Europe close: Shares start February on front foot, Italian issues left out

Stocks on the Continent reversed early losses, with the main stockmarket gauges for the most part finishing the first day of the month on the front foot, on the back of stronger-than-expected readings on the health of the US jobs market and manufacturing sector.

Investors were also mulling over news out overnight that China had promised to "substantially" ramp-up its purchases of US goods, with Beijing and Washington announcing plans overnight to hold further meetings over the next month.

"Yet another stellar month of US job creation has provided more good news for investors, who have not exactly been short of positivity of late. Earnings, a dovish Fed and a seemingly inexhaustible supply of new workers have all contributed to more gains for equity markets, with the Dow pushing higher at the end of a week that saw Wall Street end its two week consolidation period and begin a fresh move higher," IG´s Chris Beauchamp told clients.

On a similar note, on Thursday strategists at Bank of America-Merrill Lynch told clients that bearish positioning and so-called 'policy capitulation' by central banks was "consistent with further Q1 risk asset upside".

By the end of trading, the benchmark Stoxx 600 had turned around to gain 0.29% or 1.04 points to 359.71, alongside an advance of 0.07% or 7.56 points to 11,180.66 for the German Dax.

The FTSE Mibtel did slip by 0.78% or 154.01 points to 19,576.77, but nevertheless managed to recoup over half of the losses seen during the first half of the session.

Weighing on the Italian gauge was data out earlier that revealed factory sector activity in the Eurozone's third-largest economy shrank at its fastest pace since 2013 last month.

The Stoxx 600's sector gauge for banks meanwhile was down by 0.45% at 138.12, but also off its session lows, with investors in Deutsche Bank in particular enduring another rollercoaster session after the lender posted weaker-than-expected fourth quarter profits.

Another sub-index linked to Basic Resources climbed, adding 0.70% to 447.76 as traders focused on figures released overnight showing a rebound in Chinese exports.

Caixin's China factory sector PMI came in at 48.3 for January, which was down from a reading of 49.7 in December and well below the consensus forecast of 49.6.

But there was perhaps a silver lining, with the survey compiler noting the improvement seen in the sub-index for new orders to its best level since March 2018, a development it attributed to the truce in the US-China trade war.

Elsewhere on the economic front, IHS Markit confirmed a retreat in its euro area manufacturing sector Purchasing Managers' Index from a reading of 51.4 for December to 50.5 in January.

Eurozone consumer prices on the other hand surprised to the upside, with Eurostat reporting that the year-on-year rate of consumer price gains slipped from 1.6% for December to 1.4% in January (consensus: 1.4%).

However, at the core level, the rate of gain in the euro area's CPI accelerated slightly, from a year-on-year pace of 1.0% for December to 1.1% in January.