Europe midday: Stoxx 600 on track for another record after late-morning rally

(Sharecast News) - European stocks edged towards new record highs by Tuesday lunchtime, cutting earlier losses, as a recovery on the CAC 40 gave markets a boost despite ongoing political turmoil in France. Despite a weaker start, the Stoxx 600 was up 0.2% at 571.47 by 1257 CEST, with gains reported across all major bourses. The pan-European index was on track to surpass last Friday's record closing high of 570.45, having now gained in seven of the past eight trading sessions.

French stocks were up 0.4% following a heavy fall on Monday after France's newly appointed prime minister Sebastien Lecornu abruptly resigned just hours after he had named cabinet.

The new administration was due to meet for the first time on Monday afternoon. However, allies across the political divide were disappointed with the line-up, and threatened to withdraw their support, prompting Lecornu's shock departure.

In the latest developments, Lecornu is reportedly starting last-ditch talks with various parties to attempt to bring an end to the political turmoil engulfing the country, as president Emmanuel Macron faces mounting pressure to hold a snap parliamentary election.

"Upward pressure on French bond yields is easing after President Macron gave the Prime Minister [...] two days to form a new government," said Kathleen Brooks, research director at XTB. "However, the spread between French and German 10-year bond yields remains elevated and is at the highest level since December 2024, which suggests that financial markets do not see political stability in France any time soon."

In economic data, German factory orders unexpectedly fell for the fourth straight month in August, dropping 0.8% after a revised 2.7% decrease in July. The consensus forecast was for an increase of 1.4%

Meanwhile, the Halifax UK house price index fell 0.3% in September following a 0.2% uplift in August, marking its first decline since May. Most analysts had been expecting another 0.2% rise.

Market movers

London-listed discount retailer B&M was a heavy faller, dropping 5% after guiding to a big fall in annual profits this year. The company said it was launching a turnaround plan after underlying sales in its main UK operation barely grew in the first half.

Pharma stocks were providing a drag on markets, with Bayer, Novo Nordisk, Sanofi and GSK trading lower after recent gains. British outfit AstraZeneca, however, was flat after reporting positive results from a phase III clinical trial of its Baxdrostat treatment.

Denmark's Orsted was flat after saying it had raised nearly £7bn in a heavily discounted rights issue, as it looks to shore up its finances amid Donald Trump's vocal opposition to wind power.

London's Shell gushed higher after saying it expects "significantly higher" trading in its gas division in the third quarter than in the previous quarter, while tobacco giant Imperial Brands rose after announcing a £1.45bn share buyback.