Europe midday: Stocks rise, but gains limited after recent surge

(Sharecast News) - European stock markets edged higher on Tuesday, though risk appetite was kept in check following a recent rally which pushed the Stoxx 600 benchmark to its highest in seven weeks.

The Stoxx 600 was trading 0.2% higher at 545.62 by lunchtime, with all major indices across the continent trading in positive territory, albeit with limited gains.

The European benchmark is on track for its highest close since 27 March. After the unprecedented market sell-off last month following the start of the US trade war, which sent the Stoxx 600 to 469.89 on 9 April - its lowest in more than a year - the index has since jumped 16%.

While Wall Street indices rocketed overnight as US investors reacted to a temporary truce in US-China trade talks, with both nations agreeing to lower levies for 90 days as they continue negotiations, European and Asian markets were more subdued on Tuesday since they already had a chance to react to the news.

"European markets are making moderate gains today, as stocks take a breather after yesterday's widespread exuberance," said Joshua Mahony, chief market analyst at Scope Markets.

"For now, we are enjoying a welcome reprieve that allows the bulls to regain the upper hand, building on the strong earnings season that is now 91% complete," he said.

US stock futures, meanwhile, were pointing to a weaker start on Wall Street ahead of the all-important CPI inflation report due out after the opening bell.

In economic data, UK unemployment rose to its highest level in nearly four years, rising to 4.5% in the January to March period, up from 4.4% previously. Meanwhile, annual growth in average weekly wages was 5.6%, excluding bonuses, down from 5.9% and broadly in line with expectations.

German investor sentiment improved more than expected in May, according to a survey released by the ZEW Center for European Economic Research in Mannheim. The economic sentiment index rose to 25.2 from -14 in April, coming in above expectations for a reading of 11.9, while the current situation index declined to -82 in May from -81.2 the month before.

Market movers

Renewable energy stocks were surging in morning trade, including Vestas Wind Systems, EDP Renováveis and Orsted, on speculation that the proposed phase-out of president Biden's incentives on US clean energy projects won't be as severe as feared.

Pharma giants Bayer and Grifols were putting in decent gains after Donald Trump's executive order to cut prescription drug prices on Monday was largely deemed softer than expected. Bayer was also rising after reporting better-than-forecast earnings, helped by sales of its new cancer and kidney treatments.

London-listed DCC fell after underwhelming with its full-year results, which revealed a 5% rise in adjusted operating profit and plans to return £800m to shareholders, while Entain gained after a UBS upgrade to 'buy'.