Europe close: Stock track better tone on Wall Street, bounce in Italian debt
Stocks in Europe recovered from earlier falls on Tuesday to finish in the green, tracking a turnaround higher on Wall Street and a bounce in Italian government debt.
Commenting on the price action in markets, Chris Beauchamp at IG said: "After yesterday's first attempt, markets are having another go at leaping higher after recent short-term weakness. If this is the beginning of the next leg higher, particularly in the US, then it will have been timed almost to perfection; the S&P 500 usually sells off into early October in mid-term years, before pushing higher."
Back in Europe, earlier in the session, Italian economy minister, Giovanni Tria, had argued that the country's targets for GDP growth between 2019 and 2021, of 1.5%, 1.6% and 1.4%, respectively, were prudent and might in fact be surpassed.
Tria was responding to the many economists who had aired the opposite view - to varying degrees - just the day before.
Nevertheless, in remarks to the country's lawmakers, Tria conceded he was worried about the bulging risk premium.
"We are working to get the spread to converge towards the fundamentals and to create confidence," Tria said.
"If the spread reaches 500? The government will do what it does in an unexpected crisis, because we aren't expecting that."
Against that backdrop, by the end of the session, the benchmark Stoxx 600 had added 0.19% or 0.72 points to 372.93, although the best performer was the FTSE Mibtel, which bounced back by 1.06% or 210.78 points to close at 20,062.25.
Germany's Dax meanwhile was 0.25% or 30.06 points higher to 11,977.22.
Meanwhile, the yield on the benchmark 10-year Italian government note dropped by nine basis points to 3.48%, compressing the risk premium versus Germany to 293 points- after hitting an intraday high of 315.
According to ANSA, the move in Italian yields followed remarks from deputy prime minister, Matteo Salvini, who said: "The strength of Italy, which none of our friends sitting at the table today has, neither the French nor the Spanish, is private saving that has no equal in the world."
Salvini was speaking at a G6 meeting in Lyon and added that Rome would not stand still and do nothing if the yield spread continued to increase.
"We have a few ideas," he said.
Euro/dollar also recouped a good part of its earlier losses, ending the day just 0.07% lower to 1.14831.
The yield on similarly-dated German bunds meanwhile was edging up by two basis points to 0.55%.
In the background, overnight the International Monetary Fund trimmed its projections for global GDP growth in both 2019 and 2020 from 3.9% to 3.7% - its first reduction since July 2016.
Officials at the Fund also urged the government in Rome to follow Brussels's recommendations.
On a more positive note, the Stoxx 600's gauge of Basic Resources companies added 1.16% to 452.07 on the back of the Chinese central bank's decision, at the weekend, to cut its reserve requirements for most of the nation's lenders.
Elsewhere on the economic front, according to the Federal Office of Statistics, Germany's seasonally-adjusted trade surplus jumped from €15.9bn for July to €18.3bn in August (consensus: €16.4bn) on the back of a 2.7% drop month-on-month in the pace of imports.
Commenting on Tuesday's release, Claus Vistesen at Pantheon Macroeconomics said: "Overall, the German trade surplus is down 2.6% year-to-date compared to the same period last year, which is as much due to a big increase in imports from all the economy's major trading partners, as it is about a slowdown in exports."