European shares retreat from record rally; earnings, US-China trade on tap

European shares retreated on Tuesday, pausing after a third consecutive record-high close on signs of easing Sino-U.S. trade tensions, as investors assessed a slew of corporate earnings.

The continent-wide STOXX 600 index  fell 0.3% at 575.57 points, as of 0924 GMT. Germany's DAX  and France's CAC 40  edged down 0.1% each, while Britain's FTSE 100  was flat.

Spain's blue-chip index IBEX 35  hit a new record high and was last up 0.1%. A remarkable performance by domestic lenders so far this year has boosted the index, with Spanish banks outpacing already vigorous growth in the broader European banking sector.

Optimism over a potential U.S.-China trade deal supported markets on Monday. The spotlight will be on a planned meeting between U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, in South Korea on Thursday.

A trade deal would halt heavier U.S. tariffs and Chinese rare earths export controls, helping allay some recent worries among investors about relations between the world's two largest economies.

Michael Brown, senior research strategist at Pepperstone said, "Market participants are very much now in the mindset that trade and Sino-US relations are kind of solved and on a much better footing at least temporarily."