European shares rise as US, China reach deal to slash tariffs for 90 days

European shares rose on Monday after the United States and China said they have agreed on a deal to slash reciprocal tariffs, giving investors some confidence that a full-scale trade war may have been averted.

Speaking after talks with Chinese officials in Geneva, US Treasury Secretary Scott Bessent told reporters the two sides had agreed on a 90-day pause on measures and that tariffs would come down by over 100 percentage points to 10%.

The pan-European STOXX 600 index rose 0.9% as of 0853 GMT. Other regional indexes also rose, with Germany up 1.1%, France up 1.3%, Spain rising 0.7%, and the UK gaining 0.5%.

"European markets are riding with joy...except for the FTSE 100...that is under pressure due to its exposure to pharmaceutical companies," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

Signs of de-escalation between the US and China in the recent weeks have helped the European equities recover their sharp losses from early April, with Germany's benchmark DAX index hitting a new record high on Monday.

Chinese Foreign Minister Wang Yi speaks during a meeting with foreign ministers and representatives from the Caribbean countries in Beijing on Monday. Reuters

German sportswear makers Adidas and Puma gained 2.7% and 4.8%, respectively.

European logistics firms rise

European logistics companies also rose on news of the deal with Maersk and Hapag-Lloyd advancing 11.6% and 12%, respectively.

Healthcare stocks fell 2.6% after President Donald Trump said he would sign an executive order to cut prescription drug prices to the level paid by other high-income countries.

Shares in Novo Nordisk fell 5.7%, under pressure after latest data from US competitor Eli Lilly, which said its drug Zepbound was superior to Novo's Wegovy across five weight-loss targets.

Other healthcare heavyweights GSK, Roche Holding , Sanofi and AstraZeneca fell between 1.3% and 3.1%.

"These (European pharma) companies have been quite optimistic that they do have their protections in the US, so they won't be hit by tariffs as bad as the other sectors. But now... there's going to be a certain pressure on their revenues from the US sales," Swissquote Bank's Ozkardeskaya said.

European arms makers fell 2.1% after Ukrainian President Volodymyr Zelensky said he was ready to meet Russian President Vladimir Putin in Turkey on Thursday.

Reuters