Europe midday: Shares hold gains despite French turmoil, EZ data

(Sharecast News) - European shares opened higher on Thursday, despite the collapse of the French government overnight. The pan-regional Stoxx 600 index was up 0.21% to 518.54. France's CAC 40 pared early gains but was still up 0.16% after extreme right lawmakers combined with left-wing rivals to depose Prime Minister Michel Barnier's minority government in a no-confidence vote over his controversial Budget.

Barnier was widely expected to resign on Thursday after only three months in office, making him the shortest serving prime minister in French history. He was brought down for forcing through his austerity measures without a parliamentary a vote. The draft budget contained €60bn in savings to cut the country's deficit.

"The fact that the political right and left ousted Barnier highlights the risk that they may jointly undo some of (President Emmanuel) Macron's previous pro-growth reforms, going beyond the partial reversal of Macron's corporate tax cuts which Barnier had already proposed," said Berenberg chief economist Holger Schmieding.

"Moreover, the reluctance to return to a sustainable fiscal policy now means that the correction will have to be even starker at some time in the future even if the EU now accepts further French fiscal slippage for a while, as seems likely."

"Instead of outperforming the Eurozone average, as France had done in 2023 and 2024, we expect France to fall significantly short of eurozone average growth in the next two years - and possibly beyond. We lower our calls for the gain in French real GDP from 0.7% to 0.5% for 2025, from 1.2% to 1.0% in 2026, and from 1.3% to 1.2% in 2027 respectively."

In economic news, the eurozone's construction sector slowed in November, a closely-watched survey showed on Thursday, heaping more pressure on the bloc's faltering economy.

The latest HCOB Eurozone construction PMI total activity index was 42.7, down on October's 43.0.

Meanwhile, retail sales in the single currency bloc fell for the first time in four months in October, reversing gains made the month before, according to figures out on Thursday from Eurostat.

The government agency reported that the adjusted volume of retail trade decreased by 0.5% across the single-currency region during the month of October, following a 0.5% gain in September.

In equity news, Watches of Switzerland surged as it reported a jump in first-half revenue amid solid US demand, but a dip in profit.

Aurubis shares spiked as the German ferrous metals supplier and copper recycler post upbeat annual earnings amid a volatile market.

Kit meal producer HelloFresh also jumped after Jefferies upgrade the stock to 'buy' from 'hold' and raised its target price to €16.50 euros from €7.50. The news boosted fast food delivery companies such as Just Eat Takeaway and Delivery Hero.

Reporting by Frank Prenesti for Sharecast.com