Europe close: Shares on the Continent extend gains

European shares extended their relief rally following reports of progress overnight in US-China trade talks, market chatter around possible new fiscal stimulus in China and 'dovish' remarks out of at least three top US central bank officials.

Overnight, the American Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, Ted McKinney, said the first round of talks between Beijing and Washington had gone "just fine", CNBC reported.

"Stocks are pushing higher into the close after US-China trade talks ended on an optimistic note. It was reported that Beijing will release details of the talks on Thursday, but a more recent report claims the release date might change. Traders are aware that some structural issues still persist, and that more issues need to be resolved, but the overall mood is positive," said David Madden at CMC Markets UK.

By the end of trading, the pan-European Stoxx 600 index was up by 0.78% or 2.71 points to 348.56, while the German Dax had put on 1.03% or 111.21 points to 10,915.19 and the FTSE Mibtel was ahead by 1.33% or 253.71 points at 19,253.71.

Further afield, according to two persons cited by Bloomberg, authorities in Beijing were now looking at setting a public spending target of 2.8% of GDP for 2019, versus 2.6% for 2018.

Meanwhile, in the States, the President of the Federal Reserve bank of St. Louis, James Bullard, cautioned against any further rate hikes, while the heads of the Chicago and Boston Feds said the central bank could afford to be patient in deciding its next move.

Back in Europe, France and Germany vowed to deepen the 55-year old Elysee treaty between the two nations, which calls for closer coordination on security, economic and environmental policy, even as Italy's deputy Prime Minister, Matteo Salvini, met with Poland's Jaroslaw Kaczynski with the aim of forging a euroskeptic alliance.

In other news, Germany's seasonally-adjusted trade surplus widened to €19.0bn in November, but chiefly as a result of a 1.6% month-on-month drop in the country's imports, the country's Ministry of Finance reported.

Those figures echoed the much weaker-than-expected industrial production figures published the day before.

"We had thought that German exporters were making a timely recovery from the impact of several transitory shocks (notably new car-emissions standards). But recent data indicates that this rebound will be slower and more spread out than we had envisaged," said analysts at Oxford Economics.

With better implications for the outlook, euro area unemployment fell from 8.0% for November to 7.9% in December, Eurostat reported (consensus: 8.0%).

AMS reversed early losses on reports that Apple had cut planned first-quarter production for its three new iPhones with a downgrade out of Credit Suisse having hit the shares further.

Taylor Wimpey rallied and led the index risers after saying full year results would be in line with expectations as the housing market "remained stable" despite uncertainties caused by Brexit. In a trading statement for the last calendar year, it said total home completions increased by 3% to 14,947, including joint ventures.