Europe open: Stocks hold onto early gains, but sentiment grim

Stocks are holding higher in early trading, despite a raft of negative headlines out of Europe on the economic front, with a widely-followed German survey of analysts showing clear concern about the storm clouds gathering over global trade.

The German ZEW institute's economic sentiment index for July fell by 8.6 points to stand at -24.7 - its lowest level since August 2012 - amid "great political uncertainty", especially around the possible escalation of the trade war with the US, according to ZEW president Professor Achim Wambach.

Year-to-date ZEW's index had fallen by 45.1 points.

Nevertheless, for the time being at least, investor sentiment was being buttressed by strong gains overnight in US markets.

As of 1003 BST, the benchmark Stoxx 600 was 0.23% or 0.89 points higher to 385.51, alongside a gain of 0.03% or 3.49 points to 12,547.74 for the German Dax and an advance of 0.28% or 61.11 points to 22,094.80 for the FTSE Mibtel.

Euro/dollar meanwhile was down by 0.25% to 1.17223.

Commenting on the market backdrop on Tuesday, Chris Beauchamp at IG said: "Solid gains across markets yesterday have certainly set the tone for the week, and today’s mixed session thus far, with markets alternating between small gains and losses, suggests we are in for a ‘digestion day’ as markets pause before moving higher.

"For a second day the big worry of late, trade wars, has been mercifully quiet, which has certainly helped to buoy risk appetite. All eyes will be on the S&P 500, which has reached the key 2800 area once again. Even those who deride technical analysis can’t fail to notice that this is the region that has seen rallies since February stall – a firm push through here would calm many nerves."

Other economic data published in the euro area on Tuesday was also on the weak side.

Earlier, INSEE ha reported a 0.2% decline in French industrial output during the month of May (consensus: 0.5%), as construction sector activity dropped by 3.4% and manufacturing production declined by 0.6%.

Growth in industrial output also fell shy of forecasts in Italy, where ISTAT reported a month-on-month rise of 0.7% (consensus: 0.8%), as production of durable consumer goods shrank by 1.2%.

Meanwhile, on the corporate front, Airbus boss Tom Enders called on Brussels and EU capitals to be similarly "pragmatic and fair" as HM Government' when it came to Brexit.