- Investors weigh US government shutdown
- Italy's Letta fights for survival
- UK, US, EU manufacturing data
- Eurozone jobless rate holds steady
FTSE 100: -0.03%
CAC 40: 1.28%
FTSE MIB: 3.11%
IBEX 35: 1.69%
Stoxx 600: 0.77%
European stocks proved resilient against news of a partial US government shutdown on Tuesday.
The US government came to a screeching halt for the first time in 17 years after Congress failed to pass a budget bill by the Monday midnight deadline.
Congress was unable to break the political statement as they continued to disagree over President Barack Obama's highly controversial healthcare reform.
The shutdown could potentially put up to one million workers on unpaid leave, close national parks and halt some services.
The closure could also cost the US at least $300m a day in lost economic output at the start, according to IHS Inc..
While fears of a shutdown sent stocks spiralling downwards on Monday, the market appeared more upbeat in the aftermath on Tuesday as economists predicted a budget deal in coming days.
ETX Capital Market Strategist Ishaq Siddiqi said "investors are not fretting" as demonstrated by the upward movement of stocks today.
"See, even though economic growth may get a knocking on the back of this, for markets addicted to the Federal Reserve's liquidity programme, quantitative easing, this shutdown has just bought risk-junkie investors some precious time to enjoy the current mammoth of easy Fed cash still floating around in the global money markets," he said.
"The Fed intended to taper quantitative easing, announcing their exit strategy during the summer of 2013, gearing the market up for a withdrawal only to not executing it last month when investors were almost convinced tapering was on the cards."
Italian PM faces showdown over Berlusconi crisis
Prime Minister Enrico Letta has been trying to rally up support ahead of a meeting in Parliament on Wednesday as centre-right leader Silvio Berlusconi works to topple the ruling coalition.
Berlusconi sent the government into disarray after ordering the resignation of his People of Freedom party ministers from the coalition over the weekend.
Letta's survival appears to depend on some 20 senators from Berlusconi's party who are displeased with his shock decision.
Sources in Letta's center-left Democratic Party told Reuters he was yet to decide whether to call a formal vote of confidence in parliament on Wednesday or hand in his resignation to President Giorgio Napolitano if he feels he cannot win.
Eurozone manufacturing, unemployment
Eurozone manufacturing activity growth eased in September, according to a survey on Tuesday. Markit Economics said its Eurozone factory index fell to 51.1 in September from 56.7 in August. However, it was in line with forecasts and exceeded the 50 reading the signals expansion.
The German manufacturing purchasing manager's index (PMI) was at 51.1 in September, down a tad from August's 51.3 reading and below expectations for the reading to remain unchanged.
Germany's jobless rate rose slightly to 6.9% in September from 6.8% the prior month. Economists predicted the rate to hold steady.
The Eurozone unemployment rate was flat in August at 12%, beating forecasts for a rise to 12.1%.
In the US, the Institute for Supply Management's manufacturing sector purchasing managers´ index for September rose to 56.2, the strongest since April 2011, from 55.7 a month earlier. It beat the forecast for a reading of 55.
UK manufacturing activity however eased to 56.7 last month from 57.1 in August when it reached a two-and-a-half year high, according to Markit. Consensus was for a reading of 57.5.
Telecom Italia, Vestas
Telecom Italia jumped after Goldman Sachs reiterated a 'buy' rating on the shares.
Vestas Wind Systems rallied after Bank of America Corp. raised its price forecast on the Danish maker of wind turbines to 180 kroner from 150 kroner, saying the company will pay off almost all its debt earlier than initially expected.
Wolseley advanced after the distributor of plumbing and heating products posted full-year earnings that beat analysts' estimates.
Unilever dropped after the world's second-largest consumer-goods maker said sales growth slowed in the third quarter.
A gauge of commodity producers slid as the price of gold and silver declined. Mining companies Fresnillo and Randgold Resources were among the fallers.
Other asset classes mixed
The euro was up 0.13% to the 1.3544 US dollar.
Brent crude futures were down $1.271 to $101.010 per barrel on the ICE.