European Stocks Gain Amid Softer U.S.–China Trade Signals

European stocks started the week higher after President Donald Trump struck a more conciliatory tone on trade with China, easing fears of another escalation between the world’s two largest economies.

By early Monday, the pan-European Stoxx 600 rose 0.4%. Germany’s DAX and the UK’s FTSE 100 were also up 0.4% and 0.2%, respectively. The gains followed a week of volatility after Washington threatened triple-digit tariffs on Chinese goods, which had rattled global markets.

Over the weekend, Trump said relations with Beijing would be “fine” and that the U.S. was not looking to “hurt” China, signaling a potential pause in tensions. China, meanwhile, defended its export curbs on rare earth elements as a necessary response but stopped short of imposing new duties.

Analysts at Capital Economics noted that the dispute could still ease if “cool heads prevail,” pointing to an expected meeting later this month between Trump and Chinese President Xi Jinping in South Korea as a possible “off-ramp.” Still, they warned both sides might dig in, with China’s economy showing resilience but facing “significant downside risk” if the rift deepens.

Markets were also watching the World Bank and IMF meetings this week, which analysts at Vital Knowledge said could serve as an informal forum for diplomatic discussions on trade.

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In France, political uncertainty continued to weigh on sentiment even as the CAC 40 rose 0.6%. President Emmanuel Macron reappointed Sebastien Lecornu as prime minister after a brief resignation last week and announced a new cabinet aimed at “renewal and diversity,” though few new names were added.

Among individual stocks, AstraZeneca rose after Trump announced a deal allowing the U.K. drugmaker to offer discounted medicines to a U.S. government healthcare program for low-income Americans in exchange for tariff relief.

PSI Software surged more than 34% after private equity firm Warburg Pincus agreed to acquire the German company in a deal valued above €700 million.

Elsewhere, Greek defense tech firm Theon International said it plans to buy a 9.8% stake in French peer Exosens. Exosens shares gained over 5%, while Theon’s Amsterdam-listed stock slipped.

Overall, the day’s rebound reflected cautious optimism that trade tensions might ease, but investors remain alert to geopolitical and political risks across Europe.