European shares at near three-week highs as U.S.-China trade tiff appears to ease

By Sukriti Gupta, Medha Singh and Nikhil Sharma

(Reuters) - European shares climbed to a near three-week high on Wednesday, boosted by strong earnings from Europe's largest software maker SAP, while easing trade tensions between the United States and China lifted investor sentiment globally.

The pan-European STOXX 600 index ended 1.8% higher. Germany's blue-chip index outperformed local peers to climb 3.1%.

SAP jumped 10.6% to mark its best day in six years after the German company topped analysts' first-quarter profit expectations, lifting the European technology sector up 3.9%.

Basic resources sub-index was also a stand-out, soaring 3.3%, as prices of base metals like copper climbed on easing worries about trade tensions between the U.S. and China. [MET/L]

A source familiar with the matter told Reuters that the Trump administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing, adding that any action would not be made unilaterally.

The source's comments followed a Wall Street Journal report that the White House is considering cutting its tariffs on Chinese imports in a bid to de-escalate tensions.

U.S. Treasury Secretary Scott Bessent also said that he believes there will be a de-escalation in U.S.-China trade tensions, but described future negotiations with Beijing as a "slog" that has not started yet.

"Markets are really hoping that the worst will not happen and are really giving a chance to negotiations and less tariffs being implemented," said Amelie Derambure, senior multi-asset portfolio manager at Amundi.

"That's an important element which is lifting U.S. equities, but also as a consequence, global equities including European ones."

Uncertainty over U.S. tariffs continues to cloud the outlook for European corporate health. European companies are now expected to post a 3.5% decline in their first-quarter earnings — the weakest performances in two years — according to data compiled by LSEG IBES. That's a sharper drop than the 3% decline forecast just a week ago.

Global risk assets had turned higher earlier in the day when Trump said he had no plans to fire Federal Reserve Chair Jerome Powell following a series of criticisms over Powell's refusal to cut interest rates, which put into question the autonomy of the U.S. central bank.

An index of banks built on its strong run this week, closing 3.8% higher.

Fresh data showed euro zone business growth stalled this month as services activity contracted and the manufacturing downturn persisted.

On the downside, banking software company Temenos slid 7.1%, the worst individual performer for the day, after the company missed first-quarter revenue expectations.

(Reporting by Sukriti Gupta, Medha Singh, Nikhil Sharma and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips, Alexandra Hudson)