European Stocks Surge Amid Trade Deal Hopes and Auto Rally

European stocks ascended to an over one-week high on Friday, driven by a surge in automaker stocks, against a backdrop of increasing risk appetite from investors hopeful for a U.S.-China trade reconciliation. The pan-European STOXX 600 index advanced by 1.1%, breaking a two-week losing streak while actualizing its initial weekly rise in three.

Germany experienced its most potent weekly stock rally in two months, with France and Spain's indices recording their best performances in over a month. Meanwhile, the STOXX 600's energy sector declined for the first time in several weeks as oil prices tumbled following eased Strait of Hormuz closure fears due to resolving tensions between Israel and Iran.

Amid receding geopolitical strains and a spotlight on global trade negotiations, investment strategies pivoted towards potential breakthroughs ahead of looming U.S. tariff increases. A recent accord between Washington and Beijing expedited rare earth shipments, boosting European auto and luxury sectors substantially. However, tariff dialogue remains a focal concern as EU leaders deliberate trade negotiations with the U.S., leaving all negotiation outcomes open.

(With inputs from agencies.)