(Reuters) – London-listed stocks pushed European shares lower in early dealings on Tuesday, but signs of easing trade tensions between U.S. and China limited market losses.

U.S. President Donald Trump on Monday predicted a trade deal with China after positive gestures by Beijing, calming nerves after a ramp-up in the rhetoric derailed financial markets last week.

London’s FTSE 100 index .FTSE slipped 0.4%, as investors returned from a bank holiday weekend, and the pan-European STOXX 600 index was down 0.22% by 0710 GMT.

British stocks – HSBC Holdings Plc (HSBA.L), British American Tobacco (BATS.L) and AstraZeneca (AZN.L) – fell between 0.3% and 1.3%, and were the biggest drags on the STOXX 600.

An outlier was Milan’s FTSE MIB .FTMIB, which rose 0.04%, as the ruling 5-Star Movement and the opposition Democratic Party appeared on the verge of a deal to form a new Italian government on Monday.

The two parties will meet on Tuesday at 0900 GMT to continue negotiations.

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