Europe midday: Stocks deepen losses ahead US producer price data

(Sharecast News) - European stocks were moving lower approaching midday, responding to hawkish remarks from a top U.S. central bank official overnight that served to pull Wall Street off its intra-day highs and to a nearly flat finish.

In the wake of slightly softer then expected consumer prices data in the U.S. the day before, stocks had initially jumped but according to the head of the San Francisco Fed, Mary Daly, the monetary authority still had more to do.

"This failure to hang onto the gains of the day speaks to how nervous investors are when it comes to the outlook for inflation at a time, even though Daly isn't a voting member on the FOMC this year, and she's hardly likely to say anything else," said Michael Hewson, chief market analyst at CMC Markets UK.

Against that backdrop, as of 1100 BST the pan-European Stoxx 600 was down by 0.65% to 461.23.

In parallel, the French Cac-40 was down by 0.89% to 7,367.96 and Germany's Dax by 0.55% to 15,911.36.

On a more positive note, reports indicated that Beijing would allow provincial governments to raise funds to pay down the debt of local government financing vehicles.

In geopolitical news, Spanish daily El Mundo cited Ukrainian foreign minister Dmytro Kuleba as saying that his country would never sit down to negotiate with Putin, although "it was open to mediation."

However, at another point in the interview, Kuleba reportedly said that "we can negotiate with Russia once they have withdrawn their troops from our lands, but not with Putin. This can be achieved through a combination of war and diplomacy."

When asked if talks could begin before a withdrawal, Kuleba said: "it depends on the circumstances. We do not trust the Russians' word, no sane person would. Before a withdrawal we would want to be sure that they're serious and that it's not a faint to only then attack later [...]."

Still ahead for later in the day, at 1330 BST was producer price data out of the U.S. covering the month of July and the results of the University of Michigan's consumer confidence survey at 1500 BST.

Bechtel was the top gainer on the Stoxx 600 after the IT systems provider reported better-than-expected second quarter profit and revenues.

UBS was right behind jumping 5% after ending the Swiss government's $10bn backstop for the stricken investment bank.