European shares edged slightly higher on Tuesday, with gains in banks outweighing declines in healthcare, while shares of Bayer surged after the U.S. administration supported the German pharmaceutical firm's appeal against lawsuits over its weedkiller.
The pan-European STOXX 600 (.STOXX), opens new tab was up 0.1% to 576.03 as of 0937 GMT, following Monday's industrials-driven decline.
Banks (.SX7P), opens new tab were up 0.9% and looked set to extend their winning streak to a seventh session. Banco Santander's (SAN.MC), opens new tab 1.3% gain was the biggest boost, after it sold a 3.5% stake in subsidiary Santander Bank Polska (SPL1.WA), opens new tab, which fell 6%.
A boost from Spanish banks helped the regional indexes (.IBEX), opens new tab, (.SMSI), opens new tab outperform peers, and were less than 1% away from their intraday record highs. Bourses in Germany (.GDAXI), opens new tab and France (.FCHI), opens new tab were up 0.5% and 0.2% respectively.
"The banking sector is both a safe haven and likely to benefit from interest rates remaining high. Spain is often the outlier...it's mainly due to the financial sector," said Nick Saunders, CEO of trading platform Webull UK.
Meanwhile, industrial stocks staged a recovery from Monday's declines, and were up 0.4%. Defence companies will be on the radar as U.S. President Donald Trump's special envoy, Steve Witkoff, and son-in-law Jared Kushner are scheduled to meet Russian President Vladimir Putin for talks on a possible Ukraine ceasefire.
Conversely, healthcare stocks dipped 0.2%, weighed by losses in heavyweights AstraZeneca (AZN.L), opens new tab and Novo Nordisk (NOVOb.CO), opens new tab. However, Bayer (BAYGn.DE), opens new tab jumped over 11% and limited losses in the sector after Trump's administration urged the U.S. Supreme Court on Monday to take up the company's bid to curtail thousands of lawsuits claiming its Roundup weedkiller caused cancer.
Investors will now focus on the euro zone's flash inflation data for November due later in the day. Saunders said that because inflation was "on target" in Europe, markets were unlikely to see any changes in interest rates, compared with the U.S. and the UK, where chances of a December cut were high, and that could slow Europe's growth.
European shares outperformed U.S. peers in the first half of the year, as uncertain trade and monetary policy in the U.S. drove investors to diversify abroad.
