Europe close: Stocks end session little changed

Stocks across the Continent finished the session little changed but off their best levels, alongside a sharp drop in the pound's value as traders reacted to the new British government's insistence on risking a no-deal Brexit if it could not obtain a better deal from Brussels.

Speaking on a visit to Scotland on Monday, the new Prime Minister said the old withdrawal agreement that had been draw up by Theresa May and EU leaders, only to then be repeatedly shot down by lawmakers in Westminster, was "dead".

And in an op-ed articled for the Sunday Times, Michael Gove had said that the UK "must operate on the assumption" that Brussels will refuse to change the Withdrawal Agreement, forcing a no-deal Brexit.

By the end of trading, the benchmark pan-European Stoxx 600 was ahead by 0.03% to 390.85, buoyed by fresh mergers and acquisitions news centred on the UK.

However, the German Dax drifted lower by 0.02% to 12,417.47, while the FTSE Mibtel dropped 0.55% to trade at 21,709.30.

During the previous session, the S&P 500 had notched up a fresh record high at 3,025.68 while the Cac-40 continued to hover near its best levels for 12 years.

The euro meanwhile had pushed up by 1.43% to reach 0.91142 versus Sterling.

Meanwhile, in the background, traders were waiting on a raft of key central bank policy decisions, including from policymakers at the US Federal Reserve, on Wednesday, and the start of a new round of trade talks between the US and China, on Tuesday.

Also due out were decisions on official interest rates in the UK and Japan, followed by non-farm payrolls figures in the States, on Friday, covering the month of July.

Commenting on the current market backdrop, earlier in the session, strategists at Bank of America-Merrill Lynch had told clients that they were still "long", albeit with caveats, highlighting the market reaction to the European Central Bank's decision during the previous week, which they believed showed that "the bar for the Fed to impress is high".

In a research note sent to clients, they also flagged the need for the economic data to improve by the fourth quarter.

On Sunday, Chinese media said the country would restart purchases of agricultural commodities from the US, portraying the move as a 'goodwill' gesture.

But come Monday morning, Chinese media was blaming America for playing a hand in the recent protests in Hong Kong, even as Beijing said it had found evidence of further illegal actions by US parcel delivery company FedEx as part of its ongoing investigation into the mistaken rerouting of packages sent by Huawei Technologies to the US.

Indeed, according to some market commentary, expectations around the possibility of a resolution were increasingly muted.

There was little fresh data for traders to sift through, although in Spain the national statistics office reported the year-on-year rate of harmonised consumer price gains in the euro area's fourth largest economy picked up to 0.7%, after a rise of 0.6% in the month before.

Retail sales in Spain meanwhile increased by 2.4% year-on-year in June, which was unchanged from the month before.

Heineken shares were under the weather, retreating by 6% after posting the slowest rate of growth in first half operating profits for six years.

LSE Group rocketed, rising by 15% after unveiling its plans to acquire financial data and news provider Refinitiv for $27bn.

Just Eat shot 23% higher to 799.60p after reaching a preliminary agreement on a takeover by rival Takeaway.com via a proposed all share transaction that had valued its stock at 731.0p. Earlier, stock in Just Eat hit an intraday high of 867.40.

Ryanair Holdings gave up its early gains, falling by 1.4% even after the budget carrier reiterated its full-year outlook for earnings.