European shares hit 6-week high on US trade deal optimism, earnings boost
The pan-European STOXX 600 index (.STOXX), opens new tab gained 0.5% by 0817 GMT after hitting its highest since June 11 in early trading.
Most regional bourses were in the green, with Germany's blue-chip DAX (.GDAXI), opens new tab adding 0.9% and the UK's FTSE 100 (.FTSE), opens new tab advancing 0.6% to an all-time peak, on pace for a sixth straight session of gains.
In a busy day for corporate results, banks were in a bright spot after second-quarter profit beat from Deutsche Bank (DBKGn.DE), opens new tab and BNP Paribas (BNPP.PA), opens new tab.
The German lender Deutsche Bank climbed 5.8%, while French bank BNP Paribas added 2.8%. The eurozone banks index (.SX7E), opens new tab rose to its highest since 2008, aided by a rise in government bond yields.
The anticipated trade deal between the U.S. and European Union would impose a broad 15% tariff on imports from the bloc, avoiding a harsher 30% levy planned from August 1, two EU diplomats said on Wednesday.
"15% is a good number ... this would imply a meaningless price increase for companies which are exporting to the U.S. This could be totally manageable for the whole supply chain in different industrial sectors and clearly could be potentially also absorbed by the final customers," said Simone Ragazzi, portfolio manager at Algebris Investments.
The move would follow Japan's trade deal with the U.S. that lowered auto tariffs and sent automobile shares soaring on Wednesday.
Cooling trade tensions have lifted the STOXX 600 about 19% from its lows in April after U.S. President Donald Trump slapped steep tariffs on its trading partners. The index still remains about 2% away from its March historic high.
Roche (ROG.S), opens new tab gained 0.8% after the Swiss drugmaker reported better-than-expected first-half operating profit, while Deutsche Telekom rose 3% after its U.S. subsidiary T-Mobile posted strong second-quarter . Both were among the major boosts to the benchmark STOXX 600.
Meanwhile, Nestle (NESN.S), opens new tab dropped 3.4% after the Swiss consumer major announced a strategic review of its vitamins business and posted first-half results.
Chipmaker STMicro (STMPA.PA), opens new tab slumped 10.5% after its first quarterly loss in more than a decade, in contrast to other tech titans Alphabet (GOOGL.O), opens new tab and SK beating earnings expectations.
Adding to the upbeat mood, a latest survey showed euro zone business activity accelerated faster than forecast this month, supported by a solid improvement in the bloc's dominant services industry and with manufacturing showing further signs of recovery.
Later in the day, focus will shift to the ECB, which is widely expected to keep rates steady at 2% after seven consecutive cuts.
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