(Reuters) – European shares ticked higher on Friday as investors assessed a potential de-escalation in the U.S.-China trade war, while some upbeat quarterly earnings also offered support.
China is considering exempting some U.S. imports from its 125% tariffs and is asking businesses to identify goods that could be eligible, according to businesses notified, stoking hopes for a de-escalation in a spiralling trade war between the two largest economies.
The pan-European STOXX 600 index (.STOXX), opens new tab was up 0.3% by 0920 GMT and was on track to climb about 2.8% this week, its second straight week of gains.
Other regional indexes including Germany’s DAX (.GDAXI), opens new tab, France’s CAC 40 (.FCHI), opens new tab, Spain’s IBEX (.IBEX), opens new tab, and the UK’s FTSE 100 (.FTSE), opens new tab gained between 0.1% and 0.9%.
U.S. President Donald Trump’s softened rhetoric on the trade war with China also helped stabilise sentiment this week.
With the bulk of Trump’s sweeping tariffs suspended for 90 days, expectations of trade deals between the U.S. and its major trading partners have mounted, but none have yet emerged.
Even with the 90-day reprieve, the European Union, along with other countries, is still being hit by a broad 10% tariff along with higher rates on steel, aluminium and cars.
“There is acknowledgment that the level of tariffs we see is likely not sustainable but it’ll probably take some time before these tariffs settle, and the question is still open as to where they settle, said Richard Flax, chief investment officer at Moneyfarm.
European defense stocks (.SXPARO), opens new tab led sector gains with a 2.4% rise, followed by construction and materials stocks (.SXOP), opens new tab that rose 1.5%.
French jet engine maker Safran (SAF.PA), opens new tab jumped 4.8% after it reported a stronger-than-expected rise in first-quarter revenue and said it was confident of hitting full-year targets, excluding any tariff impact.
The head of Safran said China has decided to grant exemptions from import tariffs for some aircraft parts, including jet engines.
Mapfre (MAP.MC), opens new tab rose 6.7% after the Spanish insurer said its net profit in the first quarter rose 28%.
Accor (ACCP.PA), opens new tab rose 4.6% after Europe’s biggest hotel group by portfolio reported a larger-than-expected rise in first-quarter revenue.
On the flip side, Kemira’s (KEMIRA.HE), opens new tab shares fell 9.1% after the Finnish chemical solutions maker delivered first-quarter earnings below expectations and signalled weaker demand in its end markets.
