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Europe close: Stocks give back some of the prior session's gains

Wed 23 August 2017 17:09 | A A A

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(ShareCast News) - Equity markets took a breather following outsized gains in the previous session which was stoked by optimism over the potential for US tax reforms.

By the closing bell, the benchmark Stoxx 600 was down by 0.50% or 1.88 points to 373.92, alongside a dip in Germany's Dax of 0.45% or 55.04 points to 12,174.30 and a fall of 0.32% or 16.47 points in the Cac-40 to 5,115.39.

Nonetheless, some analysts were rather sceptical regarding the prospect of any progress actually being made on Capitol Hill.

"Sadly we've seen this movie quite a few times this year with the hope that US politicians may well be poised to move forward with a program of tax reform, and for those hopes to subsequently turn to dust," commented Michael Hewson, chief market analyst at CMC Markets UK.

The day before, Politico had reported that top Trump administration officials and several key Republicans had reached a broad consensus on the best way to go about cutting both the individual and corporate tax rates.

Against that backdrop, investors were focusing on a very strong reading on the German economy ahead of the Federal Reserve bank of Kansas City's eagerly awaited economic symposium which was due to begin the next day.

IHS Markit's composite purchasing managers' index for France was steady at a reading of 55.6 in August (consensus: 55.4).

However, the equivalent PMI for Germany shot higher from 54.7 for July to 55.7 in August, far exceeding economists' forecasts calling for an unchanged print.

Meanwhile, a composite PMI covering both the factory and services sectors for the entire euro area edged up from a print of 55.5 in July to 55.7 for August.

Commenting on the results of the latter, Andrew Harker, the survey compiler's associate director, said: "Overall, this is another positive set of numbers for the euro area, which continues to enjoy its best growth spell for a number of years".

Still on the economic calendar for Wednesday, IHS Markit's August euro area 'composite' PMI was expected at 0900 BST, followed by a preliminary reading on consumer confidence in the single currency bloc at 1500 BST.

Meanwhile, on the corporate front, Brussels was aiming to complete its initial review of Bayer's takeover of Monsanto on Tuesday.

Air Berlin chief Thomas Winkelmann told Germany's Handelsblatt he was confident he would soon be able to deliver good news regarding talks with investors.

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