By Medha Singh
(Reuters) - European shares edged higher in quiet trading on Monday, with bank stocks leading the gains, as Sino-U.S. trade optimism and strong Chinese economic data eased some worries over the global economy.
By 0932 GMT, the pan-European STOXX 600 index was up 0.1 percent, hovering near eight-month highs. The banks-heavy Italian and Spanish indices led the gains.
Mark Taylor, sales trader at Mirabaud Global Thematic Group in London, said banking stocks could be rising due to "U.S. and German yield curves starting to move off their lows".
JPMorgan (NYSE:JPM) handily beating quarterly profit estimates on Friday and kickstarting the U.S. corporate earnings season on a strong note could be another factor helping banks, Taylor said.
"It's very quiet Monday. Apart from a few earnings catalysts through the week, it looks like people are just largely sitting on the sidelines," he said.
Asian shares began the week with a positive tone after U.S. Treasury Secretary Steven Mnuchin said on Saturday he hoped that the United States and China were close to the final round of negotiations.
Adding to trade relief, Reuters reported that U.S. negotiators had tempered demands that China curb industrial subsidies as a condition for a deal after strong resistance from Beijing.
Compass Group (LON:CPG) was among the biggest weights on London's blue-chip index after Barclays (LON:BARC) downgraded shares of the world's largest caterer to "equal-weight".
Dragging down the euro zone blue chips index was pressured by Finland's Nokia (HE:NOKIA), down about 3 percent, after Goldman Sachs (NYSE:GS) downgraded the stock to "sell".
Nestle, trading without entitlement to its latest dividend pay-out, dragged down the food & beverages index down 0.4 percent and pulled the Swiss SMI index into the red.
EXPANDING OUTPUT
London-listed shares of Rio Tinto (LON:RIO) weighed down basic resources sector. The mining major announced plans to invest an extra $302 million to develop its Resolution copper project in the U.S. state of Arizona, as it looks to expands output to meet the lucrative market for new energy vehicles.
Rio Tinto is due to release its production data for the March quarter later in the week.
Publicis gained 3.4 percent even as the French advertising group said it would pay $4.4 billion to acquire Alliance Data's Epsilon marketing unit, expanding its digital business and North American footprint.
Among top performers was Norsk Hydro up 4.7 percent as the company's alumina refinery in Brazil, Alunorte, and Brazilian public prosecutors jointly petitioned a federal court to lift a production embargo.
Daimler slipped on a report that Germany's motor vehicle authority KBA was investigating the carmaker on suspicion that 60,000 Mercedes cars were fitted with software aimed at tricking emissions tests. A spokesman for Daimler, owner of Mercedes-Benz, said the carmaker was reviewing the facts and fully cooperating with the KBA.
Italian media group Mediaset and its German rival ProSiebenSat.1 Media rose on merger speculation, even after both companies denied they were in talks.
Vivendi (PA:VIV) gained after the French media conglomerate posted higher first-quarter revenue and said it was making progress on the planned sale of up to 50 percent of its UMG music arm.