LONDON (ShareCast) - (Sharecast News) - Stocks across the Channel were modestly higher on Tuesday, with investors taking their cue from US markets, which had finished higher the day before on the hope that the worst scenarios in the Middle East could yet be averted.
"While relations between the [US and Iran] are unlikely to improve over the coming weeks, we are seeing the extreme rhetoric from both sides ease to the benefit of markets," said IG's Josh Mahony.

"That easing in tensions is taking some of the heat off havens such as gold and the yen, while stock markets have arrested their declines to find some stability."

By the end of trading, the benchmark Stoxx 600 had added 0.25% to 417.67, alongside a 0.76% jump to 13,226.83 for Germany's Dax and a gain of 0.60% to 23,723.38 for the FTSE Mibtel.

Spain's Ibex 35 however dipped 0.22% to 9,579.8, with shares of utilities Endesa and Iberdrola at the bottom of the pile, after MPs in Madrid voted in favour of a minority coalition government between the Socialist PSOE and far-left Unidas Podemos, albeit with just a razor thin majority of two votes.

"A PSOE-Podemos coalition government is likely to loosen fiscal policy and push for a more rigid labour market," said analysts at Barclays Research.

"This could generate tensions with Brussels and pose medium-term growth challenges. Government formation does not mean political stability is back for good."

Ipsen topped the leaderboard for the Stoxx 600 after the UK's drug regulator approved the company's Dysport drug for the symptomatic treatment of upper limb spasticity in children suffering from cerebral palsy.

BioMerieux was right behind on the leaderboard, with its stock breaking out to a fresh record high - after two years of sideways movement - ahead of an industry conference scheduled for 20-21 January, in London.

Stock in Pandora had paced gains on the Stoxx 600 throughout much of the day, hitting a fresh 52-week high in the process, but later trimmed its advance. In an unexpected trading update released during the previous session, the jewellery-maker posted a fourth quarter drop in like-for-like sales of 4.0% (JP Morgan: -7.0%) and guided towards the higher end of its previous guidance for its full-year EBIT margins.

Chip stocks were also wanted, with shares of Infineon, ams AG, and ASM International all higher.

Going the other way, NMC Health was to be found at the bottome of the pile.

In other economic news, Eurostat confirmed that the year-on-year rate of increase in Eurozone consumer prices picked up from 1.0% in November to 1.3% for December.

February gold futures on COMEX meanwhile were a tad higher, rising 0.20% to $1,572.30/oz., while the yield on the benchmark 10-year bund - another of investors' favourite safe havens - was steady at -0.29%.

As an aside, analysts at UBS bumped up their year-end target for the US S&P 500 from 3,000 to 3,250, telling clients that the Fed interest rate cuts in 2019 had sown the seeds for the next economic recovery, with US GDP growth likely to trough later in 2020.

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