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European Markets Close Slightly Higher as Traders Look Ahead to Fed Meeting; Thyssenkrupp Drops 7%

Ting Shen | Xinhua via Getty Images
  • Investors await the Federal Reserve's two-day policy meeting which starts on Tuesday — a focal point for the markets this week.
  • The Producer Price Index — which measures the prices paid to producers as opposed to prices on the consumer level — rose 0.8% month-on-month in May, outstripping a Dow Jones estimate of 0.5%.

LONDON — European stocks closed in positive territory on Tuesday as investors awaited the start of the U.S. Federal Reserve's latest monetary policy meeting.

The pan-European Stoxx 600 added 0.15% by the close, with chemicals and insurance stocks climbing 0.8% while basic resources dropped 2.3%.

The Federal Reserve's two-day policy meeting, which starts on Tuesday, is a focal point for the markets this week. The central bank is not expected to take any action, however, commentary on interest rates, inflation and the economy could drive market moves and there will be close attention to comments on the Fed's eventual tapering plans.

Billionaire hedge fund manager Paul Tudor Jones told CNBC on Monday that this Fed meeting could be the most important in Chairman Jerome Powell's career. Jones also warned that Powell could spark a big sell-off in risk assets if he doesn't do a good job of signaling a taper.

U.S. stocks fell slightly on Tuesday with the S&P 500 and the Nasdaq Composite slipping from their respective records.

Investors were also digesting another inflation gauge released on Tuesday. The U.S. Producer Price Index — which measures the prices paid to producers as opposed to prices on the consumer level — rose 0.8% month-on-month in May, outstripping a Dow Jones estimate of 0.5%. On an annual basis, this represented a 6.6% increase from the same time last year, an all-time record 12-month rise.

German final harmonized inflation was 2.4% annually in May, official figures confirmed Tuesday, while French final inflation came in at 1.8%.

In terms of individual share price movement, Italian infrastructure group Atlantia jumped 3.5% on reports that it is considering a 2 billion euro ($2.4 billion) share buyback and 600 million euro dividend payout next year, following the agreed sale of motorway unit Autostrade.

At the bottom of the European blue chip index, German steel conglomerate Thyssenkrupp dropped 7%.

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- CNBC's Maggie Fitzgerald contributed reporting to this story.

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