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Europe ends slightly higher despite Italy uncertainty, US tariff concerns

  • The pan-European STOXX 600 closed up 0.13 percent, with most of the region's sectors ending flat or in the black.
  • Italian shares on its FTSE MIB index closed up over 1.5 percent, as traders awaited for clarity on which parties are going to form the next government following the inconclusive vote over the weekend.
  • Positive sentiment seen in markets changed direction late in Europe's session, after a report that Donald Trump was convinced Gary Cohn would leave his administration if the tariffs proposed by the president were implemented.

European equities finished Tuesday's session slightly higher, as investors appeared to shrug off concerns of a potential trade war and uncertainty following Italy's election result.

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IBEX 35
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The pan-European STOXX 600 closed up 0.13 percent provisionally, off its session lows, with most of the region's sectors ending flat or in the black. Stocks pared some of the gains, as stocks on Wall Street came under pressure.

On the bourses front, the U.K.'s FTSE 100 popped 0.43 percent by the close, while France's CAC 40 rose 0.06 percent and Germany's DAX rose 0.19 percent.

In peripheral markets, Italy's FTSE MIB jumped 1.75 percent, bouncing back from Monday's declines, as traders awaited clarity on which parties were going to form the next government following the inconclusive vote over the weekend. The populist Five Star Movement was the single largest party following the election. Meanwhile, former Italian Prime Minister Matteo Renzi resigned Monday after his party suffered its worst result since 2007.

Autos outperform

In sector news, autos were one of the top performers, rising 1.24 percent following comments from German automaker Volkswagen, who said that its deliveries rose 5 percent last month. The stock rose 2.25 percent. News that Fiat will spin off auto-parts business Magneti Marelli to shareholders, without any fundraising, also supported the sector. Shares of Fiat jumped 5.67 percent.

Food & beverage was one of the worst performing sectors, with online food ordering group Just Eat falling to the bottom of the STOXX 600, ending down 12.5 percent. The company sank after it released results that disappointed the markets, announcing a core earnings outlook that came in below consensus.

Looking at individual stocks, Dormakaba sank over 9 percent after the German group said it was "a little more cautious" on its outlook for organic sales growth. Britain's Rotork fell 7.5 percent, after the manufacturer said it expected results in 2018 to be impacted by currency moves.

At the top of the leaderboard, shares of Smurfit Kappa rose over 18 percent after Europe's largest producer of paper-based packaging rejected an unsolicited proposal from International Paper — arguing it is better to remain as an independent business.

French defense firm Thales meantime announced that it exceeded all of its annual financial targets in 2017. The stock jumped 6.26 percent as a result.

Trade war concerns

At the start of trading, President Donald Trump had eased concerns over a potential trade after he said Monday that tariffs on aluminum and steel — which he announced last week — would not apply if there would be a "fair" trade deal with Canada and Mexico (the so-called NAFTA agreement).

The positive sentiment seen in markets, however, changed direction later in Europe's session, after Bloomberg News reported news, citing sources, that Trump was convinced chief economic adviser Gary Cohn would leave his administration if the tariffs proposed by the president were implemented. Consequently, by the European market close, U.S. stocks traded sharply lower with the Dow Jones industrial average falling more than 130 points after opening sharply higher.

Another piece of news that moved markets was the South Korean presidential National Security Office's announcement that North Korea was willing to hold denuclearization talks with the U.S. and would suspend nuclear tests while those talks took place.

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