European shares hit record in countdown to Christmas

(Reuters) - European stocks ground out fresh record gains on Tuesday in thin trading ahead of Christmas with investors optimistic about global growth heading into 2020 amid progress in U.S.-China trade talks.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, December 20, 2019. REUTERS/Staff

In an early close for markets, the pan-European STOXX 600 index .STOXX added 0.12% to touch an all-time high, while France's CAC 40 .FCHI and Spain's IBEX 35 .IBEX were little changed.

Domestically focused mid-cap shares .FTMC in Britain outshone their European peers again with a 0.6% rise to hit a new record, while the blue-chip index .FTSE clung to a five-month high. [.L]

With only a week left for 2019 to close, European shares are on course to log their best gains in a decade as two of the biggest risks to global growth - a prolonged Sino-U.S. trade war and a disorderly exit for Britain from the European Union - eased over the past few weeks.

Following the landslide Dec. 12 election victory for Prime Minister Boris Johnson’s Conservatives, Britain now looks certain to leave the EU on Jan. 31 with a withdrawal deal that includes a transition period lasting until the end of 2020.

However, investors are concerned about the outcome next year of post-Brexit negotiations to establish the UK’s future trade relationship with the EU, as Johnson’s hard line could eventually raise the risk of no deal.

“Markets may look buoyant, but not all is what it seems,” said Vishnu Varathan, senior economist at Mizuho Bank. “Uncertainty that hangs over the global economy has taken a back seat, but will not go silently into the night.”

In thin corporate news, BMW BMWG.DE said it was being investigated by the U.S. Securities and Exchange Commission over its sales reporting practices. But with the German stock index .GDAXI closed for the Christmas holidays, any impact on the automaker's shares will only be evident on Friday.

Shares in BBVA BBVA.MC slipped 0.6% after Reuters reported the European Central Bank had asked Spain's High Court to provide information about an investigation into a spying case involving the lender.

Italian .FTMIB and Swiss .SSMI markets were also shut on Tuesday. Most European stock markets will remain closed on Dec. 25 and Dec. 26 for Christmas and Boxing Day.

Reporting by Sruthi Shankar and Sagarika Jaisinghani in Bengaluru; Editing by Saumyadeb Chakrabarty and Mark Heinrich