Europe close: Stoxx 600 hits 21-month high

European stocks have ended the day on the frontfoot despite renewed selling pressure on the euro and in crude oil futures, albeit with some traders expressing doubts about continued low levels of volatility.

The benchmark Stoxx 600 finished 0.45% higher at 396.06 and at a 21-month high, alongside gains of 0.43% for the German Dax to 12,749.12 and a gain of 0.28% in the Paris Cac-40 to 5,398.01.

Euro/dollar was lower, amid recent hawkish comments from US central bank officials, at 1.0875, down by 0.44% versus the Monday close and below its 200-day moving average, while Brent futures retreated 0.76% to $48.97 a barrel on the ICE.

"After yesterday’s falls, European markets have rebounded today with a firmer tone in the more cyclical areas of the market, with an air of almost indifference starting to descend on investors, as concerns about political risk fade into the background," said Michael Hewson, chief market analyst at CMC Markets UK.

"The successful navigation around the latest in political risk appears to have prompted a significant degree of complacency with respect to hedging potential downside moves, with the VIX down at levels last seen in 1993."

On a related note, on 4 May strategists at Bank of America-Merrill Lynch highlighted to clients the critical role central bank liquidity was playing in driving gains in financial markets.

German industrial production shrank by 0.4% month-on-month, better than forecasts calling for a drop of 0.7%, according to the country's Ministry of Finance, but downwards revisions to data for previous months meant the year-on-year rate of output fell to 1.9% (consensus: 2.5%).

Construction output added to February's month-on-month jump of 9.9%, rising by 1.3%.

Despite that, for the first quarter of 2017 as a whole total industrial production was 1.3% higher, following a rise of 0.4% at the tail-end of 2016.

Germany's trade surplus with the rest of the world hit €25.4bn in March, up from €20.0bn for February (consensus: €23.0bn)
Still on the economic calendar for Tuesday, Italian retail sales data for March were set for release at 0900 BST, followed by speeches from the presidents of the Federal Reserve banks of Boston and Dallas at 1800 BST and 2115 BST.

Ryanair and Lufthansa expressed an informal interest in Alitalia before a the sales process was due to kick-off, Il Messaggero said.

Analysts at Barclays stuck to an 'equalweight' rating on shares of Bank of Ireland while reiterating an 'overweight' for Danone with a higher target price of €70.7 for the latter.

Commerzbank posted a 28% jump in first quarter profits thanks to one-off income.

Net profit at Munich Re hit €557.0m over the first three months of 2017.