(Reuters) -European shares rose on Tuesday, with a U.S.-China tariff truce extension aiding sentiment, while investors awaited U.S. inflation data to gauge the impact of tariffs on price pressures and
European Markets Rise on US-China Tariff Truce and Fed Rate Hopes
Market Reactions to Tariff Truce and Economic Data
By Twesha Dikshit, Purvi Agarwal and Sukriti Gupta
Sector Performance
(Reuters) -European shares closed higher on Tuesday on optimism about the U.S.-China tariff truce and interest rate cuts by the U.S. Federal Reserve, while declines in heavyweight technology stocks limited gains.
Impact of US Inflation
The pan-European STOXX 600 index closed 0.2% higher a day after starting the week lower.
Earnings Forecasts
Investors were relieved after Washington and Beijing extended a tariff truce by 90 days, staving off triple-digit duties on each other's goods until November 10.
"Equity markets have been pretty relaxed about all the trade news. The assumption seems to be that (U.S. President Donald) Trump will relent on everything and that it will all be OK," said Rob Perrone, investment specialist for Orbis Investments. "If the news is better than yesterday's, then stocks go up."
Most sectors on the benchmark STOXX 600 rose, led by energy with a 1.5% advance. Vestas Wind Systems outperformed peers with a 4.7% gain, after receiving U.S. orders for undisclosed projects.
Heavyweight tech shares fell 2.1% to their lowest levels since early May. Software stocks in particular fell sharply on concerns that artificial intelligence could weaken this technology segment.
SAP slid 7%, while Nemetschek SE was down 11%, the biggest decliners on the index. The stocks logged their steepest one-day declines since 2020.
Most regional indexes were higher, but Germany's DAX, dipped 0.2%. German investor morale fell more than expected in August, an index showed.
Latest earnings forecasts showed companies are expected to report 4.8% growth in second-quarter earnings, on average, above the previously expected 3.1%, according to LSEG I/B/E/S data.
Earnings in Europe have been resilient so far, partly because the recent EU-US tariff deal has eased concerns over how Trump's levies might affect corporate performance.
Moreover, data showed U.S. inflation rose broadly in line with expectations in July, putting the Fed on track to lower interest rates next month.
Markets also eyed a Friday meeting between Trump and Russian President Vladimir Putin on Russia's war in Ukraine. Trump said on Monday that both Kyiv and Moscow will have to cede land to end the war.
European leaders and Ukrainian President Volodymyr Zelenskiy plan to speak with Trump on Wednesday amid fears that Washington might dictate unfavourable peace terms to Kyiv.
Among other stocks, Spirax Group surged 13% to record its best day since March 1983, after the British manufacturing group's first-half results beat expectations.
Sartorius rose 7.4% after Jefferies upgraded the pharmaceutical equipment supplier's stock rating to "buy" from "hold".
Conversely, Derwent London <DLN.L> shares dropped 6% after reporting lower first-half earnings.
(Reporting by Twesha Dikshit and Sruthi Shankar in Bengaluru; Editing by Rashmi Aich and Richard Chang)
