* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.4 pct
* Low demand at Bund auction signals rising risk appetite
* BP sinks on renewed worries over oil spill costs
By Blaise Robinson
PARIS, Sept 5 European stocks were up around
midday on Wednesday in choppy trade in the run-up to this week's
ECB policy meeting, as low demand at a Bund auction signalled
that investor appetite for safe-haven assets is drying up, a
bullish sign for equities.
Germany sold 3.61 billion euros of new 10-year government
bonds on Tuesday, drawing bids worth less than the amount on
offer. That sparked a rally in Germany's DAX stock index
, up 0.6 percent at 1030 GMT.
"It confirms the switch to a 'risk on' mood we've been
seeing since July across all asset classes. People are slowly
coming back to equities and are trimming their exposure to
Bunds, on which they are losing money," a Paris-based equity and
exchange-traded funds trader said.
The FTSEurofirst 300 index of top European shares
was up 0.2 percent at 1,081.75 points while the euro zone's blue
chip Euro STOXX 50 index was up 0.4 percent at
2,445.21, reversing gains made in early trading, and testing its
20-day moving average.
Stocks have also been buoyed by expectations of strong new
measures from the European Central Bank on Thursday to fight the
Markets are looking for the ECB to unveil a plan to buy
bonds from Spain and Italy to lower the two countries' borrowing
costs and ease the debt crisis, although it may outline rather
than detail its strategy on Thursday, keeping the pressure on
governments to bring their deficits and debts under control.
"We might not get all the details of the ECB plan tomorrow,
but we know it's coming, so it's priced in. There isn't much
downside risk here," said David Thebault, head of quantitative
sales trading at Global Equities.
"The downside risk is elsewhere, in Chinese and U.S. macro
data. The question is: 'how bad is the situation in the U.S.
economy?' We'll get a better idea on Friday with the payrolls."
Gains were limited on Wednesday, however, by a recent raft
of grim macro data, including figures on Wednesday showing the
contraction that began in the more vulnerable of the bloc's 17
economies is now taking hold even in the largest and strongest,
Around Europe, the UK's FTSE 100 index was flat,
France's CAC 40 up 0.2 percent, and Spain's IBEX
up 0.3 percent.
Shares in BP sank 4.2 percent, the biggest loser
among Europe's blue chips, after the U.S. Justice Department
ramped up its rhetoric against the oil major for the massive
2010 oil spill in the Gulf of Mexico, describing in new court
papers examples of what it called "gross negligence and wilful