Europe stocks at record high as Middle East tensions ebb

By Ambar Warrick

Jan 9 (Reuters) - European shares touched a record high Thursday after the United States and Iran backed away from further military escalation and investors returned to riskier assets on firmer hopes of a Sino-U.S. trade deal.

U.S. President Donald Trump imposed more sanctions on Iran, quelling fears of military retaliation and defusing a crisis that sparked a rush to safe-haven investments.

Adding to the mood, China confirmed it would sign a Phase 1 deal during Vice Premier Liu He's visit to Washington next week.

The pan-European STOXX 600 index .STOXX rose as much as 0.7% to a record high of 421.43.

Stocks in Germany .GDAXI, the bloc's biggest economy, jumped 1.4% to a near two-year high as industrial production rose more than expected in November.

However, a separate reading showed the country's exports sank well below expectations, indicating that demand for goods from the industrial powerhouse remained languid.

"We would expect to see some improvement come through in German output as we look to the first half of this year, particularly as we see some modest improvement coming through in trade," said David Page, senior economist at AXA Investment Managers.

Technology .SX8P was among the best performing regional sub-indexes and touched a near 19-year high, with gains led by a 3.6% rise in Swiss shares of Austrian chipmaker ams AG AMS.S.

Brussels-listed Argenx ARGX.BR led gains on the STOXX 600 after the antibody therapeutics developer updated its 2020 pipeline and flagged positive results from a phase 2 study.

British retailer Marks & Spencer MKS.L was the worst performer on the STOXX 600, dropping to a one-month low after it said its performance over the key Christmas quarter was held back by waste in its food business and weak sales of menswear and gifts.

(Reporting by Ambar Warrick and Lisa Pauline Mattackal in Bengaluru; Editing by Arun Koyyur and Saumyadeb Chakrabarty)

((Ambar.Warrick@thomsonreuters.com; +91-80-6749-6625; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))

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