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European Shares Advance On Trade Deal Hopes

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European stocks rose on Tuesday to hit a three-week high as investors pinned hopes for a trade deal between China and the United States and the Italian government approved a decree aimed at shoring up troubled lender Banca Carige.

The pan-European Stoxx Europe 600 index was up 0.7 percent at 345.18 in opening deals after declining 0.2 percent the previous day.

The German DAX was up 0.3 percent, while France's CAC 40 index and the U.K.'s FTSE 100 were up around 0.8 percent each.

Carrefour rallied 1.9 percent in Paris after Bank of America Merrill Lynch upgraded its rating on the stock to buy.

Sika AG fell 2.6 percent after reports that it will buy its French rival Parex in a $2.55 billion.

Rolls- Royce Holding jumped 3.4 percent in London after Britain's Serious Fraud Office (SFO) dropped its investigation of some individuals associated with the company.

WM Morrison Supermarkets fell 3.7 percent after a disappointing trading update as it reported a sharp slowdown in sales growth at its stores over Christmas.

On the data front, Eurozone's economic sentiment decreased more-than-expected in December to its lowest level since the start of 2017, survey data from the European Commission showed.

The economic sentiment index dropped to 107.3 from 109.5 in November. Economists had predicted a score of 108.2.

France's merchandise trade deficit widened sharply in November and was worse than economists' forecast, preliminary figures from the French Customs showed.

The visible trade deficit rose to EUR 5.1 billion from EUR 4.1 billion in October. Economists had expected a shortfall of EUR 4.9 billion for November. A year ago, the deficit was EUR 5.96 billion.

German industrial production decreased for a third straight month in November, defying expectations for an increase, amid a sharp fall in consumer goods and energy output, preliminary data from the Federal Statistical Office revealed.

Industrial production fell a calendar and seasonally adjusted 1.9 percent from October, when it decreased 0.8 percent, revised from 0.5 percent. Economists had expected a 0.3 percent increase.

The British pound was little changed as a report showed British house prices surged unexpectedly in December and U.K. Brexit Secretary Stephen Barclay denied a report in the Telegraph that U.K. officials are "putting out feelers" in Brussels about an extension to the Article 50 notice.

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