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Europe shares close flat despite North Korea tensions; Siemens in reported merger; AA down 5%

European stocks closed largely flat Tuesday afternoon, with the pan-European Stoxx 600 down 0.04 percent. This followed a day of trading in which global sentiment recovered after a sell-off in technology stocks and increased tensions on the Korean Peninsula.

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Deutsche Wohnen was among the top performers after announcing a new convertible bond offering of 800 million euros ($ 947.60 million). The stock rose 3.3 percent.

Health care stocks were down by 0.3 percent following news that an attempt to repeal Obamacare has failed. This after U.S. Senator Susan Collins said she would oppose her party's bill. Novo Nordisk was also down by 1.7 percent after BNP Paribas moved it to "neutral" from "outperform".

British lender Close Brothers Group was among the worst-performing companies on the European benchmark, down by more than 5 percent. The lender said Tuesday that though current market conditions were stable, the long-term economic outlook was "uncertain" due to Brexit.

AA hit the bottom of the benchmark, down by nearly 4.5 percent as its growth figures failed to improve. Analysts at Jefferies said that they are worried the firm cannot generate enough cash flow and rated it at an "underperform" level. Analysts at Liberum lowered the target share price for the company but said the appointment of Simon Breakwell as permanent chief executive should be well received.

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Also, in the corporate world, Siemens is reportedly set to choose French rival Alstom for a rail merger, Reuters reported citing sources. The German firm was marginally lower in late morning deals.

In the U.S., stocks opened higher Tuesday, helped by a recovery in technology stocks. The tech-heavy Nasdaq composite outperformed, climbing about half a percent. Information technology stocks fell more than 1 percent Monday in their worst day since August 17. The small-cap Russell 2000 hit a record high for the first time since July.

Trump-North Korea tensions

Markets started the day on the back foot after North Korea's Foreign minister said Monday that one tweet from President Donald Trump over the weekend was a declaration of war. As such, Pyongyang reserved the right to take countermeasures, which could include shooting down U.S. bombers even if they are not in North Korea's air space.

In Europe, German Chancellor Angela Merkel has begun coalition talks with three other parties to build a new government, after the far-right AfD party beat forecasts and become the third largest presence in parliament.

Meanwhile in Japan, minutes from the central bank's last meeting showed Tuesday that the Bank of Japan (BOJ) will continue with its current monetary policy strategy. Policymakers showed signs of optimism given that inflation expectations stopped falling.