By Nikhil Sharma and Shashwat Chauhan

(Reuters) -Europe's STOXX 600 struggled for direction on Tuesday as rising industrials and financial services shares offset losses in healthcare stocks, with the focus on key inflation data across the continent due later in the day.

Europe's premier index reversed initial losses and held steady at 513.28 points, trading at its highest level in three weeks.

Financial services rose 0.9% and was amongst the top STOXX sub-sectors, boosted by a nearly 5% rise in Partners Group after UBS upgraded its rating on the buyout firm to "buy".

Retailers gained 0.8% as UK's Next advanced 2.7%, after the clothing retailer lifted its annual profit outlook for the fourth time in six months.

Industrial goods and services gained 0.3%, boosted by a 9.8% rise in heavy machinery & vehicles supplier Kion Group. The company has partnered with Nvidia and IT services provider Accenture to optimise supply chains with AI technologies.

A 4.7% jump in Volvo also aided gains.

On the downside, healthcare fell 0.4%. Index heavyweight Novo Nordisk lost 2.3% and AstraZeneca was 1.2% lower.

The pan-European benchmark had jumped nearly 1% in the last session following a report that suggested U.S. President-elect Donald Trump may opt for a less aggressive tariff strategy.

Trump later denied the report, adding to the uncertainty in the days leading up to the former president's Jan. 20 inauguration.

"Rumours and denials have a history of misguiding investors and causing temporary dislocations across a range of assets," analysts at Societe Generale wrote in a note.

"Yesterday was a prime example of how stories, originating from reputable channels, can distort daily flows."

The focus will be on a euro zone inflation reading due later in the session that could offer more insights into the European Central Bank's interest rate outlook.

French consumer prices rose less than anticipated in December, while Swiss inflation fell again, fuelling expectations for more interest rate cuts by the Swiss National Bank.

European equities lagged their global counterparts last year as looming tariff threats, a slowing economy and geopolitical uncertainty in top economies France and Germany kept investors on edge.

Deutsche Bank said it is now "overweight" on European equities due to an improving political climate, macro conditions and potential stimulus measures from China in 2025.

Among other notable stocks, Sodexo slid 8.4% after the French food caterer missed market expectations on first-quarter organic revenue.

(Reporting by Nikhil Sharma and Shashwat Chauhan in Bengaluru; Editing by Mrigank Dhaniwala and Janane Venkatraman)