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European shares inch lower ahead of Sino-U.S. trade deal; Q4 earnings eyed

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Jan 14 (Reuters) - European shares treaded water on Tuesday, as investors awaited the signing of an initial trade truce to end a prolonged U.S.-China tariff dispute, with attention also turning to the fourth-quarter corporate earnings season.

The pan-European STOXX 600 index fell 0.2% by 0812 GMT in its third straight day of declines.

The Phase 1 Sino-U.S. trade deal, due to be signed in Washington on Wednesday, marks the first step in winding down the prolonged and damaging trade war.

In further signs of goodwill, the U.S. Treasury Department on Monday dropped China’s designation as a currency manipulator, while another report said China had pledged to increase buying of U.S. manufactured goods over the next two years.

European chemicals stocks were the worst performing sector on Tuesday, shedding about 0.8%. (Reporting by Ambar Warrick in Bengaluru; Editing by Anil D’Silva)