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(Sharecast News) - European shares rallied on Wednesday on hopes that a ceasefire in Ukraine could be achieved, despite another sell-off on Wall Street amid fears that US President Donald Trump's erratic tariff policy would trigger a recession, while the European Union also unveiled retaliatory levies of its own.
The pan-regional Stoxx 600 index was up 0.7% in early deals at 540, while Germany's DAX rose almost 1% and France's CAC-40 0.87%. Shares had slumped on Tuesday as Trump threatened to double tariffs on Canadian steel and aluminium to 50% in response to a levy on electricity supplied to three US states by Ontario.
As Ontario Premier Doug Ford stood by his position the US backed down and agreed to talks in Washington this week.
However, 25% US tariffs on steel and aluminium imports took effect on Wednesday. The European Commission responded immediately, saying it would impose counter tariffs on 26bn worth of US goods from next month.
Meanwhile, Ukraine President Volodymyr Zelenskyy, effectively left in the cold by the US after Washington pulled military aid and intelligence information, agreed to a 30-day ceasefire in the war with Russia after talks in Saudi Arabia with American officials.
Russia's response was to launch another bombing blitz on the Ukrainian capital Kyiv. Trump said his officials hoped to talk to their Moscow counterparts this week.
XTB research director Kathleen Brooks said markets were "far from a rebound" with investors also eyeing US inflation data.
"This looks like a pause, to see how the next headline from the White House plays out. There are two drivers of this early price action today: 1, Donald Trump, who played down the chances of a US recession, and 2, the prospect of a 30-day truce between Russia and Ukraine, which is seen as being a step towards a more lasting peace process," she said.
In equity news, Zealand Pharma surged as the Danish drug company unveiled a collaboration with Roche to develop a weight loss drug.
Shares in Porsche fell as the luxury car maker reported lower revenues and profits for 2024.
German sportswear maker Puma was also lower on annual earnings.
Reporting by Frank Prenesti for Sharecast.com
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