By Sanchayaita Roy and Twesha Dikshit
(Reuters) -European shares climbed more than 1% on Wednesday, led by automobile stocks, after U.S. President Donald Trump revived hopes for a trade deal with the European Union following an agreement with Japan.
The pan-European STOXX 600 index gained 1.1% to 550.14, as of 0809 GMT, after three straight sessions of declines. Britain’s blue-chip FTSE 100 rose for a fifth session to a record high, last up 0.5%.
Other regional indexes also traded higher, with France’s CAC 40 leading the pack, jumping 1.3%.
European automobile stocks led the broad-based rally, rising 3.6%, tracking strength in Asian rivals.
Carmakers such as Mercedes-Benz, Volkswagen (ETR:VOWG_p) and Porsche (ETR:P911_p) gained between 7.4% and 5.1%.
Trump struck a trade deal with Japan, lowering tariffs on auto imports and sparing Tokyo from punishing new levies on other goods in exchange for a $550 billion package of U.S.-bound investment and loans.
The Japan deal included reduced 15% tariffs for auto exports to the U.S., down from 25% earlier.
Meanwhile, the prospects of an EU-U.S. trade agreementimproved after Trump said on Tuesday that EU representatives would come for trade negotiations on Wednesday.
“The message is that things are negotiable,” said RBC Brewin Dolphin’s head of market analysis, Janet Lui, mentioning how Japan faced similar difficulties in reaching a tariff consensus with the U.S.
“The read across is there is potential to reach a trade deal that’s lifting European markets across the board.”
Among individual stocks, Temenos gained 18.1%, the biggest gainer in the STOXX 600, after the banking software company raised its full-year earnings forecast.
UniCredit rose 3.4% after the Italian lender posted higher-than-expected quarterly profit and raised its fiscal-year outlook.
Lonza rose 6.3% after the Swiss company topped core profit forecast.
Conversely, Nokia (HE:NOKIA) slumped 7.7%, pressuring media stocks, after the Finnish group lowered its guidance for 2025 comparable operating profit on Tuesday.
ASM International fell the most in the benchmark index, down 9.3%, after the computer chip equipment maker reported second-quarter bookings below market expectations.
SAP fell 2.5% after the German software maker reported a positive second-quarter profit on cost cuts and increased demand.
Meanwhile, the latest earnings forecasts showed on Tuesday that the outlook for European corporate health has slightly improved.
On the day, Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) will kick off the results season for the “Magnificent Seven” stocks.
Investors will also focus on euro zone consumer confidence flash for July later in the day.
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