European shares edged higher on Thursday, after positive comments from China on trade with the United States soothed investor sentiment, while a drop in shares tobacco companies following a profit warning from Imperial Brands kept gains in check.
The Chinese commerce ministry said Beijing is in close communication with Washington and is preparing to make progress at trade talks in October.
Initial market action after the opening bell was negative after Bloomberg reported the World Trade Organization will authorize the U.S. to impose tariffs on nearly $8 billion of European goods due to illegal state aid provided to aircraft maker Airbus SE (PA:AIR).
The tariffs will target planes and parts as well as luxury products, such as wine and spirits and leather goods.
The personal & household goods index (SXQP) slipped 0.6%, the most among the major European sub-sectors.
Imperial Brands Plc (L:IMB) tumbled 9.1%, after the company said it expects full-year profit to be flat compared to last year in the face of a regulatory backlash against vaping in the United States.
Shares of peer British American Tobacco Plc (L:BATS) also fell 3.2%.
The pan-European STOXX 600 index (STOXX) rose 0.2%, however, still hovering at two-week lows.