Europe open: Investors cling to hopes on China-US talks

European shares opened flat on the last trading day of the year as investors pondered the likelihood of a US-China trade deal in the absence of any significant corporate news.

The pan-European Stoxx 600 was up 0.53% with the German and Italian markets closed. London, Madrid and Paris were all slightly higher on thin volumes.

The Stoxx was on track to log a 13% loss for the year as investors fretted over Brexit, a slowing global economy and the China-US trade spat.

Investors took some heart from signs of improving Sino-US relations, after US President Donald Trump hailed trade progress over the weekend.

"Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!" Trump said on Saturday.

A statement on Sunday from China foreign ministry spokesman Lu Kang seemed to confirm Trump's trade optimism.

"China stands ready to work with the US to implement the important consensus reached by President Xi Jinping and President Trump in Argentinaa, expand co-operation on the basis of mutual benefit, manage differences on the basis of mutual respect," Lu said.

On the downside, Chinese manufacturing figures disappointed. The National Bureau of Statistics’ official manufacturing purchasing managers’ index printed at 49.4 this month from 50.0 in November, falling short of expectations for a reading of 49.9 and marking the lowest level since February 2016.

Meanwhile, the sub-index for total new orders declined to 49.7 in December from 50.4 the month before, moving into contraction territory and hitting its lowest level since February 2016, while the sub-index for production fell to 50.8 from 51.9 in November.

Mike van Dulken, head of research at Accendo Markets, said, the data "may fan the flames of concern about slowing global growth".