Europe open: BofA-ML cautions of near-term risks for shares on the Continent

(Sharecast News) - Stocks are in the green on the back of a raft of new stimulus measures announced overnight in China, which have come alongside some unexpected good news from the Continent itself.Yet some strategists, such as at Bank of America-Merrill Lynch, were cautioning of the potential downside risks that might lie ahead over the next few months, although on longer time frames, say 12 months, there might be reasons to be more positive."While the worst case of a no-deal Brexit has diminished, negative political catalysts remain for the next few months: unresolved trade tensions between the US and EU on Autos will only be clarified by mid-May, and risks of greater populist vote share in EU parliamentary elections in May raises policy uncertainty and risk premia," BofA-ML said.But "ultimately", reflation in China should favour Europe, the investment bank said.On that note, overnight Chinese officials unveiled a combination of various tax cuts and plans to reduce reserve requirement ratios for smaller companies.As of 0946 GMT, the benchmark Stoxx 600 was edging up by 0.16% to 375.70, alongside gains of 0.20% to 11,616.42 for the German Dax and a rise of 0.25% to 20,771.26 on the FSTE Mibtel.Sector-wise, gains were being paced by one of the worst performers year-to-date, Telecommunications, with the corresponding sub-index on the Stoxx 600 jumping 1.47% to 241.54.Meanwhile, front month Brent crude oil futures were slipping 0.61% to trade at $65.27 a barrel on the ICE.To take note of, on Monday America's S&P 500 had failed to make any fresh inroads above the 2,820 point area and come Tuesday some market commentary was pointing out the so-called 'overbought' levels which had been reached by gauges such as the EuroStoxx 50.Echoing a widely-shared view among other traders, Neil Wilson, chief market analyst at Markets.com, said: "It's also as we look at the global picture a case of markets pausing for breath, taking some profit and - as I said in yesterday's note - a buy the rumour, sell the news type trade. Look for pull backs ahead of the ink drying on any deal between the US and China."In other economic news, IHS Markit's closely-followed composite euro area output index for February was revised up significantly, from a preliminary reading of 51.4 to 51.9.Nevertheless, the survey compiler warned against reading too much into those numbers."However, the survey remained subdued as other headwinds continued to increasingly constrain business activity. These include slowing global economic growth, rising geopolitical concerns, trade wars, Brexit and tightening financial conditions," said Chris Williamson, chief business economist at IHS Markit.Vodafone was a top gainer after announcing plans for a €4.0bn issue of convertible bonds to finance the acquisition of Liberty Global assets.