Europe close: Dax outperforms amid profit-taking, periphery markets weakest

Stocks finished modestly in the red on Tuesday as the latest economic data laid bare the task that lay ahead in order for governments to get their economies back on track.

Overnight, France and Germany announced what analysts at Danske Bank dubbed a "surprisingly bold" proposal for a €500bn European Union reconstruction fund financed by joint debt issuance.

But data out on Tuesday morning showed that Spain's sovereign debt pile was set to rocket higher in 2020.

Furthermore, Austria, Denmark, the Netherlands and Sweden continued to hold out against the idea of grants to other member states.

By the end of trading, the benchmark Stoxx 600 was down 0.61% at 339.49, alongside a 0.89% fall for the French Cac-40 to 4,458.16 while the FTSE Mibtel dropped 2.11% to 17,034.54.

Germany's Dax on the other hand managed to eke out a small gain of 0.15% to 11,075.29.

Sovereign debt from periphery countries advanced alongside, bolstered by an interview with the European Central Bank's Christine Lagarde, who told Spanish daily, El Mundo, that the ECB would not hesitate to support the likes of Spain and Italy.

Against that backdrop, the yield on the benchmark 10-year Spanish government note was eight basis points lower to 0.72% and that on similarly-dated Italian debt was lower by three basis points lower to 1.64%.

Figures released earlier by Spain's central bank had shown a three percentage point increase in the country's debt-to-GDP ratio over the first quarter to reach 98.3%.

The day before, BoS had warned that the ratio was now expected to hit 115% in 2020, rising to 122% in 2021, before dipping to 120% in 2022 - and that wasn't the worst scenario.

Front dated Brent meanwhile ended the day off by 0.9% to $34.49 a barrel on the ICE.

On a positive note, the closely-followed ZEW institute's gauge of German economic confidence bounded higher for a second month in a row.

It rose by 22.8 points from the month before to reach 51.0 (consensus: 33.0).

"According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020. However, the catching-up process will take a long time. Only in 2022 will economic output return to the level of 2019," said ZEW president Professor Achim Wambach.

Nevertheless, the hard data continued to make for grim reading, with Eurostat reporting a 14.1% month-on-month decline in construction output.

And reports were that the IMF might be set to lower its forecasts for global GDP growth in 2020 and 2021.