Europe close: Intraday reversal sees stocks finish higher

Stocks across the Continent reversed early losses, helped by the release of steady readings for manufacturing sector activity in the euro area and China, as shares prices on Wall Street seemed to find their footing.

Nevertheless, in the background many economists were reassessing their projections for economic growth.

Against that backdrop, at the weekend the Chinese government published a White Paper in which it claimed that it was the US which had backtracked in trade talks and accused Washington of making unreasonable demands.

"Trade tensions continue to weigh on stocks, and President Trump has touched down in the UK, and given that he is at the centre of the trade spat, dealers will be playing close attention to what he has to say," said David Madden at CMC Markets UK.

By the end of trading, the benchmark Stoxx 600 was up by 0.39% to 370.49, alongside a gain of 0.56% to 11,792.81 for the German Dax, while the FTSE Mibtel was ahead by 0.36% at 19,874.24.

In parallel, front month Brent crude oil futures were down by 1.89% at $60.84 a barrel on the ICE.

To take note of, over the weekend, economists at Morgan Stanley estimated that should the White House move ahead with blanket 25% tariffs on all Chinese exports, versus roughly half at present, and China retaliate, then the US economy could fall into a recession within nine months.

IHS Markit confirmed a reading of 47.7 for its manufacturing sector PMI covering the month May, which was down from a print of 47.9 in April.

Despite the drop in activity levels, the survey compiler pointed out how the forward looking orders to inventory ratio had picked up for a second consecutive month to hit a six-month high " the improvement of which augurs well for the downturn to moderate in June."

On the flip side, IHS Markit said: "However, trade wars, slumping demand in the auto sector, Brexit and wider geopolitical uncertainty all

remained commonly cited risks to the outlook, and all have the potential to derail any stabilisation of the manufacturing sector."

Infineon was one of the biggest fallers after the German chipmaker announced it had closed the purchase of US rival Cypress Semiconductor for $23.85 a share, in a transaction that valued the US company at an enterprise value of €9.0bn.