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European Stocks Close Modestly Higher

European stocks closed slightly higher on Tuesday after swinging between gains and losses in somewhat cautious trade as investors looked ahead to the Federal Reserve Chairman Jerome Powell's testimony in the House of Representatives.

Powell's testimony today is likely to provide some clues about the central bank's outlook on its asset buying program and interest rates.

In his prepared remarks for hearing before Congress, Powell said that the current surge in inflation is likely to be transitory and it could move back to the Fed's 2 percent target when supply imbalances are resolved.

The Federal Reserve had signaled last week that a couple of rate hikes are likely by 2023. Powell had said in his post meeting press conference that policymakers had already started discussing about tapering the bank's asset buying program.

Investors also continued to react to the ECB President Christine Lagarde's positive comments on Monday about the outlook for the euro zone economy.

The Bank of England is scheduled to announce its monetary policy later this week. Meanwhile, British Prime Minister Boris Johnson said the country is likely to relax or lift restrictions on social gatherings in July. However, he warned about a resurgence in coronavirus cases caused by the delta variant.

The pan European Stoxx 600 climbed 0.26%. The U.K.'s FTSE 100 gained 0.39%, Germany's DAX moved up 0.21% and France's CAC 40 advanced 0.14%, while Switzerland's SMI edged down 0.11%.

Among other markets in Europe, Austria, Finland, Greece, Ireland, Netherlands, Norway, Russia and Turkey closed higher.

Czech Republic, Iceland and Portugal ended weak, while Belgium, Denmark, Poland, Spain and Sweden closed flat.

In the UK market, British Land and Land Securities climbed 4.7% and 3.2%, respectively following a rating upgraded of the stocks by JP Morgan.

Royal Dutch Shell, Melrose Industries, Flutter Entertainment, Glencore and Scottish Mortgage gained 2 to 2.8%.

Shares of Kingspan Group moved up sharply after the provider of high performance insulation and building envelope solutions said it expects first-half sales and trading profit ahead of last year as well as the first half of 2019.

Hargreaves Lansdown ended lower by 2.65%. Smith (DS), IAG, Prudential, GlaxoSmithKline and Standard Chartered shed 1 to 1.7%.

In France, Unibail Rodamco, Technip, Air Liquide, STMicroElectronics, Dassault Systemes and Atos gained 1 to 2%, while Renault and Michelin declined sharply.

In the German market, Covestro gained more than 4%. Merck gained nearly 2.5%, while Vonovia, Infineon Technologies and Linde gained 1 to 1.5%. Bayer, Thyssenkrupp, Volkswagen and Deutsche Bank ended with sharp to moderate losses.

In economic releases, the U.K. budget deficit narrowed in May from the last year, data from the Office for National Statistics showed.

Public sector net borrowing decreased to GBP 24.33 billion in May from GBP 43.76 billion in the previous year. The deficit was also below the economists' forecast of GBP 26.1 billion. Nonetheless, this was the second highest May borrowing since records began in 1993.

UK manufacturers' reported the strongest growth in new orders since 1988, the latest Industrial Trends Survey results from the Confederation of British Industry showed.

The order book balance rose to 19% in June from 17% in May. This was the biggest outturn since May 1988. The export order book balance advanced to -8 percent, the highest since April 2019.

Eurozone consumer confidence strengthened for a fifth month in a row in June to its highest level since early 2018, preliminary data from the European Commission showed Tuesday.

The flash consumer confidence index rose to -3.3 from -5.1 in May. Economists had forecast a score of -3.0. The latest reading was the highest since January 2018, when it was -3.0.

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