Europe close: Auto stocks lead retreat

European stocks finished on the back foot on Tuesday, with early gains having been progressively eroded as the day wore, with traders seemingly fixated on the guessing-game surrounding Fed policy.

By the closing bell the benchmark DJ Stoxx 600 was exactly flat at 334.72, while Germany's DAX gave back 0.63% or 62.71 points to reach 9,890.19 and France CAC up 0.01% or 4.25 points to 4,316.86, with Spain's Ibex rising 0.38% or 32.80 points and at 8,714.90.

Shares in Automobiles&Parts companies were especially weak, with the DJ Stoxx 600's sector gauge dropping 2.88% to 463.68 as broker Exane downgraded Fiat Chrysler to a 'sell', telling clients a bubble in automotive lending in the States might be set to burst.

Consumer goods companies were also weaker, with a sub-index tracking those companies' shares down by 0.89% to 839.24, mimicking sector price action on Wall Street in afternoon trading.

Also in focus were the on-going negotiations between European capitals and the International Monetary Fund on the degree of debt relief which Athens should be given, which in turn might determine to what extent, or not, the IMF would participate in the country’s next rescue package.

Involvement by the IMF was considered key for keeping Athens on the straight and narrow and hence protecting the credibility of any programme. Washington was also keen to avoid any renewed flare-ups in the Greek crisis given the already tense situation elsewhere and politically in the wider euro area, The Wall Street Journal reported.

The Eurozone’s trade surplus with the rest of the world increased from €20.6bn in February to €22.3bn in March (consensus: €22bn), data from Eurostat showed.

Oil prices were higher by the end of trading, with Brent crude oil futures up by 0.891% to $49.41 per barrel and West Texas Intermediate 1.18% higher to $48.29 per barrel in ICE trading.

Consumer price inflation in Britain slowed to a 0.3% year-on-year clip in April, missing forecasts for a rise of 0.5% by a wide margin.

“The sharp fall in inflation in April is not a signal that inflation pressure is easing. The fall mainly reflected a decline in airline fares inflation […] The other main downward influence on inflation was a fall in clothing inflation which merely seems to reflect retailers discounting in response to unusually bad weather.

“Sterling’s decline has boosted apparel retailers’ costs and will compel them to raise their prices soon,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics said in a research note sent to clients.

Among corporate stocks, Vodafone shares gained after the company’s organic sales returned to growth and beat expectations in the full year after a strong performance in the fourth quarter, hiking the final dividend 2%.