Europe close: Italian stocks jump even as ruling party splits

European stocks were higher on Monday, with Italian stocks leading the way, as investors reacted to promises of greater defence and infrastructure spending from the US president and apparently shrugged off news that the ruling party in Rome had split.

By the closing bell, the benchmark Stoxx Europe 600 index was down 0.13% to 369.52, Germany’s DAX rose 0.16% to 11,822.67 and France’s CAC 40 was flat at 4,845.18.

In a meeting with state governors at the White House, Trump promised a "historic" increase in US defence spending and said he would talk to Congress about his plans for infrastructure spending.

"We're going to start spending on infrastructure big," he said.

The FTSE Mibtel was the unexpected star of Monday's session even after Italy's rulling PD or Democratic Party split over the weekend.

Milan's benchmark gauge finished 1.71% higher at 18,914.30.

On Saturday, left-wing rebels within the PD's ranks quit and founded - together with members of the Italian Left party - the Progressive and Democratic Movement (DP).

That, economists at Barclays said, meant an increased possibility of higher Italian political risk over the medium-term.

"If the newly created junior left-leaning DP party that emerged after the party split is able to drain popularity from the PD, and the voting system is not reformed so as to push parties to form pre-electoral coalitions (not our baseline), we do not rule out that anti-establishment/euro parties may be able to form a government after elections," Fabio Fois at Barclays said in a research report sent to clients.

Macron continues to make headway against Le Pen

In Paris, the latest Opinionway poll had Le Pen with 26%, centrist independent Emmanuel Macron at 24% (+1) and centre-right Francois Fillon at 21% in the first round of France's presidential election.

In the second round, Macron against Le Pen were at 62% and 38% (previously 61% and 39%) and Fillon against Le Pen were at 58% and 42%.

On the data front, the European Central Bank’s M3 money supply data, which measures growth in the amount of money circulating in the Eurozone, fell to an annualised pace of 4.9% in January from 5% a month earlier (consensus: 4.8%).

The annual growth in household loans grew to 2.2% in January up from 2.0% in December. Loans to non-financial businesses were unchanged at 2.3% in January, a seven-year high.

Meanwhile, the European Commission's economic sentiment index for the Eurozone rose to 108 in February from 107.9 last month, well above the long-term average of 100.

There was a rise in the service industry gauge to 13.8 from 12.8 (consensus: 13.5), although the widely-tracked consumer confidence gauge contained in the same report fell from -4.3 to -5.2.

A separate business climate indicator published by the EC increased to 0.82 in February from 0.76 in January, the highest level since June 2011 and above expectations for a reading of 0.79.

Meanwhile, Brent crude was edging higher by 0.27% to $56.14 per barrel, while the euro was on the frontfoot against the US dollar, rising 0.63% to 1.0628.

Intesa SanPaolo, Unicredit gain

In corporate news, Intesa SanPaolo was bid higher following news on 24 February it would not pursue a tie-up with Generali.

Unicredit chief Gianni Papa told Il Sole 24 Ore there were no plans to exist more countries after the lender sold assets in Poland and the Ukraine, sending its shares higher by 2.47%.

Shares in the London Stock Exchange Group dropped 1.12% as it said on Sunday that it did not think its proposed merger with Deutsche Börse, which fell 2.44%, will be approved by the European Commission, after competition regulators came up with "unexpected" demands last week.

Distribution and outsourcing company Bunzl gained 3.41% as it reported a 12% jump in full-year pre-tax profit to £362.9m, boosted by the post-Brexit vote slump in the pound.