Europe midday: Stoxx holds gains on hopes of US rate cut

(Sharecast News) - European shares held gains as earnings season continued with the benchmark Stoxx index making a strong start to Tuesday on hopes of a US rate cut.

The pan-regional index was up 0.39% to 542 at 1147 BST with all major bourses higher. Sentiment was also boosted by a survey that showed business activity in the eurozone grew at a slightly faster pace in July than the previous month, although demand dipped.

The HCOB Eurozone composite purchasing managers index rose slightly to 50.9 in July from 50.6 in June, just under a flash estimate of 51.0.

"US markets put last week in the rearview mirror. Stocks surged across the board with encouraging breadth as investors dived back in," said Hargreaves Lansdown analyst Matt Britzman.

"Friday's soft jobs report has reignited the argument that the Fed should be cutting, and markets are now almost certain of a cut in September, putting the odds at 94%. The potential for rate cuts, alongside a strong earnings season, is proving enough of a cocktail to keep the fire lit under US stocks."

In equity news, UK consumer group Smith & Nephew led the gainers with a 12% jump after reporting earnings. Miner Fresnillo and drinks maker Diageo also gained after results.

DHL was higher as the German logistics giant reported forecast-beating second-quarter profits. Compatriot fashion house Hugo Boss jumped as cost cuts helped produce a better-than-expected operating profit for the quarter.

Reporting by Frank Prenesti for Sharecast.com