Europe midday: Stocks erase early gains as markets pause at record highs

(Sharecast News) - After a brief stint higher, European stocks had slipped into the red by Friday lunchtime, struggling for direction as markets continue to trade at or close to record levels.

The Stoxx 600 was down 0.2% at 573.38 by the 1256 mark in Central Europe, with most major indices registering small losses despite a earlier positive start to trading.

Some profit-taking was likely, given the benchmark index hit a new closing high of 574.43 on Thursday, helped by the DAX, CAC 40 and FTSE 100 having all reached new peaks in recent weeks.

Investors were treading carefully ahead of the long-awaited release of US inflation data for September due at 1330 CST - delayed because of the ongoing government shutdown - which is expected to show that annual price growth Stateside picked up to 3.1% from 2.9% in August.

"Today brings a rare dose of economic data out of the US, with CPI inflation figures belatedly due for September," said Joshua Mahony, chief market analyst at Scope Markets. "Coming ahead of next week's FOMC meeting, the ability of today's release to change the perception of the markets is questionable, with the CME currently pricing a whopping 99% chance of a 25bp cut next week. That figure may weaken somewhat with a high inflation print today, but in all likeliness the more questionable meeting comes in January given that markets attach a 55% chance of additional easing."

Back on this side of the Pond, data from S&P Global and HCOB revealed that eurozone private sector activity expanded at its fastest pace in 17 months in October. The composite PMI rose to 52.2 this month from 51.2 in September, marking the 10th straight month of growth (indicated by any figure above 50) and well ahead of the 51.0 expected by analysts, with new orders rising at their sharpest rate since April 2023.

The S&P Global UK composite PMI rose to 51.1 from 50.1, beating the 50.6 consensus estimate, marking the sixth straight month of growth. Notably, the manufacturing sector remained in a downturn but neared breakeven at 49.6 - a 12-month high and well ahead of the 46.6 forecast.

Meanwhile, UK retail sales unexpectedly grew by 0.5% in September, easing from the revised 0.6% increase in August but marking the fourth straight month of growth. "Markets had been predicting a 0.2% decline, but rising real wages and a steadying house market are helping to drive an uplift in overall consumer spending," said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

NatWest impresses

NatWest was trading 3% higher after the UK banking group raised its income and returns guidance for 2025 following a strong performance in the third quarter, helped by "healthy levels of customer activity". Net profits surged 35.1% to �1.68bn in the third quarter.

Also in London, London Stock Exchange Group was extending gains made the previous day after raising its full-year outlook, announcing a new share buyback and revealing a stake sale of its post-trade services business.

Swedish B2B tech outfit Lagercrantz Group was up 9% after reporting positive results for the second quarter, with revenues and profits both up by double digits, helped by the acquisition of five companies in the first half.

Swedish crane maker HIAB dropped 14% after reporting that first-half sales were down double digits with comparable earnings down 24% as profitability was hit by lower sales in the US.