European Markets Rally as US-China Trade Tensions Ease

European shares experienced an uplift on Friday, encouraged by signals of reduced trade tensions between the United States and China. This development brings optimism for further trade agreements before the U.S. tariff pause deadline in July.

The pan-European STOXX 600 index witnessed a 0.6% increase, marking its first potential weekly gain in three weeks as it hit 540.67 points by 0707 GMT. The momentum spread across other major regional indexes. On Thursday, a White House official announced an agreement with China to expedite rare earth shipments to the U.S.

Currently, Middle East tensions have receded into the background, shifting investor attention to upcoming trade negotiations, especially ahead of the potential expiration of higher U.S. tariffs. European leaders deliberated on new US trade proposals at a Brussels summit, with Commission President Ursula von der Leyen keeping all options open for future talks. In sectoral performances, European auto stocks rose by 1.5%, media by 1.2%, and German sportswear giants Puma and Adidas saw gains following positive news from U.S. company Nike.

(With inputs from agencies.)