European Markets Tread Carefully Amid U.S.-China Trade Developments

European shares experienced a subdued trading session on Wednesday, with investors on edge ahead of crucial U.S. inflation data. This development follows news of a potential resolution to the U.S.-China trade conflict.

The pan-European STOXX 600 index slightly increased by 0.1%, reaching 553.85 points early Wednesday morning. Late Tuesday, U.S. and Chinese officials announced they had reached a framework agreement to resume their trade truce, which includes removing China's rare earth export restrictions.

While carmakers benefited from a potential easing of rare earth restrictions, leading to modest gains, retailers faced challenges. Notably, Inditex, the owner of Zara, saw its stock fall by 4% after missing first-quarter sales expectations. The upcoming U.S. inflation report also added to market jitters, as investors speculated on the impact of tariffs on the economy. Elsewhere, UK's Finance Minister Rachel Reeves prepared to allocate over £2 trillion ($2.7 trillion) in public spending to stimulate economic growth in Britain.

(With inputs from agencies.)