European Shares Surge as Optimism Builds Over US Tariff Policy

European shares rose collectively, buoyed by optimism surrounding US tariff policies and Germany's economic outlook. The STOXX 600 index saw a significant gain after President Trump hinted at a lenient tariff approach. Business morale in Germany improved, contributing to the optimism as European equities outperformed U.S. counterparts.

European stock markets saw a surge, with the STOXX 600 index climbing 0.7%—its first rise in four sessions—reflecting widespread investor optimism spurred by potential leniency in US tariffs. Spanish and German shares led the gains, advancing by 1.2% and 1.1%, respectively.

US President Donald Trump's softer stance on tariffs, announced on Monday, was noted by investors who saw it as a positive sign, further bolstered by a rise in German business morale due to expectations of economic recovery. The euro STOXX equity volatility index dropped, reflecting decreased market fears.

European equities outshone their US counterparts, aided by Germany's increased spending plans and upgrades to the euro zone economy. The financial sector showed particular strength, with European bank stocks rising 2.1%. In contrast, Swiss logistics firm Kuehne und Nagel and home improvement retailer Kingfisher faced declines due to profit warnings and weak demand.

(With inputs from agencies.)