[STOCKHOLM] European shares were steady in early trading, with Italian stocks recovering some ground after their sharp sell-off on Monday while tensions over the country's budget remained at the forefront of investors' minds.

The Stoxx Europe 600 Index was little changed, while Italy's FTSE MIB was up 0.5 per cent. A gauge for the car sector was down 0.2 per cent. Automakers are in the spotlight ahead of potentially tougher European Union emissions caps.

In Italy, Finance Minister Giovanni Tria is among speakers set to defend the country's budget plans in parliament on Tuesday. The FTSE MIB tumbled 2.4 per cent on Monday after the EU rejected the government's budget plans.

"The main talking point in Europe is (Italian Deputy Prime Minister Matteo) Salvini's anti-EU comments yesterday hitting the Italian financial market badly," said Martin Guri, head of Nordic strategy at Kepler Cheuvreux. "Otherwise, the focus is on the implication of higher interest rates in the U.S. and the ongoing U.S.-China trade conflict. Underlying sentiment remains on the weak side."

BLOOMBERG