FRANKFURT: European shares logged their biggest daily rise in over two weeks on Thursday, boosted by financial stocks as investors weighed mixed corporate earnings, US tariffs and a potential breakthrough to end the Russian-Ukraine conflict.
The pan-European STOXX 600 index closed up 0.9% at a one-week high, with the European banks index climbing 2% to its highest level since 2010 and the insurance index up 1.6% to a record high.
Financial stocks have rallied in recent weeks as investors look for areas of the market less exposed to trade uncertainty. US President Donald Trump’s higher import duties on many trade partners took effect on Thursday.
Negotiations remain underway with Switzerland, which faces a 39% import levy that is likely to inflict serious damage on its export-focused economy. Swiss stocks settled 0.8% higher, with pharma companies Roche and Novartis both rising as the sector is currently spared from the higher tariffs. Also aiding the upbeat mood, the Kremlin said Vladimir Putin and Donald Trump will meet in coming days, raising expectations of a potential ceasefire in Ukraine. The defence sector lost 2.3%, with German defence firm Rheinmetall down 8% after missing second-quarter sales forecasts, partly due to delayed German defence contract awards. “A Russia Ukraine peace deal should be positive for European consumers and risk sentiment and negative for oil prices. Sectors to benefit should be European consumers, growth sensitive and construction related sectors,” said Mohit Kumar, an economist at Jefferies.
“It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies.”
Tech stocks rallied globally on relief that companies committed to US manufacturing, like Apple, would avoid tariffs.
The European technology index was up 1.7%, with chipmakers BE Semiconductor, ASML Holding and SAP all between 2.4% and 4.5% higher. Danish drugmakers Novo Nordisk and Zealand Pharma rose 6.7% and 4.7%, respectively, after US competitor Eli Lilly’s weight-loss pill data fell short of expectations.
