Asian shares tracked European gains on Tuesday, as relief over EU election results eased concerns about political difficulties in the bloc and merger news supported auto shares, although persistent concerns about trade capped regional sentiment.

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MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.07 percent in early trade, and US S&P 500 e-mini futures rose 0.14 percent to 2,835.75.

Australian shares were up 0.51 percent, while Japan’s Nikkei stock index gained 0.41 percent.

Those small gains followed a relatively light session in Europe on Monday, with financial markets the UK and US closed for holidays.

European auto shares had rallied after Italian-American carmaker Fiat Chrysler confirmed it had made a “transformative merger” proposal to French peer Renault in a deal that would create the world’s third-biggest carmaker. That sector rally spilled into Asia with Mitsubishi Motors Corp in Japan adding 3.17 percent and Nissan Motor Co gaining 2.11 percent.​ Provisional results from EU elections also buoyed markets after pro-union parties kept a firm grip on power in elections to the European Parliament. The pan-European STOXX 600 added 0.22 percent.

“Although Eurosceptic and anti-establishment parties didn’t win as many seats as expected, their influence has increased significantly. This could have implications for the political color of key EU positions,” said Rodrigo Catril, senior FX strategist at National Australia Bank.

“The Parliament composition is also likely to have implications on the priority agenda for future EU reform, particularly with respect to things like immigration, fiscal spending and fiscal union,” he added, noting a decrease in bond yields pointed to continued risk aversion.

Benchmark 10-year German Bunds hit a low of -0.147 percent on Monday, their lowest level since September 2016.

On Tuesday, US yields were also lower. Benchmark 10-year Treasury notes yielded 2.3132 percent. The two-year yield touched 2.1766 percent.

Trade concerns also remain high on investors’ list of concerns. US President Donald Trump said on Monday that Washington was not ready to make a deal with Beijing but he expected one in the future, while at the same time pressing Japanese Prime Minister Shinzo Abe to even out a trade imbalance with the United States.

The dollar was up 0.05 percent against the yen at 109.55, and fell 0.04 percent against the euro, with the common currency buying $1.1192.

The dollar index, which tracks the greenback against a basket of six major rivals, 0.14 percent higher at 97.754.

In commodity markets, oil prices wavered after gaining more than 1 percent on Monday on tensions in the Middle East and OPEC-led supply cuts, as well as continuing Russian supply disruptions after a contamination problem discovered last month.

Brent crude dipped back below the $70 mark, falling 0.26 percent to $69.93 per barrel, but US West Texas Intermediate crude remained higher, adding 0.72 percent to $59.05 per barrel.

Spot gold was flat at $1,284.80 per ounce.

Bitcoin, which on Monday had touched $8,939.18, its highest level in more than a year, retreated 0.14 percent to$8,758.48. The cryptocurrency topped $8,000 for the first time since July 2018 on May 13.

First Published:May 28, 2019 6:54 AM IST