By Nikhil Sharma and Purvi Agarwal
(Reuters) -European shares bounced back on Wednesday following four sessions of declines on optimism around positive developments in the Ukraine-Russia conflict, while a cooler-than-expected U.S. inflation report also helped sentiment.
The pan-European STOXX 600 closed 0.8%, snapping its longest losing streak since December.
The U.S. agreed on Tuesday to resume military aid and intelligence-sharing with Kyiv following Ukraine’s willingness to accept a 30-day ceasefire proposal with Russia.
"It’s creating some optimism given that if we do see a ceasefire and a potential peace deal coming through, that could reduce energy costs in Europe and there’s a lot of benefits coming from that," said Fiona Cincotta, senior market analyst at City Index.
Most sub-indexes on the STOXX 600 clocked gains, led by gains in European banks and industrial goods and services.
Zealand Pharma (NASDAQ:ZEAL) jumped over 37%, logging its best day on record, after Swiss pharmaceutical company Roche acquired rights to an obesity therapy by the firm in a collaboration deal worth up to $5.3 billion. Index heavyweight Roche gained 3.6% to trade at an over two-year high. The healthcare index was up 0.4%.
Retailers, on the other hand, declined 3%, hit by a 7.5% fall in Inditex (BME:ITX) after the Zara-parent reported a slower start to its first quarter, beginning February 1.
Puma (OTC:PMMAF)’s 19.9% tumble to a more than eight-year low after the German sportswear group gave a disappointing outlook for first-quarter sales weighed on the personal and household goods sector.
Meanwhile, a cooler-than-expected inflation reading in the U.S. also helped sentiment.
"It gives the Fed a little more flexibility to be able to support the economy if it needs to with rate cuts. But the upside is being capped by concerns regarding trade wars and recession concerns," said Cincotta.
Europe’s benchmark index lost 1.7% in the previous session after U.S. President Donald Trump doubled tariffs on Canadian steel and aluminium products, a move which was soon backtracked.
Canada countered with retaliatory tariffs, while the European Commission said it would impose similar counter-measures next month.
Trump’s trade policies have been a constant source of volatility in global markets, with the S&P 500 wiping out an eye-watering $4 trillion in market value from its recent peak hit last month.
Porsche fell marginally after the luxury carmaker reported an over 30% drop in its earnings per share in 2024, battling high costs and weak Chinese demand.
Investors also watched for political developments in Portugal after the centre-right minority government collapsed on Tuesday and Germany ahead of the vote to pass economic reforms.