Global stocks pressured as political, trade fears resurface

Most European stock markets turned lower towards the close on Tuesday as political and trade uncertainties pushed investors to the sidelines.

London underperformed as the British government sold a chunk of Royal Bank of Scotland at a sizeable loss, dealers said, while Frankfurt managed to just about remain in positive territory.

Paris and many other eurozone exchanges also closed lower as political worries in Italy and Spain resurfaced, keeping Milan and Madrid under pressure after Italy's new leader appeared to question eurozone debt rules.

US stocks were mixed, with the Nasdaq edging higher and closing at a record for the second straight day. The S&P 500 finished mildly positive, while the Dow slipped lower.

Geopolitics are "still simmering in the background, from Rome to Madrid, Westminster to Washington, with populist stances continuing to challenge financial markets," said Mike van Dulken, head of research at Accendo Markets.

Italy's Prime Minister Giuseppe Conte on Tuesday declared that his eurosceptic government wanted to reduce the country's huge public debt "through growth," not austerity, in his first speech to the country's Senate.

This did little to reassure investors who have been fearing the new Italian government could go on a collision course with its EU partners over debt rules and eurozone reform.

Whither NAFTA?

In the US, meanwhile, a strong report on services sector activity was offset by a stream of headlines about trade policy that sowed further uncertainty.

White House advisor Larry Kudlow said Washington would prefer bilateral agreements with Mexico and Canada to a rewrite of the North American Free Trade Agreement.

Canadian and Mexican officials, however, said they remained focused on a three-nation trade deal to revise the 1994 trade pact.

The back-and-forth came as Mexico released a detailed list of specific US products facing retaliatory import duties, including a host of steel products, pork, fruits, cheese and bourbon.

"The data continue to prove out the fundamental backdrop being strong, but there's a concern on the other side of that of what would it mean if we took this trade policy to its possible conclusion," said Art Hogan, chief market strategist at Wunderlich Securities.

In London, shares in RBS slid around five percent after Britain announced it had sold a small chunk of state-rescued Royal Bank of Scotland for more than £2.5bn. The 7.7% stake sale in RBS still leaves the government with a majority of 62.4%.

The Edinburgh-based lender underwent the world's biggest bailout by taxpayers at the height of the global financial crisis a decade ago.

In the US, Starbucks dropped 2.4% after former chief executive and chairperson Howard Schultz announced he was stepping down from the coffee giant.

Twitter surged 5.1% after S&P Dow Jones Indices announced it would add the microblogging company to its S&P 500 index to replace Monsanto, which is being acquired by Bayer.