* Italy's president gives green light to new coalition govt
* China comments soothe worries about tit-for-tat trade spat
* Micro Focus sinks 32% after profit warning
* Bouygues gains on upbeat H1 core operating profit
(Recasts, adds details, changes comments, updates to close)
By Agamoni Ghosh
Aug 29 (Reuters) - Hopes of a resolution to a trade dispute
between the United States and China pulled European stocks to a
near one-month high on Thursday, while the prospect of a new
coalition government in Rome sent Italian shares rallying.
The pan-European benchmark index STOXX 600 .STOXX closed
1% higher as new comments from Beijing signaling willingness to
continue trade talks with Washington calmed investors fears over
the risk of a global recession.
China's commerce ministry said both sides were discussing
the next round of talks scheduled in September and hoped U.S.
officials could cancel the planned additional tariffs to avoid
an escalation.
Following that, U.S. President Donald Trump said in a Fox
News radio interview that trade talks were scheduled for next
Thursday "at a different level," but did not provide additional
details. "Both of those things, despite being comments that markets
have heard a thousand times before helped," said Spreadex
analyst Connor Campbell.
"Markets are so keen at this to hear positive news and just
need reassurance that things are not just going to suddenly go
south regarding the relationship between China and the U.S."
Commodity-linked shares .SXPP rose nearly 2% to lead
gains, while defensive plays like utilities .SX6P and
healthcare .SXDP made the smallest gains.
The technology index .SX8P moved over 1% higher despite a
sizeable drag from British IT group Micro Focus MCRO.L which
tanked 31% after warning on profit, citing lower spending by
clients. French conglomerate Bouygues BOUY.PA jumped 7%, topping
the STOXX 600 after reporting a better-than-expected first-half
core operating profit. The benchmark European index is on track to end August about
3% lower as a deeper inversion in the U.S. Treasury yield curve
earlier in the week exacerbated concerns about economic growth
in the face of the U.S.-China trade war.
POLITICS IN FOCUS
Italian stocks .FTMIB rose nearly 2% to hit its highest
level since Aug. 2 as President Sergio Mattarella gave a green
light to two former political enemies, the 5-Star Movement and
Democratic Party (PD), to form a new coalition government headed
by Giuseppe Conte as prime minister. The move was perceived by markets to reign in stability at
the center and could improve Italy's fractious relations with
the European Union.
In Britain, however, fears of a disorderly Brexit weighed on
Britain's mid-cap index .FTMC , which underperformed the
broader markets as Prime Minister Boris Johnson made his most
audacious bid yet to take Britain out of the European Union on
Oct. 31 by moving to suspend parliament on Tuesday.
Johnson's move also increases the chance of him facing a
vote of no-confidence in his government, and possibly an
election.