Europe close: Stocks bounce ahead of US central bank decision

Stocks across the Channel staged a small bounce despite mixed reports out of the US-China trade talks in Shanghai and ahead of a key US central bank policy announcement later in the day.

According to China's Commerce Ministry, the two sides "had a candid, highly effective, constructive and deep exchange on major trade and economic issues of mutual interest" and talks were set to continue in September.

In parallel however, Reuters cited Chinese Foreign Ministry spokeswoman, Hua Chunying, as saying that it was Washington that was continuing to 'flip flop'.

Earlier, after the talks had wrapped up following a shorter than expected half day of meetings, the South China Morning Post had reported that not much had been on the table from either side and that the talks had ended ahead of schedule with a willingness to continue discussions but no a sign of a breakthrough.

At the closing bell, the benchmark Stoxx 600 was up by 0.17% to 385.77, while the German Dax had added 0.34% to 12,189.04 and the FTSE Mibtel was ahead by another 0.56% to 21,398.19.

In parallel, front month Brent crude oil futures were ahead by 0.71% to 65.18 per barrel on the ICE and sterling was 0.77% higher on the euro to 1.0979.

Rate-setters in the US were scheduled to meet later in the session with a 25 basis point interest rate cut widely expected, although the focus was expected to be on whether Fed chief Jerome Powell would validate market expectations for two or three more rate cuts before the end of 2019.

The latest economic reports out of the euro area were again on the soft side, with a reading on core inflation printing below forecasts, upwards revisions to unemployment figures and slower than expected economic growth in Spain.

According to Eurostat, the year-on-year rate of increase in Eurozone consumer prices slowed from 1.3% in June to 1.1% for July.

That was as expected, but at the core level, CPI printed at up by just 0.9% on the year (consensus: 1.0%), after a rise of 1.1% in the month before.

Euro area GDP on the other hand did meet expectations, expanding at a 0.2% quarter-on-quarter pace over the three months to June, although in Spain growth slowed from 0.7% in the first quarter to 0.5% in the second (consensus: 0.6%).

The rate of unemployment in the single currency bloc meanwhile was reported at 7.5% in June, also as expected, but the reading for May was marked up by a tenth of a percentage point to 7.6%.

In Germany, the number of people out of work rose by 1,000 in July to 2.283m, as expected, failing to fall for a third month in a row.

Airbus shares finished higher but off their best levels of the session after the jetmaker posted a 72% jump in second quarter profits before interest and tax to reach €1.98bn as it ramped up production of its A320 planes.

Credit Suisse was a top gainer throughout most of the trading day after the Swiss investment bank reported a 45% rise in second quarter net income to 937.0m Swiss francs (consensus: SFR788.0m).