By Joao Manuel Vicente Mauricio and Ankika Biswas
(Reuters) – European shares bounced back on Thursday, led by a surge in tech stocks following a two-day decline driven by concerns over potential U.S. tariffs and economic challenges in France. Investors are now focusing on inflation reports to gauge the future direction of interest rate cuts.
The pan-European index rose 0.4% to 507.23 points, with trading volumes expected to be light due to the Thanksgiving holiday in the U.S.
The tech sector saw a nearly 1% increase, marking its best performance in a week, as chip stocks rallied on reports that U.S. restrictions on Chinese chips may be less severe than anticipated. Shares of ASM International (AS:), BE Semiconductor, and ASML (AS:) all gained between 2% and 2.5%.
France’s blue-chip index also rebounded, gaining 0.5% after hitting August lows in the previous session. Defence stocks led the sectoral gains, with Airbus jumping 4.1%.
Sentiment improved after European Central Bank President Christine Lagarde warned against a global trade war, stating it would be “in nobody’s interest.”
French government bonds stabilized after a sell-off pushed the risk premium over German bonds to its highest level since the 2012 debt crisis. Prime Minister Michel Barnier’s government is facing challenges securing approval for the 2025 budget, raising concerns about a potential collapse of the fragile coalition.
The banking sector also provided support to the STOXX 600, gaining 0.9%. Inflation in Germany remained unchanged in November at 2.4%, while rising in several German states. Spain’s November inflation met expectations.
Upcoming inflation reports for the euro zone, France, and Italy are set to be released on Friday, following strong U.S. inflation data that raised fears of a cautious approach to policy easing by the Federal Reserve.
Shares of Direct Line (LON:) Insurance surged 41.4% after rejecting a takeover offer from Aviva (LON:), while Aviva’s shares declined by 2.3%.
On the other hand, Grifols (BME:) fell 11.8% for a second consecutive session after Canadian fund Brookfield abandoned its takeover plans.