Europe close: International trade concerns offset by reports on Italian budget
European stocks finished on a mixed note on Monday, as traders waited to see whether Washington would finally push ahead with a new round of tariffs on Chinese goods and if China responded by ruling-out restarting trade talks.
By the end of trading, the benchmark Stoxx Europe 600 index had flipped back into the green, adding 0.12% or 0.46 points to 378.31, although Germany's DAX was 0.23% or 27.92 points lower to 12.096.41 and France's CAC 40 was off by 0.07% or 3.70 points to 5,348.87.
According to the Wall Street Journal, Trump has instructed aides to press ahead with tariffs of 10% as early as Monday, while in response Beijing was considering declining the US administration's offer of negotiations later this month.
Also at the weekend, Chinese media with links to state-owned organisations, such as the Global Times, claimed that China would not simply play defence in response to US trade tariffs.
To take note of too, it was announced on Monday that China's top diplomat, State Councillor Wang Yi, was due to travel to New York for the annual United Nations General Assembly, where some observers were speculating that he might engage with top US officials.
Periphery stocks on the other hand fared better, with Italian stocks and bonds climbing in response to reports that officials in Rome were preparing to present a more prudent 2019 budget to the European Commission.
Those reports gave Milan's FTSE Mibtel a 1.08% or 225.97 point boost to 21,111.40, with Spain's the Ibex 35 adding 0.42% or 39.30 points to finish at 9,404.60.
Meanwhile, the yield on the benchmark 10-year Italian government note was down by 14 basis points to 2.85%.
Euro/dollar also found a modest bid on the back of that news out of Italy, adding 0.56% to 1.16884.
In corporate news, Swedish fashion retailer H&M rocketed as its third-quarter sales beat expectations, while supermarket retailer Casino gained ground after saying it has secured €500m in bank funding to strengthen its financial position.
Credit Suisse reversed early losses to tick higher after Switzerland's financial regulator, Finma, said the lender had failed to combat money laundering in suspected corruption cases linked to FIFA and Venezuelan and Brazilian state oil companies.
On the macro front, figures from Eurostat revealed that inflation in the Eurozone fell to 2% year-over-year in August from 2.1% in July, in line with consensus and the initial estimate. Meanwhile, the core rate slipped 0.1 percentage points to 1.0%, also in line with the initial estimate.
Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "The fall in core inflation was driven by weakness in both services and non-energy goods inflation, though the latter was revised slightly higher, to 0.4%. Volatility in package holiday prices and a sharp decline in German school fees were the primary drivers of the fall in services inflation, and we expect a rebound in coming months.
"In non-energy goods, inflation remains below the rate implied by the PPI index, and the recent decline in commodity prices point to downside risks in the first half of next year. We still think, however, that goods CPI inflation will increase in coming months."