(Bloomberg) — European stocks posted their biggest weekly gain since mid-May on optimism that the European Union and the US can clinch some form of trade agreement in the coming weeks.
The Stoxx Europe 600 Index rose 1.1% by the close, with automakers and consumer products stocks outperforming. It advanced 1.3% for the week, the most in six weeks.
Sportswear companies Adidas AG and Puma SE rose after US peer Nike Inc.’s fourth-quarter revenue beat expectations and it said a yearlong sales decline is starting to ease.
Bloomberg reported that European Commission President Ursula von der Leyen told EU leaders behind closed doors she was confident a deal with the US could be reached before the deadline to avoid an economically damaging escalation.
Sentiment was also supported by comments from US Commerce Secretary Howard Lutnick, who said the US and China had finalized a trade understanding reached last month in Geneva. China said it has further confirmed details of a trade framework with Washington.
“Just like with China, more negotiations mean that the odds of a worst-case scenario diminish,” said Karen Georges, an equity fund manager at Ecofi. “It doesn’t put an end to uncertainty though.”
The main European regional index is on track for a 7% advance in the first half of the year, outperforming US peers. European stock funds are set for their second-largest annual inflow ever, with investors pouring $46 billion into the region so far in 2025, Bank of America Corp. said, citing EPFR Global data.
As the first half of the year draws to a close, traders will now likely seek a fresh catalyst to extend the rally. A positive outcome to the trade negotiations with the US could offer that, though von der Leyen has said the European Union is ready for all eventualities, including a breakdown in talks.
Meanwhile, inflation edged up in France and Spain but the rise won’t be enough to concern European Central Bank officials, who are optimistic their 2% target will be met sustainably this year.
Among other individual movers, Knorr-Bremse AG fell 2.2% after Citigroup Inc. and JPMorgan Chase & Co. downgraded the rating of the German braking systems manufacturer. Schneider Electric SE shares gained 6.5% after the electrical equipment firm reiterated its full-year guidance on a pre-close analyst call, which Oddo BHF described as “reassuring.”
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–With assistance from Michael Msika, Sabrina Nelson Garcinuno and Sagarika Jaisinghani.
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