European stocks pare gains, eyes on EU talks; Dax up 0.71%

Investing.com - European stocks were sharply higher on Tuesday, as last week's comments by the European Central Bank continued to support, although expectations for the Federal Reserve to soon scale back its stimulus program persisted.

During European afternoon trade, the EURO STOXX 50 added 0.31%, France’s CAC 40 climbed 0.43%, while Germany’s DAX 30 advanced 0.71%.

European stocks remained supported after the ECB said last week that interest rates will remain at current or lower levels for an extended period of time.

But investors still remained cautious after data last week showed that the U.S. economy added 195,000 jobs in June, more than the 165,000 increase forecast by economists.

Fed Chairman Ben Bernanke said last month the bank could begin tapering its USD85 billion-a-month asset purchase program by the end of 2013 if the economy picks up as the central bank expects.

Financial stocks remained mostly higher, as French lenders BNP Paribas and Societe Generale rose 0.33% and 0.14%, while Germany's Deutsche Bank jumped 1.68%.

Among peripheral lenders, Spanish banks Banco Santander and BBVA slipped 0.17% and 0.30% respectively, while Italy's Unicredit and Intesa Sanpaolo gained 0.11% and 0.77%.

Elsewhere, LVMH surged 2.24%, extending earlier gains, after the maker of luxury goods agreed to pay EUR2 billion for 80% of Loro Piana.

Also on the upside, French car maker Peugeot rallied 1.31%, even as it said first-half group deliveries dropped to 1.46 million cars, sport-utility vehicles and vans from 1.62 million units a year earlier.

In London, FTSE 100 climbed 0.71%, even as official data showed that U.K. manufacturing output fell by the most in four months in May.

Shares in HSBC Holdings gained 0.86% and Lloyds Banking advanced 0.88%, while Barclays and the Royal Bank of Scotland surged 1.83% and 6.20%.

Mining stocks were also broadly higher, as BHP Billiton and Rio Tinto rallied 0.87% and 2.28% respectively, while Anglo American and Polymetal soared 3.31% and 3.92%.

Meanwhile, Hikma Pharmaceuticals jumped 1.90% after UBS raised its recommendation for the stock to neutral from sell. On Monday, the drugmaker raised its estimate for revenue growth this year to 17%, from its earlier forecast of 13%.

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.34% rise, S&P 500 futures signaled a 0.38% gain, while the Nasdaq 100 futures indicated a 0.38% increase.

Finance ministers from the European Union were to hold talks in Brussels later Tuesday.