Europe midday: Markets lower as US and China scrap over HK

European stocks were slightly lower at lunchtime on Wednesday as Sino-US relations soured over Hong Kong, while hopes for a swift Brexit deal were dented on worries the Democratic Unionists could still scupper an agreement.

At 1200 BST, the Stoxx 600 was 0.2% lower at 393.36, as Germany's Dax rose by 0.2% to 12,650.80 and the French CAC 40 dropped by 0.2% to 5,692.74. London's FTSE 100 was down by 0.2% at 7,197.33.

Hopes for progress in trade negotiations between the US and China diminished after the House of Representatives passed a bill that would see Hong Kong lose its special trading status if the city's authorities were found to have breached human rights and the rule of law.

A Chinese government spokesman said that Washington should "stop meddling" in Hong Kong's affairs and warned that Beijing would take "strong measures" to counter the proposed legislation.

AxiTrader analyst Stephen Innes said that, though stripping Hong Kong of its special status remained unlikely, passing the bill could derail trade talks so badly that it would not matter who was in power after the 2020 presidential election.

Despite reports on Tuesday evening that the UK and EU were closing in on a Brexit deal, investors were tripped up by comments from Democratic Unionist Party leader Arlene Foster on Wednesday morning in which she appeared to admit to having reservations over the proposed agreement.

Citing two officials involved in talks, Bloomberg reported that negotiations for a deal will not break through the current impasse unless the UK government acts.

XTB analyst David Cheetham said: "At the moment we’re seeing pretty wild swings several times a day as comments from either side hit the news and this will likely continue into the weekend - and possibly beyond."

Elsewhere on the economic front, revised figures from Eurostat revealed a dip in the year-on-year rate of increase for headline consumer prices inside the single currency bloc from 1.0% for August to 0.8% in September (Preliminary: 0.8%).

Among individual stocks, Signify, the Dutch company formerly known as Philips Lighting, was among the top risers after it agreed to purchase Eaton's lighting business for $1.4bn.

Swiss pharmaceutical firm Roche was in the green after it hiked its annual sales outlook for a third time and said it expected to complete its takeover of Spark Therapeutics before the end of the year.

Shares in Volkswagen and Renault climbed after industry data from European car industry association ACEA showed European car registrations rose by 14.4% in September, recovering from a slump in the month before.