Europe close: Stocks higher as investors ask how much further upside is left

Stocks on the Continent finished on a mixed note on Monday, despite cautious optimism on the part of investors as US-China trade talks appeared to move into their final phase, leading to some talk that a deal might now be largely priced-in.

But not everyone was onboard with that notion, including JP Morgan equity strategist Mislav Matejka.

In a research note sent to clients, Matejka said: "Many clients we speak to argue that equities have already done what they could do for the year, as they are up 16-17% from the lows. We agree that some tactical indicators are starting to look stretched, but in our view fundamental investor positioning is much lighter than the price moves alone would suggest.

"We believe the medium-term pain trade is still on the upside and advise using any potential consolidation as an opportunity to add further."

By the end of the trading day, the benchmark Stoxx 600 had added 0.23% to 375.09, alongside a 0.41% gain for the French Cac-40 to 5,286.57, while Frankfurt's Dax had drifted lower by 0.08% to 11,592.66.

In parallel, euro/dollar was lower by 0.27% to 1.13335 and front month Brent crude oil futures were up by 0.31% to $65.27 a barrel on the ICE.

Meanwhile, Stateside, the benchmark S&P 500 was making its fourth attempt in as many months to crack the 2,820 point area.

Also on investors' minds perhaps were a potentially key meeting of European Central Bank policymakers on Thursday, followed by the release of the monthly US non-farm payrolls report the next day.

Acting as a backdrop, Washington and Beijing were reportedly near to inking a trade deal, although China was said to be pushing for the quick removal of the bulk of US tariffs on its merchandise exports, whereas America was proposing a phased roll-back subject to the Asian country carrying through on its commitments.

The progress made in talks was apparently confirmed by the spokesman for the National People's Congress, Zhang Yesui, who on Monday said that officials from both sides had "conducted fruitful and intensive consultations and made important progress on many issues of common concern."

But according to Bloomberg, a senior US administration official had cautioned on Sunday that no decision had yet been taken on the lifting of trade levies. On Friday, US President Donald Trump had asked that China lift all duties on US agricultural exports immediately.

Related to the above, the Sentix index of investor sentiment improved from a reading of -3.7 or January to -2.2 in March, on the back of an improved outlook for China's economy, although a gauge linked to assessments of the current situation plumbed its worst level since late-2014 due to worries of a 'no deal' Brexit and that the US might levy tariffs on European cars.

Nonetheless, analysts at Oxford Economics said: "Today's Sentix results are in line with our view that the woes in the eurozone industry, coming transitory factors and external risks will resolve gradually in the coming months. We think this will lead to a recovery in economic output H2 of this year."

The economic calendar was otherwise light at the start of the week, with Eurostat reporting a 0.4% month-on-month increase in factory gate prices, such that the year-on-year rate was steady at 3.0% (consensus: 2.9%).

Nordea Bank was making headlines again, and its shares mired in the red, even as it said that it would stop accepting new Russian clients.