Europe close: Stocks slip amid soft data, eyes on trade talks

Stocks on the Continent slipped a smidgen as somewhat wary investors paused for breath to assess the latest economic data, while keeping an eye on the latest news-flow around US -China trade talks.

"Stock markets in Europe are set to finish firmly in the red as political tensions linger. Investors are still a little worried about the US-China trade spat. The euphoria that was experienced during the week on the deferral of higher tariffs on Chinese imports into the US, has been replaced by impatience about the lack of clarity over trading relations," said CMC Markets UK's David Madden.

Earlier, in testimony to the US House of Representatives' House Ways and Means committee, the country's Trade Representative, Robert Lighthizer, had reportedly said that it was too soon to predict the outcome of US-China trade negotiations.

"If we can complete this effort, and again I say 'if', and can reach a satisfactory solution to the all-important outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement that turns the corner in our economic relationship with China," Lighthizer said.

"Much still needs to be done, both before an agreement is reached, and more importantly, after it is reached."

By the end of trading, the benchmark Stoxx 600 had pared losses to trade down by 0.28% at 372.58, alongside a drop of 0.46% to 11,487.33 for the German Dax, while Milan's FTSE Mibtel had edged higher by 0.19% to 20,498.79.

Alongside, Sterling had run up by a further 0.56% to 1.1701, with investors increasingly convinced - albeit not yet completely - that the risk of a 'no deal' Brexit was now lower after the Prime Minister committed to any such move being subjected to Parliament's approval.

Commenting on the moves in the pound, IG's Chris Beauchamp chipped-in, saying: "Brexit remains front and centre for European markets, with the pound approaching a new seven month high after Theresa May largely allayed fears over a potential no-deal Brexit."

In parallel, front month Brent crude oil futures were bouncing back by 1.91% to $66.8 a barrel on the ICE following the previous session's drubbing.

On the economic front, data published on Wednesday hinted at a still soft outlook for growth according to analysts.

According to Eurostat, the rate of growth in euro area money supply slowed from annualised pace of 4.1% for December to 3.8% in January (consensus: 4.0%).

The same report also revealed a slowdown in so-called 'narrow' money supply growth, from 6.6% to 6.2%.

That, said Claus Vistesen at Pantheon Macroeconomics, "suggests that headline GDP growth will rebound a bit in the next two quarters, from a very weak H2 2018, before edging down to about 0.2% towards the end of 2019."

Similarly, the European Commission's industrial confidence index for February printed at -0.2, versus a reading of 0.7 for the month before (consensus: 0.2).

Meanwhile, on the corporate side of things, shares in Air France-KLM were a standout faller after the Dutch government surprised markets, taking a 12.7% stake in the airline in what some observers said was a move meant to counter the French government's influence in the company.

Telecom Italia on the other hand eked out a small gain after Reuters reported it reached a deal with its trade unions to cut 4,300 jobs.