European stock markets inched higher on Tuesday amid speculation that the European Central Bank (ECB) could launch new stimulus measures at its meeting later in the week.
Manufacturing figures from the US came in well ahead of expectations during the session, but gains were only limited across Europe after the recent run in equity indices.
The ISM's manufacturing sector index rose to a three-year high of 59 in August from a reading of 57.1 in the month before, revealing that the recovery strengthened as credit conditions continued to improve and the drag from reduced public spending ebbed.
Despite the data, analyst Michael Hewson from CMC Markets UK said that investors were still "reluctant to load up too aggressively ahead of this week's ECB rate meeting and this appears to be limiting the upside potential, as investors weigh up the likelihood of further action".
Be that as it may, on Tuesday evening economists at Unicredit Research lowered their forecasts for Eurozone gross domestic product growth this year and next to 0.8% and 1.2%, from 1.2% and 1.7%, respectively.
On the geopolitical front, Russia's foreign minister Sergei Lavrov accused Ukraine's allies of stoking the five-month conflict just as his Security Council Deputy Secretary, Mikhail Popov, announced that Russia will revise its military doctrine in order to counter new threats.
That came amid reports that Ukrainian government forces had adopted a defensive stance in the face of a Russian onslaught.
German chancellor Angela Merkel on Monday said that Europeans will not accept Russia's military incursion into Ukraine.
Morgan Stanley ups price targets for most Spanish banks
Morgan Stanley has raised its price targets for almost all the major listed Spanish banks, including Banco Popular, Banco Sabadell, Bankia, Bankinter, BBVA and Santander.
"Net interest margin (NII) will continue to be supported by lower funding costs in the short term, but a further flattening of the yield curve and lower corporate loan spreads will weigh on NII 2015/2016, we think," the American bank said on Tuesday.
In a bid to ease competition concerns in Brazil, Spanish telecommunications giant Telefonica will exit from Telecom Italia once it has finalised the purchase of Vivendi's unit GVT in that South American nation, Reuters reports.
French carmaker Peugeot will cut 300 jobs at its Sochaux plant, in eastern France, starting in November, as output is reduced.
Swiss broker UBS has raised its recommendation on
Vallourec to 'buy' from 'neutral'.
From a sector standpoint the best performance was to be seen in the following industrial groups: technology (0.73%), basic resources (0.40%) and insurance (0.34%).
Crude futures fall back
The euro/dollar was nearly unchanged at 1.3130.
Front month Brent crude futures fell 1.37% to hit $101.4 per barrel on the ICE.