European Stocks Higher As Trade War Jitters Fade After Trump Softens Stance

European stocks closed higher on Thursday as trade war fears faded after U.S. President Donald Trump dropped planned tariffs on eight European countries and ruled out using force to take Greenland.

“We probably won’t get anything unless I decide to use excessive strength and force, where we would be, frankly, unstoppable. But I won’t do that. Okay?” Trump said in his speech at the World Economic Froum in Davos, Switzerland on Wednesday.

Rather than using military force, Trump called for “immediate negotiations” with Denmark to “discuss the acquisition of Greenland by the United States.”

NATO Secretary General Mark Rutte said he had a very productive meeting with Trump on the sidelines of the World Economic Forum in Davos on how NATO ?allies can ?work collectively to ensure Arctic ?security, including not just Greenland but the seven NATO nations with land in the Arctic.

The pan European Stoxx 600 climbed 1.03%. Germany’s DAX gained 1.2%, France’s CAC 40 advanced 0.99% and the U.K.’s FTSE 100 edged up 0.12%. Switzerland’s SMI ended 0.54% up.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Poland, Portugal, Spain, Sweden and Turkiye closed with sharp to moderate gains.

Norway ended weak, while Austria and Russia closed flat.

In the UK market, St. James’s Place and Metlen Energy & Metals climbed 4.31% and 4.25%, respectively. Hikma Pharmaceuticals, JD Sports Fashion, Spirax Group, Convatec Group, Easyjet, Vodafone Group, Ashtead Group, Weir Group, IAG, Mondi, IMI, Schroders, Barclays and Diploma gained 2 to 3.1%.

Admiral Group dropped 4.7%. BAE Systems lost about 3.7%. ICG, Rio Tinto, Shell, Antofagasta, Glencore, BP, Experian, Anglo American Plc, Aviva, Relx, Babcock International, Tesco, Legal & General and Next lost 1 to 2.7%.

In the German market, Volkswagen rallied more than 6% after reporting stronger than expected cash flow for the financial year 2025.

Porsche Automobile gained about 4.7%. Heidelberg Materials, Deutsche Bank, Infineon, Siemens Energy and Merck moved up 3 to 4.2%.

Bayer climbed about 3% after announcing that its investigational cell therapy, OpCT-001, has received Orphan Drug Designation from the FDA for treating retinitis pigmentosa.

Deutsche Boerse gained about 2.3% after announcing a record $5.3 billion deal to acquire Amsterdam-listed fund trading platform Allfunds, aiming to bolster its position in Europe’s investment fund market.

Continental, Fresenius Medical Care, Zalando, BASF, Siemens, Brenntag, Scout24, Deutsche Telekom, Fresenius and Commerzbank gained 2 to 2.7%.

In the French market, ArcelorMittal jumped nearly 6.5%. TP climbed about 6%. Orange and Bouygues moved up sharply as the two companies along with Iliad’s Free said they are in negotiations with Altice Group to buy a large part of its telecommunications activities in France.

Saint Gobain, Michelin, Societe Generale, BNP Paribas, Vinci, Accor, Kering, Capgemini, Hermes International, Bouygues, Veolia Environment, Unibail Rodamco and LVMH gained 2 to 3.4%.

Thales and Edenred closed lower by 3.7% and 3.5%, respectively. Safran ended with a loss of about 2.7%.

In economic news, the UK budget deficit narrowed more than expected in December driven by the increase in tax receipts, data from the Office for National Statistics showed.

Public sector net borrowing decreased GBP 7.1 billion from the previous year to GBP 11.6 billion in December. This was below economists’ forecast of GBP 13.4 billion.

While borrowing was the lowest for December in two years, it still represented the tenth highest December borrowing since records began in 1993.

Current receipts increased 8.9% to GBP 94.0 billion, while current expenditure rose only 3.5% to GBP 92.9 billion. Tax receipts increased by GBP 4.6 billion to GBP 70 billion on higher income tax receipts.

In the financial year to December, government borrowed GBP 140.4 billion, which was about GBP 300 million lower than in the same period of last year.

The Office for Budget Responsibility had projected borrowing to fall to GBP 138 billion in 2025-26, or 4.5% of GDP. It was estimated to reach GBP 67 billion or 1.9% of GDP in 2030-31.