Europe midday: Stoxx extends gains on positive eurozone GDP data

(Sharecast News) - European shares extended gains on Friday as investors assessed the fallout from the collapse of the French government and subsequent resignation of Prime Minister Michel Barnier, while upbeat eurozone GDP data boosted sentiment. The pan-regional Stoxx 600 index was up 0.24% in early deals at 520.74 points, France's CAC 40 shrugged off the political turmoil to post a 1.45% gain.

Barnier handed in his resignation to President Emmanuel Macron on Thursday but will stay on until a successor is appointed. He quit after left wing parties combined with the extreme right in a no confidence vote to topple his minority government in protest at the decision to force through €60bn in Budget cuts without a parliamentary vote.

Macron, who many blame for the current political crisis, made a defiant speech on Thursday insisting he would see out his presidential term, which ends in 2027.

"European stocks are close to a one-month high as traders assess rapidly unfolding political events in France. There's some hope that President Emmanuel Macron will serve out his term and that a budget can be passed in the coming weeks as the EU's second largest economy looks to tackle its debt crisis," said Hargreaves Lansdown analyst Derren Nathan.

"But until President Macron announces a replacement for Prime Minister Michel Barnier, uncertainty is likely to prevail. Finding a candidate who can unify a deeply polarised nation will be no easy task."

In economic news, economic output in the euro area rose more quickly over the three months ending in September than over the preceding quarter, as Germany skirted recession and aggregate demand in Ireland spiked.

According to Eurostat, gross domestic product in the single currency area expanded at a quarter-on-quarter pace of 0.4%, after growth of 0.2% during the three months to June.

Key to that outcome, German GDP rebounded by 0.1% on the quarter after a 0.3% drop during the previous three months.

German industrial production fell unexpectedly in October, due to declines in energy production and the automotive industry, according to official data published on Friday.

Meanwhile US nonfarm payrolls data is due later in the day with economists expecting 220,000 new jobs being added.

In equities news, Direct Line shares surged after the company said it would recommend a sweetened £3.6bn from rival Aviva.

Reporting by Frank Prenesti for Sharecast.com