Europe close: Stocks slip amid strength in euro

Stocks on the Continent slumped amid holiday-thinned volumes after a Chinese diplomat sounded a confident note on trade, leading to a back-up in longer-term government bond yields and a rising euro.

On Saturday, China's ambassador to Washington, Cui Tiankai, told state broadcaster CGTN that his country would honour its commitments under the recent phase one trade deal with the US.

As a result, investors were believed to be favouring assets outside the US, which were typically seen as more risky.

By session close, the pan-European Stoxx 600 had declined 0.85% to 416.17, alongside a drop of 0.66% to 13,249.01 for the German Dax while the FTSE Mibtel was 1.06% lower at 23,506.37.

In parallel, euro/dollar was up 0.27% to 1.1206 and the yield on the benchmark 10-year bund rose seven basis points to -0.19% to reach its highest level since late May.

Leading losses on the Stoxx 600 was a sub-index for Healthcare companies which fell 1.01% to 910.01, while that tracking Technology firms dropped 0.90% to 531.11, alongside a decline of 0.74% to 357.88 for a rival gauge tracking Utilties.

United Internet fell the most in the Technology space while Essilor Luxottica was the biggest drag in Healthcare following the discovery by the latter of fraudulent activities at a plant in Thailand that were expected to subtract €190.0m from its bottom line.

Pacing gains on the Stoxx 600 were shares in NMC Health, together with those of John Wood Group. Buoying stock in the latter, Spanish rival, Tecnicas Reunidas, clinched a contract with Algeria's state-owned oil major, Sonatrach, worth in excess of $2.0bn, sending its shares 5% higher.

In economic news, after the close of trading in London, Spain Socialist party and its putative coalition partners, far-left Podemos, published a list of economic proposals, including the partial roll-back of the previous government's job market reforms, and higher taxes for corporates and the very highest income tax brackets.

Also in Spain, it was reported that inflationary pressures remained subdued at the end of 2019.

According to the Mediterranean country's national statistics office, INE, harmonised consumer prices rose at a 0.8% year-on-year pace in December, better than the 0.4% print seen in the month before but nevertheless below the 1.0% that analysts had anticipated.

Separately, INE confirmed that over the three months to September, Spain's gross domestic product expanded at a quarter-on-quarter clip of 0.4%.