Quote Originally Posted by Haruchai
And my impression (possibly very wrongly) was that Hitler believed the British were ready for a deal at that time - he held back at Dunkirk partly through that belief.
Now why would Hitler think that letting the Brits escape home rather than be captured would induce them to come to the table? Even Hitler wouldn't be that warped.

No the reason Hitler held back was because he had been lead to believe the combined numbers of damaged, broken down and knocked out tanks were knocked out. So the loses to his precious tankforces seemed to him to be absolutely debilitating.
And unlike later he seemed to understand that tanks in urban areas would suffer a lot of losses. Hence he held the panzers back (but not the infantry thoguh). After all where could the Brits go? They couldn't possibly rescue more than 30-40,000 troops, could they?