European stocks extend gains as trade war fears ease

Investors have welcomed news that China and the US have stepped back from the brink of a potentially demaging trade war

European stocks rose Tuesday, with London hitting a new high on upbeat global sentiment and easing Italian political worries, dealers said.

At the end of the session, London's FTSE 100 benchmark index was 0.2 percent higher, Frankfurt added 0.7 percent and Paris inched up 0.1 percent.

On the other side of the Atlantic, Wall Street opened higher for a second straight day but soon fell back as investors took profit.

"FTSE is still trending upwards, supported by the easing of US-China trade tensions, as well as a weaker dollar supporting metals and mining stocks," said Accendo Markets analyst, Artjom Hatsaturjants.

Milan stocks ended the session 0.5 percent higher, as investors awaited fresh news on the formation of a new Italian government.

"The calming of tensions over Italy, or at least the lack of news, has allowed European equities to hold steady, but the situation will likely act to cap near-term bullish activity in eurozone stocks," analyst Chris Beauchamp at trading firm IG said.

World oil prices meanwhile pushed higher after Washington flagged harsh sanctions on key producers Iran and Venezuela.

Stocks rose Monday after the United States and China effectively called a truce in what had been a spiraling trade dispute.

US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He said they had agreed to pull back from the brink of a potentially damaging trade war.

However, scepticism over the news crept across Asian trading floors on Tuesday.

Also tempering optimism are worries about higher US interest rates and geopolitical issues.

"Markets are going through a bumpy ride," Bank of Singapore Investment Strategist James Cheo told Bloomberg Television.

"This trade truce is still in the early days. It's really a ceasefire, it's not a peace treaty as yet. The implementation details are still unclear. There is still some caution among Asian investors."

- Key figures around 1550 GMT -

New York - Dow: DOWN 0.1 percent at 24,981.23 points

London - FTSE 100: UP 0.2 percent at 7,877.45 (close)

Paris - CAC 40: UP 0.1 percent at 5,640.10 (close)

Frankfurt - DAX 30: UP 0.7 percent at 13,169.92 (close)

Milan - FTSE MIB: UP 0.5 percent at 23,129.24 (close)

EURO STOXX 50: UP 0.4 percent at 3,587.25

Tokyo - Nikkei 225: DOWN 0.2 percent at 22.960.32 (close)

Shanghai - Composite: FLAT at 3,214.35 (close)

Hong Kong - Hang Seng: Closed for a public holiday

Euro/dollar: DOWN at $1.1784 from $1.1792

Pound/dollar: DOWN at $1.3442 from $1.3451

Dollar/yen: FLAT at 110.96 yen

Oil - Brent North Sea: UP $1.11 at $80.33 per barrel

Oil - West Texas Intermediate: UP 44 cents at $72.79