By Riva Gold 
   -- FTSE 100 breaks new ground 
 
   -- Italian assets steady 
 
   -- Chinese stocks inch higher 

European stocks and S&P 500 edged up Tuesday after waning concerns about trade tensions between the U.S. and China helped send major global indexes to their highest close in months.

The Stoxx Europe 600 inched up 0.1% late morning while the U.K.'s FTSE 100 rose 0.2% from a record close, supported for most of May by gains in the U.S. dollar against the British pound and a rally in commodity prices that has lifted shares of energy and mining companies.

The banking sector drove most of the gains in Europe on Tuesday with shares of HSBC, Santander and UBS Group each up around 1%.

Italian banks also climbed, with the FTSE Italia All-Share Banks Index up 0.4% after falling over 6% in the two previous sessions amid worries about the country's new political agenda.

Over the weekend, party members approved a plan for a package of deep tax cuts and welfare spending with calls to revise the budget rules that govern the European Union's single currency. Italy's two antiestablishment parties on Monday nominated a political novice as their choice for the country's next prime minister.

Yields on 10-year Italian government bonds edged lower Tuesday, narrowing their spread over Germany which widened quickly in recent sessions, while the benchmark FTSE MIB index was up 0.6%.

Futures markets suggested U.S. stocks would extend gains, with the S&P 500 and Dow Jones Industrial Average each poised to add 0.2% after closing at their highest since March.

Shares of U.S. industrial companies rallied on Wall Street on Monday after Treasury Secretary Steven Mnuchin said the U.S. will suspend its efforts to apply tariffs to $150 billion in Chinese imports.

"Anything tied to economic growth and the business cycle is going to be bid up in this environment where we get news that maybe the 'trade war' is less of a risk than it was prior to the comments," said Jason Ware, chief investment officer at Albion Financial Group.

Recent news "suggests that things are on hold for now, as far as this escalating into something that would be truly bad for the global economy and therefore global markets," he added.

The U.S. and China also agreed on the broad outline of a deal that would save imperiled Chinese telecom giant ZTE, The Wall Street Journal reported.

The reaction in Asian markets was muted on Tuesday however, with many markets closed for a holiday.

Small earlier gains in the yen pressured Japanese multinationals, with the Nikkei edging down 0.2% from a two-month high. The dollar settled Monday at its highest against the yen in four months but was last down 0.1% against the Japanese currency.

The broader WSJ Dollar Index was last down 0.2%.

--Giovanni Legorano contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

 

(END) Dow Jones Newswires

May 22, 2018 06:08 ET (10:08 GMT)

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