By Mark DeCambre, MarketWatch

European stocks ended essentially at the flat line Tuesday, but with enough of a move to mark the first advance in three sessions, as Turkey's currency meltdown showed signs of steadying.

What are markets doing?

The Stoxx Europe 600 finished virtually unchanged at 384.92, rising less than a point after shedding 0.3% on Monday (http://www.marketwatch.com/story/european-stocks-drop-as-investors-remain-focused-on-turkey-2018-08-13) amid escalating worries about Turkey's plunging lira. The index shows a decline of 0.2% so far this week and a 1.1% retreat so far in 2018, according to FactSet data.

Germany's DAX 30 ended at break-even levels at 12,358.87, tacking on less than a point, after closing Monday's session down 0.5%, while France's CAC 40 declined 0.2% to 5,403.41, following a decline of about 0.1% in the previous session. The U.K.'s FTSE 100 , meanwhile, finished with a loss of 0.4% to 7,611.64, after a 0.3% fall on Monday, as a decline in miners weighed on the benchmark.

All of the European benchmarks finished the session off their best levels.

The euro traded at $1.1345, slipping from $1.1411 late Monday in New York.

What is driving the market?

European bourses turned higher early Tuesday as investors attempted to shake off worries about the deterioration of Turkey's currency, and a possible spillover to other markets. Tentative buying emerged on the back of healthy economic reports.

Meanwhile, the Turkish lira rose nearly 5% against the dollar on Tuesday (http://www.marketwatch.com/story/turkeys-lira-rallies-vs-the-dollar-on-tuesday-2018-08-14) after a withering series of drops to historic lows against the U.S. dollar. The slide has roiled global markets. The lira crisis, kicked off partly by reports by the Financial Times (paywall) (https://www.ft.com/content/51311230-9be7-11e8-9702-5946bae86e6d), that the European Central Bank was concerned about contagion from Turkey's currency slide to eurozone financial firms, took a turn for the worst after U.S. President Donald Trump on Friday said he authorized the doubling of steel and aluminum tariffs on Ankara.

One dollar bought 6.5463 lira, compared with 6.8846 late Monday in New York and one euro changed hands at 7.4645 lira , versus about 7.9079 lira in the previous session, a gain of decline of about 5.5% against the euro.

Trump's representatives on Monday told Turkey's ambassador that negotiations between the nations cannot move forward to remove sanctions against Ankara until detained evangelical pastor Andrew Brunson is released from the country.

A report on expansion (http://www.marketwatch.com/story/germanys-economy-sped-up-in-second-quarter-2018-08-14) in Germany showed that Europe's second-largest economy saw growth of 0.5% in the second quarter, with an annualized rate of 1.8%. However, the report indicated that global trade tensions and Turkey's currency crisis are clouding the business outlook.

Don't miss:A top London startup's CEO flags the biggest Brexit threat to his industry (http://www.marketwatch.com/story/a-top-london-startups-ceo-flags-the-biggest-brexit-threat-to-his-industry-2018-08-06)

What are strategists saying?

"Investors are becoming increasingly worried about how the Turkish crisis would spread into other markets after yesterday's EM currencies and equities selloff. So far, I think the risk of contagion is limited and yesterday's selloff was due more to a risk-off mood than a fundamental reason," wrote Hussein Sayed, chief market strategist at FXTM, in a Tuesday research note.

"However, economies with large current account deficits such as India, Argentina and South Africa will come under increased economic pressure as the Fed continues to tighten monetary policy," he added.

Stock movers

Shares of Antofagasta PLC(ANTO.LN) fell 7.1% after the company reported quarterly results (http://www.marketwatch.com/story/antofagasta-posts-profit-drop-backs-outlook-2018-08-14), with a decline in profit. The copper miner was the worst performer on the pan-European benchmark.

Symrise AG's stock was the best performer on the Stoxx Europe 600, gaining 4.9% after the company reported upbeat quarterly results.

 

(END) Dow Jones Newswires

August 14, 2018 21:11 ET (01:11 GMT)

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