Euro rises above $1.18
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European stocks closed lower on Tuesday as traders weighed up rising optimism that U.S. tax cuts will win passage this week against a disappointing reading on German business sentiment.
What are markets doing: The Stoxx Europe 600 index dropped 0.4% to close at 391.02, after scoring its highest close since Nov. 8 on Monday (http://www.marketwatch.com/story/european-stocks-rally-on-us-tax-reform-optimism-with-banks-in-charge-2017-12-18).
Germany's DAX 30 index fell 0.7% to 13,215.79 on Tuesday, while France's CAC 40 index gave up 0.7% to 5,382.91.
The U.K.'s FTSE 100 index added 0.1% to 7,554.09 (http://www.marketwatch.com/story/ftse-100-sticks-around-6-week-high-with-us-tax-vote-on-deck-2017-12-19).
The euro rose to $1.1824 from $1.1782 late Monday in New York.
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What's driving the market: Traders focused on signs highly anticipated corporate tax cuts in the U.S. will get the final signoff this week. Fears that the Republicans would struggle to pass tax legislation eased after 11th hour concessions made to the final version managed to appease the holdouts. Sens. Bob Corker of Tennessee and Marco Rubio of Florida both pledged their support for the bill, sparking optimism the final vote could come before Christmas.
The House of Representatives is expected to vote on the final version on Tuesday, while the Senate vote is expected to follow either on Tuesday or Wednesday. That should be enough time for the bill to land on President Donald Trump's desk for the final signature before Friday, which is the Republicans' self-imposed deadline.
Meanwhile in Europe on Tuesday, investors assessed the German Ifo business climate index, which is seen as leading indicator for economic activity in Europe's largest economy. The index dropped to 117.2 in December, down from 117.6 in November and missing forecasts of a 117.6 reading.
What strategists are saying: "The tax bill in the U.S. continues to dominate attention, being pretty much the only game in town at present. Today's slight losses, especially in the U.S., are more of a pause for breath before the rally moves on once more; the reform bill still seems certain to pass, and this still means that investors are going to be buying stocks as year-end nears," said Chris Beauchamp, chief market analyst at IG, in a note.
Stock movers: Shares of Dialog Semiconductor PLC (DLG.XE) rallied 8.2% after news that Chinese state-owned chip maker Tsinghua Unigroup has increased its stake in the Anglo-German company to 9% from about 8.1%.
Old Mutual PLC shares (OML.LN) added 2.7%, trading at the top of the FTSE 100, after the financial services firm said it will sell its single-strategy asset-management unit for GBP600 million ($801.8 million) to private-equity company TA Associates (http://www.marketwatch.com/story/old-mutual-to-sell-unit-for-600-million-2017-12-19).
British American Tobacco PLC (BATS.LN) (BATS.LN) rose 0.7%, with Berenberg raising its price target on the company by 3% to GBP57.20 a share as it expects a reduction in the U.S. corporation tax rate to result in higher earnings for BAT.
Shares of Steinhoff International Holdings NV tumbled 20% after the retailer said lenders were increasingly pulling their credit lines. The company, currently mired in an accounting scandal, also appointed Danie van der Merwe, the company's Chief Operating Officer, as acting Chief Executive. Steinhoff shares are now down 91% year-to-date, with 86% of that slide coming over the past month.
(END) Dow Jones Newswires
December 19, 2017 13:08 ET (18:08 GMT)