European stocks jump most in five years on Trump tariff reprieve

European stocks rallied after US President Donald Trump paused plans to implement higher reciprocal tariffs on dozens of trade partners, easing concerns about a global trade war, Bloomberg reported.

The Stoxx Europe 600 Index (^STOXX) was 6% higher by 8:50 a.m. in London, with all sectors in the green and banks and miners leading gains. France’s CAC 40 (^FCHI) jumped 6% and Germany’s DAX soared 7%. If the gains hold to the end of the day, European stocks will have pared back about half of the losses incurred since a record high close in early March.

European stocks have been under pressure, entering a correction, since Trump announced widespread levies last week, including higher tariffs on the European Union. Trump announced a 90-day tariff reprieve Wednesday, while ramping up duties on China.

There’s “some relief but the 125% tariff on imports from China and the uncertainty around negotiations and other side effects of this volatility could keep a risk premium in most assets,” said Rajeev De Mello, chief investment officer at Gama Asset Management. Trump “will be reluctant to allow a worse episode but I would rather fade the risk-on moves from these levels as the market finds a new equilibrium.”