Europe close: Italian shares rally on finance minister's remarks
Italian shares rallied against after the country's new finance minister indicated Rome was committed to the euro, helping investors to brush off an acrimonious end to the G-7 talks at the weekend, in Quebec.
Positive remarks from the US president and his Secretary of State ahead of a summit with North Korea's leader also boosted sentiment.
In an interview with Italian daily Corriere della Sera, Rome's newly-minted Finance Minister, Giovanni Tria, said there had been no discussion of any proposal to exit the euro, even as he hinted at a more responsible fiscal stance on the part of the new government in power.
Reacting to the news, the yield on the benchmark two-year Italian government note dropped by an out-sized 61 basis points to 1.10%; nevertheless, that remained far above the yield on similarly-dated Spanish debt at -0.18%, which was just a tad above where those on Italian notes had traded at the start of May.
That saw Milan's FTSE Mibtel jump 3.42% or 730.22 points to end at 22,086.20, pushing into positive territory for the year-to-date for the second time in under a month, although they remained roughly 10% below their most recent highs.
Meanwhile, Spain's Ibex 35 bounced back by 1.56% or 152.0 points to 9,898.30.
In parallel, Germany's Dax traded up by 0.60% or 76.36 points to 12,842.91, alongside an advance of 0.43% or 23.69 points to 5,473.91 for the Cac-40.
Nevertheless, multiple observers issued a warning over the weekend regarding the most recent developments on the trade front.
On that note, Erik F.Nielsen at UniCredit Bank said: "[...] But the good news could be short-lived if global politics interfere. And here, things don’t look too good. In my assessment, the world as we know it – namely the US-led rules-based multilateralism – is now in serious danger of unravelling, as illustrated at the G7 meeting in Canada.
"The good news is that, in reaction, Germany is now moving rapidly to embrace European integration."
Strategists at BofA-ML were also cautious, even ahead of the Quebec meetings, telling clients on 8 June that there was scope for any of the sides to miscalculate with all parties involved "stumbling" into a trade war.
"Despite the clear escalation of trade tensions, many commentators remain sanguine. They contend that the recent actions by both sides are merely negotiation tactics and that the final outcome is likely to be benign: a trade war will rationally be avoided because everyone stands to lose in a trade war. We are more concerned," they said.
On Saturday evening, Trump unexpectedly backed-out of a carefully-crafted agreement on the post-summit communique after Canadian Prime Minister, Justin Trudeau, said at a press conference that he had at one point threatened retaliatory tariffs on US-made goods.
Originally, the G-7 had committed itself to fighting against protectionism and to continue to push for lower trade tariffs globally.
Yet on Monday, all eyes were on upbeat remarks from Trump and US Secretary of State, Mike Pompeo, regarding the scope for better ties with Pyongyang.
Meanwhile, in economic data, ISTAT reported that Italian industrial production shrank by 1.2% month-on-month in April (consensus: -0.7%), although output of capital goods did increase by 0.7%.
According to Wirtschaftswoche, a court case against Monsanto - recently acquired by Bayer - over alleged cancer risk from its Roundup herbicide will kick-off on 18 June.
Further west, Air France's unions have called a four-day strike over the running dispute over pay starting from 23 June.