July 26, 2018 / 7:34 AM / a year ago

European shares rise as U.S.-EU trade breakthrough spurs carmakers

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LONDON, July 26 (Reuters) - European stocks jumped in early trading on Thursday following a breakthrough in U.S.-EU trade talks, buoying shares in carmakers as the market digested a flurry of company earnings reports.

The pan-European STOXX 600 was up 0.4 percent by 0720 GMT, while Germany’s exporter-heavy DAX, which has come under pressure due to uncertainty over global trade, rose 1 percent.

The rally followed Wednesday’s meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker, in which the U.S. president agreed to refrain from imposing tariffs on European cars while the two sides launch negotiations to cut other trade barriers, easing the threat of a transatlantic trade war.

European autos were the biggest sectoral gainers, up 1.5 percent. The sector has been hit particularly hard, with tariffs forcing carmakers on both sides of the Atlantic to cut their guidance.

Shares in Fiat, Porsche, Volkswagen and BMW all rose by between 2.9 and 4.3 percent.

Daimler, however, dipped 0.1 percent after its second-quarter profit was hit by weaker pricing and tariffs.

On a busy day of earnings, a number of market heavyweights saw some decent-sized share price moves. British American Tobacco, Smith & Nephew, RELX and AstraZeneca all rose by between 1.9 percent and 4.5 percent after giving updates, topping the FTSE 100 which inched 0.1 percent higher.

Airbus led France’s CAC with a 5.4 percent gain after the aerospace group’s second-quarter core profit doubled.

Nokia was among the biggest STOXX fallers, tumbling 8.7 percent after reporting weak profits, while Kion was down nearly 7 percent after its results.

Reporting by Kit Rees; Editing by Susan Fenton

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