European shares gain on optimism over U.S.-China trade row

By Julien Ponthus

LONDON (Reuters) - Hopes that the United States and China might find a compromise to resolve their trade dispute lifted European shares on Monday, while Turkey's currency crisis showed no immediate sign of worsening.

The pan-European STOXX 600 <.STOXX> was up 0.6 percent at the close, with all major markets across the continent also finishing in positive territory.

"The prospect that any possible escalation may well be some way away has prompted some investors to tentatively step back into the market," CMC Markets analyst Michael Hewson said in a note to clients.

Amid the "risk-on" environment, basic materials and miners <.SXPP> were among the best-performing sectors, up 0.9 percent.

Among stocks that fared best were ArcelorMittal (NYSE: MT), up 2.5 percent at the top of Paris' CAC 40 index, and London-listed Evraz , up 2.8 percent.

Italian infrastructure group Atlantia (NYSE: ATL) fell 4.7 percent as speculation continued over whether the government would revoke toll highway concessions held by its Autostrade per l'Italia business after last week's collapse of a Genoa bridge that it operated.

British software group Sage dropped 7 percent after a rating downgrade by Deutsche Bank.

"The competitive situation in Sage's core mid-market franchise appears to be worsening," the German bank's analysts wrote, adding that "higher-end competitors also appear to be gradually gaining share from Sage's core user and reseller base".

Shares in British contractor G4S fell more than 1 percent after the British government took over the running of a prison after an inspection found it had fallen into a "state of crisis".

Among smaller companies, handbag maker Mulberry sank nearly 30 percent to its lowest in nearly eight years after a trading update in which it warned of "materially reduced" profit if current UK sales trends continue into the second half.

The results could be seen as a bad omen for retail and luxury peers in Britain.

"This is really a sign of how it’s not just the retailers that are affected by the decline on the high street, but also some of the key brands that depend on department store concessions and the visible presence they offer to consumers," wrote Neil Wilson, an analyst for Markets.com.

(This version of the story corrects company name in second bullet point)

(Reporting by Julien Ponthus and Kit Rees; Editing by David Goodman)

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