Europe close: Midday rally smothered out by US political controversy

Stocks on the Continent have begun the new month in poor form, with a late advance into the black breaking down as news of the brewing political controversy in the US hit the wires.

By the closing bell, the benchmark Stoxx 600 was down by 0.70% or 2.72 points at 383.97, alongside a 1.25% or 162.49 point fall for the German Dax to 12,861.49 and with the Cac-40 down by 1.04% or 55.90 points to 5,316.89.

In parallel, euro/dollar was edging higher by 0.08% to 1.1900.

Earlier, ex-US National Security Agency chief Michael Flynn pleaded guilty to charges that he lied to the Federal Bureau of Investigation regarding conversations with the Russian ambassador as part of the new administration's transition following their election victory.

That was followed by a report from ABC according to which Flynn had agreed to testify against Trump.

The news drowned out optimism among traders regarding the prospects for US tax reforms, amid reports that Senate Republicans had secured sufficient support to secure passage of their proposals through the upper chamber.

In economic news, IHS Markit's euro area factory sector purchasing managers' index jumped from a reading of 58.5 for October to 60.1 in November (preliminary: 60.0).

That was its best level since April 2000, as subindices linked to output and new orders hit multi-year highs, amid record levels of job creation, the survey compiler said.

Elsewhere, ISTAT revised down its initial estimate of Italian GDP growth in the third quarter of 2017 from 0.5% quarter-on-quarter to 0.4%.

On the corporate front, shares of Italian oil field services group Saipem found a bid after announcing it had inked a new offshore contract in Saudi Arabia.