Europe close: Markets finish off best levels as oil and gas shares trim gains

Stocks on the Continent finished higher - but off their best levels - on news of a political compromise in Germany and after China's central bank stepped in to try and put a floor under the yuan.

That is despite a softer than expected reading on Eurozone retail sales that some analysts said underlined the recent loss of momentum in the single currency bloc's economy.

On Monday evening, German Chancellor Angela Merkel and her interior minister, who also heads the CSU in Bavaria, the historical ally of Merkel's CDU, reached a deal on creating transit centres for refugees on the Austrian-German border.

The agreement had yet to be endorsed by the two parties' main coalition ally, the Socialist SPD, but for the moment it appeared to forestall the risk of a breakdown in the governing coalition.

By the close of trading, the benchmark Stoxx 600 was higher by 0.81% or 3.06 points to 379.81, alongside an advance of 0.91% or 110.97 points to 12,349.14 for the German Dax while the Cac-40 was gaining 0.76% or 40.01 points to 5,316.77.

However, the reaction in the single currency was muted, with the euro edging up by just 0.06% to trade at 1.16468 versus the US dollar.

To take note of, the Stoxx 600's gauge of Oil&Gas shares ended the session 1.02% higher at 347.12, but by the end of trading had relinquished nearly half its earlier avance.

Brent crude oil futures were down 0.14% at $77.19 a barrel in ICE trading, having hit an intra-session high of $78.55 a barrel earlier in the day.

In the background meanwhile, the Governor of the People's Bank of China, Yi Gang, said the central bank was aiming to keep its currency at a "stable and reasonable" level.

Euro area retail sales volumes were flat month-on-month in May (consensus: 0.1%).

"In Europe consumer spending has shown signs of stagnation so far this year after a patchy performance in 2017, and today’s EU retail sales numbers for May could well reinforce concerns about declining consumer confidence, at a time of rising oil prices," CMC Markets's Michael Hewson told clients before the figures were released.

"Today's retail sales are expected to show a monthly gain of 0.1% but given last week's shocking 2.1% decline in German retail sales there is a risk we could see this number miss by some distance."

Irish unemployment continued to trend lower last month, the Central Statistics Office said, with the rate of joblessness dipping by a tenth of a percentage point to 5.1%.

It was a similar story in Spain, where the number of unemployed declined by 89,968 or 2.8% month-on-month to reach 3.162m, the lowest level since December 2008.

Shares of Allianz were higher, helped by the insurer's announcement of a €1.0bn share repurchase programme.