Auto stocks limit losses for Europe, trade doubts linger

European shares struggled for direction on Wednesday as losses due to uncertainty around an interim U.S.-China trade deal were curtailed by a jump in auto stocks following merger talks between Fiat Chrysler and PSA Group.

The pan-European STOXX 600 index was flat at 0810 GMT, with auto stocks climbing 1.2% to their highest level in nearly six months. Italian-American carmaker Fiat Chrysler confirmed merger talks with French rival PSA, a potential deal that could reshape the global auto industry and create a European powerhouse.

Shares of both companies rose between 7% and 8%, topping the benchmark STOXX 600 index. However, concerns over the U.S.-China trade pact resurfaced after a U.S. administration official told Reuters that it might not be completed in time for the leaders of the two countries to sign in Chile next month.

Trade-sensitive tech and commodity-linked stocks were the biggest decliners among the major European sub-sectors. Deutsche Bank fell 5% after reporting a loss for the second consecutive quarter, partly due to costs for a major restructuring.

Markets now await a raft of euro zone economic indicators that will shed light on the health of the trading bloc, along with an expected interest-rate cut at the U.S. Federal Reserve's meeting later in the day.

Also Read: UPDATE 4-Fiat Chrysler, Peugeot owner PSA in talks to combine -source