By Sukriti Gupta and Medha Singh
(Reuters) -European shares climbed on Wednesday, boosted by strong earnings from Europe’s largest software maker SAP, while U.S. President Donald Trump’s backflip from threats to dismiss Federal Reserve Chair Jerome Powell also provided relief to investors.
The pan-European STOXX 600 index was up 1.8%, as of 0804 GMT. Other regional indexes – Germany, France, Spain, and the UK – gained between 2.2% and 3%.
Markets this week have wrestled with concerns over the U.S. Fed’s independence, following repeated criticism from Trump over Powell’s refusal to cut interest rates since the president returned to office in January.
Shares of SAP jumped 9.4% after the German company topped analysts’ first-quarter profit expectations. The European technology sector climbed 3.4%.
Also lifting sentiment was Trump’s softer tone on China tariffs, where he told reporters on Tuesday that he would be very nice in negotiations with Beijing.
U.S. Treasury Secretary Scott Bessent 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.
“There’s a sense of optimism that the worst may not happen, and the markets are responding very positively in Europe, not just to the single point of China tension but to the prospect that we may be able to avert a trade war after all,” Nick Saunders, CEO of Webull UK, said on Wednesday.
“There is a danger here that the markets are starting to respond only to throwaway phrases of the president rather than actions.”
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.
Shares of BE Semiconductor Industries rose nearly 9% after the Dutch chip equipment maker reported first-quarter order growth, driven by rising demand from Asian subcontractors for AI-related data centre applications.
Reckitt fell 5.1% after the maker of Dettol and Lysol cleaning products missed growth estimates for first-quarter like-for-like net sales.
BP rose 4.6% after activist hedge fund Elliott increased stake in the oil major to just over 5%. Elliott urged the company to boost its free cash flow to $20 billion by 2027, a source familiar with the situation told Reuters.
PMI data showed private sector activity in France and Germany contracted this month, weighed down by weakness in the services sector.
Euro zone business growth also stalled this month as services activity contracted and the manufacturing downturn persisted.
(Reporting by Sukriti Gupta and Medha Singh in Bengaluru; Editing by Sherry Jacob-Phillips)
