Europe open: Stocks hit by China downgrade

News of the downgrade on Asia's largest economy - the first since 1989 - initially weighed on stocks across Asia Pacific although they recovered afterwards.

As of 1045 BST, the Stoxx 600 was higher by 0.13% to 392.54, but the Dax was dipping 0.11% to 12,645.66 and a 0.04% slip in the Cac-40 to 5,345.85.

Acting as a backdrop, investors were waiting on a speech from European Central Bank chief Mario Draghi himself, at 12:45 BST, amid increased speculation that the ECB might subtly change its guidance when it next met in June.

Earlier in the day, the ECB's chief economist, Peter Praet, had indicated policymakers need to be more confident that inflation is on a durable path towards the monetary authority's target of just below 2% before making any changes.

That meant that a shift in the ECB's policy bias at its June meeting was unlikely, but there were others such as fellow Governing Council member Benoit Coeure who had recently argued for the need to begin moving to a less accomodative stance.

GfK's German consumer confidence index improved from a reading of 10.2 for May to 10.4 for June (consensus: 10.2).

According to ex-French central bannk chief Christian Noyer, almost two dozen lenders and asset management firms are talking to the country's regulators about shifting jobs to France after Brexit.

Shares in German real estate outfit Vonovia SE were lower despite the company having raises its full-year outlook.

On Tuesday, Moody's raised the outlook on Leonardo's long-term debt to 'positive' from 'stable'.