.