- German business confidence higher
- US consumer confidence report
- Fed officials to speak
FTSE 100: 0.11%
CAC 40: 0.50%
FTSE MIB 0.45%
IBEX 35: 0.27%
Stoxx 600: 0.12%
European equities rallied at the midday mark Tuesday as markets reacted positively to German business confidence figures.
A report from the Ifo Institute showed business confidence in Germany increased at a slower-than-expected rate in September. The business climax index, based on a survey of 7,000 executives, rose to 107.7 from a revised 107.6 in August. Economists had pencilled in a reading of 108.
"Investors reacted favourably to the German Ifo release this morning, despite the headline figure falling short of expectations at 107.7," Alpari Market Analyst Craig Erlam pointed out.
"The miss was due to businesses assessment of current conditions, which fell slightly from a month earlier, despite expectations of a small rise. However, going forward businesses were much more optimistic, which is much more important from an investor perspective."
The report comes as Germany's federal election remains inconclusive.
Angela Merkel's Christian Democratic Union party won 41.5% of votes at the country's federal election on Sunday - which was not enough to secure a majority required to secure her third term as leader of Europe's largest economy.
She will need to find a coalition partner with either the Social Democrats which won 25.7% or the Green party which won 8.4%.
In the UK, mortgage approvals rose less than expected in August but still reached the highest level since December 2009, the British Bankers' Association revealed today. The number of new mortgages approved in August rose to 38,200 from July's revised total of 37,400 compared to the consensus of 38,950 approvals.
US consumer confidence, Fed officials speak
US consumer confidence figures will be released later amid concerns over the government budget debate and the possibility of stimulus cut next month.
The index for consumer sentiment in the world's biggest economy is expected to fall to 80.3 in September from 81.5 in August.
Separately, data will show the US house price index rose 0.9% in July from 0.7% the prior month.
Policymakers are turning to economic indicators as the Federal Reserve continues to weigh up when to begin scaling back its $85bn per month in bond purchases.
The Fed shocked markets last week when it announced it would keep its stimulus unchanged.
New York Fed President on Monday defended the central bank's move, saying the US economy was not ready for tapering as the economy had not picked up forward momentum.
On Friday James Bullard, head of the St Louis Fed, said that quantitative easing reduction could come in October and admitted that this month's decision to maintain quantitative easing was a close call.
Investors will now turn to speeches from Fed Bank of Cleveland President Sandra Pianalto and Fed Bank of Kansas President Esther George today.
Debt ceiling talks are also high on the agenda after President Barack Obama urged Congress to approve a budget to prevent a government shutdown by October 1st.
If the government fails to reach an agreement to raise the borrowing authority, which is currently limited to $16.7tn, it could lead to the first default by the US on its debt obligations.
Telefonica increases stake in Telecom Italia
Telecom Italia rallied after Telefonica SA agreed to increase its stake in the Italian phone company.
Total SA rose after Barclays raised its rating on the oil producer to 'equal weight' from 'underweight'.
Barclays gained following Monday's announcement that it was working to improve customer satisfaction with a review of overdraft fees.
Burckhardt Compression Holding declined after saying fiscal first-half net income will drop from a year ago.
Precious metals company Fresnillo slumped as the price of gold and silver dropped.
Other asset classes slide
The euro fell 0.07% to the 1.3483 US dollar.
Brent crude futures dipped $0.362 to $107.770 per barrel on the ICE.