European shares edge higher amid China support measures

European shares inched higher on Monday as fresh attempts by China to limit the economic impact of the coronavirus outbreak helped calm investor nerves.

The pan-European STOXX 600 index rose 0.3% in early trade, staying slightly below a record high of 432.26 touched last week. Market activity is expected to be light through the rest of the day on account of a U.S. holiday. Given that several European companies depend on China as part of their supply chain, local markets are likely to trade cautiously awaiting concrete news on whether the outbreak will dent the country's long-term growth outlook.

However, a cut in interest rates and the prospect of tax cuts in China provided some hope that the economic impact from the virus outbreak could be limited. Automobile stocks, which are highly sensitive to Chinese demand and industrial output, were the best performing European sector, led by French car parts group Faurecia after reporting a rise in annual profits and sales. German herbicide providers Bayer AG and BASF SE fell 2.7% and 0.9%, respectively, after a U.S. peach grower was awarded $265 million in a lawsuit against the two.