European shares flat ahead of U.S.-China trade deal
(Reuters) – European shares were little changed on Tuesday as investors locked in some gains after a recent record-setting rally ahead of the signing of an initial U.S.-China trade truce.
The pan-European STOXX 600 index fell 0.1% by 0920 GMT in its third straight day of declines, after hitting a record high last week on de-escalation in U.S.-Iran tensions.
The Phase 1 Sino-U.S. trade deal, due to be signed in Washington on Wednesday, marks the first step in winding down the prolonged and damaging trade war.
U.S. Trade Representative Robert Lighthizer will meet EU Trade Commissioner Phil Hogan for bilateral talks on Thursday, a USTR spokesman said.
Tensions between Washington and Brussels remain high due to differences over France’s digital tax and aircraft subsidies.
“Markets are not too sure about how these negotiations will develop, there’s a lot of tension between the Atlantic partners,” said Teeuwe Mevissen, senior market economist at Rabobank in Amsterdam.
Markets are also cautious that the United States may adopt a strategy of applying trade pressure on the EU as it had done with China, Mevissen added.
European bank stocks .SX7P were among the worst performing sectors on Tuesday, shedding about 0.4%. Most of the euro zone’s stock subindexes were in the red.
A trader also suggested that there was some profit taking in the market, with recent gains appearing to be overextended.
Germany-based specialty chemicals company Evonik Industries AG (EVKn.DE) was the worst performer on the STOXX 600, dropping about 4.3% after its controlling shareholder sold a 5.2% stake in the company.
Shares of UK gambling companies William Hill (WMH.L), Playtech (PTEC.L), 888 Holdings (888.L) dipped after the country banned consumers from using credit cards to gamble.
Aluminium producer Norsk Hydro (NHY.OL) was among the top gainers on the STOXX 600, rising about 4% after Citigroup raised the stock’s price target. The stock also propped up the basic resources sector .SXPP, which was the best performing regional subindex for the day.
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