Markets

European stocks close higher on US-China trade optimism; Michelin climbs 13%

Key Points
  • Auto stocks led the gains on the back of earnings and optimism over U.S.-China trade talks.
  • U.S. lawmakers reached a tentative funding deal that would avoid another U.S. government shutdown.
  • In Europe, U.K. Prime Minister Theresa May updated lawmakers on the latest Brexit developments.

Stocks in Europe closed higher Tuesday as investors monitored trade and political developments.

The pan-European Stoxx 600 closed provisionally up by around 0.5 percent, with most sectors in positive territory.

Auto stocks led the gains on the back of earnings and optimism over U.S.-China trade talks. Michelin was the top performing stock across Europe, up by 13 percent, after giving a strong outlook for 2019.

Randstad rose 4.7 percent after reporting its fourth-quarter results which beat market expectations. The Dutch staffing firm said the slowdown in some European markets at the end of last year had not carried over into 2019. Meanwhile, British travel and tourism firm Tui dropped over 6 percent after reporting a widening loss for its first quarter.

Stateside, stocks surged at the open following news that lawmakers reached a tentative funding deal that would avoid another U.S. government shutdown.

Overall the positive market sentiment was linked to trade talks between the United States and China. Both countries continue to discuss a possible agreement over trade ahead of a self-imposed deadline in early March. This week's talks are focused on intellectual property.

In Europe, U.K. Prime Minister Theresa May updated lawmakers on the latest Brexit developments on Tuesday. May said she needed some time to complete the process with the EU but that lawmakers will be able to vote on the Brexit process by February 26.

The EU's Brexit negotiator Michel Barnier said Monday that time is running out to find a compromise over the Irish backstop. The U.K. remains scheduled to leave the EU on March 29.