UKX FTSE 100 Index

By Ryan Vlastelica

U.K. ends slightly lower as BHP and Rio Tinto weigh

European stocks closed mostly higher on Tuesday, rising for a second straight session with banks and pharmaceutical stocks leading the day's advancers.

Despite the general uptrend on the day, U.K. stocks ended with modest losses, pressured by a decline in BHP Billiton after the company's results. Investors were also looking ahead to comments from the U.S. Federal Reserve, which could provide insight into the outlook for monetary policy.

Where are the major benchmarks trading?

The Stoxx Europe 600 Index rose 0.2% to 384.15. This was the second straight day of gains for the index, although it came after three straight weeks of losses.

Italian stocks were proving the day's best performers in Europe, with the FTSE MIB Italy index climbing 1.5% to 20,767.73.

Germany's DAX rose 0.4% to 12,384.49. On Monday, the index rose 1% in its biggest single-day percentage gain since July 26. That came after its third straight down week, its longest such stretch since February.

France's CAC 40 jumped 0.6% to 5,413.58.

Bucking the positive tone on the day was the U.K.'s FTSE 100 , which ended down 0.3% to 7,565.70, with energy and commodity names leading the move lower.

The euro extended its recent advance against the dollar, changing hands at $1.1534, compared with $1.1484 late Monday in New York. The U.S. dollar index is down for a fifth straight session, its longest such streak since the start of the year. Thus far this year, however, the euro is down nearly 4% against the greenback.

U.S. stocks rose on Tuesday, putting the S&P 500 within striking distance of record levels (http://www.marketwatch.com/story/stock-futures-flat-as-sp-nasdaq-eye-records-investors-look-for-fed-clarity-2018-08-21).

What's driving the market?

In a data-light session, investors turned much of their attention to the upcoming central bank meeting in Jackson Hole, Wyo, which kicks off Thursday. Friday's speech by Federal Reserve Chairman Jerome Powell will be particularly scoured for any insight (http://www.marketwatch.com/story/feds-powell-may-use-jackson-hole-speech-to-discuss-potential-trouble-ahead-2018-08-17) into what the central bank sees as potential problem spots for the economy, as well as for any clues into future policy plans on interest rates. In particular, market participants will be looking to hear Powell's thoughts on trade policy and whether the currency crisis in Turkey could spread to other emerging markets or regions.

Don't miss:Here's how Jackson Hole could impact the dollar, bonds and emerging markets (http://www.marketwatch.com/story/heres-how-the-jackson-hole-gathering-may-influence-the-dollar-bonds-and-emerging-markets-2018-08-20)

Separately, investors are continuing to monitor trade relations between the U.S. and its major trading partners, with talks between the U.S. and China set to resume on Wednesday. Just Monday, Trump called the eurozone, as well as China, currency manipulators (https://uk.reuters.com/article/us-usa-trump-fed-exclusive/exclusive-trump-demands-fed-help-on-economy-complains-about-interest-rate-rises-idUKKCN1L5207) once again, while also telling Reuters that he has "no time frame" (http://www.marketwatch.com/story/trump-wary-of-perjury-trap-says-he-could-intervene-in-mueller-probe-2018-08-20) for ending the trade dispute with China, and that he didn't "expect much" from the talks. His administration is also moving forward with tariffs (http://www.marketwatch.com/story/even-with-trade-talks-on-tap-us-moves-forward-on-new-tariffs-against-china-2018-08-20) that cover $200 billion in Chinese goods, including some that are to take effect on Thursday.

Meanwhile, the U.K.'s top diplomat was expected to deliver a speech in Washington (http://www.marketwatch.com/story/uk-to-seek-further-russia-sanctions-from-allies-including-us-2018-08-20) on Tuesday calling for fresh sanctions against Russia, urging a continued hard line, according to prepared remarks released by the embassy.

Renewed Brexit talks between London and Brussels kicked off on Tuesday as well, with U.K. Brexit minister Dominic Raab and European Union chief negotiator Michel Barnier meeting to discuss the future relationship of London and Brussels.

What are market analysts saying?

"The FTSE 100 is underperforming its continental counterparts as a decline in consumer and mining stocks is holding the British equity benchmark back," said David Madden, market analyst at CMC Markets UK. "Dealers are optimistic about the trade talks between the US and China, despite the less cheery tone from Washington DC and Beijing."

Jack Allen, senior European economist at Capital Economics, noted that the yield on Italy's 10-year government bond dropped below 3% for the first time in nearly two weeks. However, "we think that the Government will implement a stimulus that causes the public debt ratio to rise. Together with uncertainty about the Government's commitment to the single currency, we expect this to push bond yields up over the coming years," he said.

What stocks are in focus?

BHP Billiton PLC (BLT.LN) fell 1.6% after it reported its quarterly results (http://www.marketwatch.com/story/bhp-posts-higher-profit-and-dividend-2018-08-21), where earnings were pressured by $5.2 billion in impairment charges.

Industry peer Rio Tinto PLC (RIO.LN) lost 1.4%; it has shed nearly 13% thus far this month.

Bank stocks were busting higher and supporting the main European index, with Spain's Banco Santander SA (SAN) (SAN.MC) up 1.2% and France's BNP Paribas SA (BNP.FR) closing 1.2% higher. Italian banks were also gaining, with Unione di Banche Italiene SpA (UBI.MI) surging 4.1% and UniCredit SpA (UCG.MI) climbing 2.1%.

Bayer AG (BAYN.XE) surged 1.7%, extending Monday's rally. The pharmaceutical giant is up nearly 6% so far this week, following massive losses last week sparked by a litigation loss (http://www.marketwatch.com/story/bayers-stock-plunges-after-monsanto-ruling-2018-08-13) in California over whether Bayer-owned Monsanto's Roundup herbicide is carcinogenic. Shares were lifted to buy by Berenberg Bank, where an analyst said the selloff had gone far enough (http://www.marketwatch.com/story/investors-are-too-bearish-on-roundups-cost-to-bayer-says-berenberg-2018-08-21).

John Wood Group (WG.LN) gained nearly 8%, and was among Europe's top percentage gainers after posting results and saying its full-year outlook was on track (http://www.marketwatch.com/story/wood-group-swings-to-pretax-loss-on-one-off-costs-2018-08-21).

(END) Dow Jones Newswires

August 21, 2018 12:37 ET (16:37 GMT)

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