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European markets edge lower ahead of much anticipated G-20 meeting

Elliot Smith

European stocks were muted Wednesday after U.S. Treasury Secretary Steven Mnuchin told CNBC that the U.S. and China were closing in on a trade deal.

Markets began the day in the red after Federal Reserve chairman Jerome Powell tempered expectations of an imminent cut to interest rates, but erased losses by mid-morning following Mnuchin's comments in Bahrain, only to return to negative territory during the afternoon session.

The pan-European Stoxx 600 traded 0.1% lower, with auto stocks gaining 1% while healthcare led losses with a 0.7% fall.

Mnuchin expressed confidence that President Donald Trump and Chinese President Xi Jinping can make progress in stalled trade talks at the forthcoming Group of 20 (G-20) meeting in Osaka this weekend.

Asian shares slipped Wednesday afternoon after Powell reiterated the central bank's "independence" in a speech, and issued a warning about policy caving to "short-term political interests" amid pressure from President Trump to cut rates.

Back in Europe, stock exchange venues are preparing to delist over 250 Swiss companies, including blue chips like Nestle and UBS, on Monday July 1 if no resolution is reached in a political row over Switzerland's bilateral agreements with the European Union.

In corporate news, Reuters reported Tuesday that rural U.S. telecom carriers dependent on Chinese giant Huawei for network gear are in discussions with European rivals Ericsson and Nokia as possible replacements. Ericsson stocks were down slightly during afternoon trade, while Nokia rose 0.5%.

Meanwhile, German electric utility group E.ON has offered to sell assets in Hungary, Germany and the Czech Republic to address antitrust concerns from the European Union surrounding the company's bid for rival Innogy's network and retail assets. E.ON shares were down slightly in early trade.

In terms of individual stocks, British energy company John Wood Group climbed 6.9% after keeping its full year outlook unchanged while announcing improved first half performance. German steelmaker Thyssenkrupp jumped 8.3% after reports of a possible offer from Finnish engineering company Kone.

At the other end of the Stoxx 600, German chemical distributor Brenntag fell 5.3% after German media reported that it had sent weapons-grade chemicals to Syria in 2014 despite sanctions, by using a Swiss subsidiary.