European shares advance as Trump hints at auto-related tariff relief

FRANKFURT: European shares rose on Tuesday as investors weighed fast-changing US tariff plans, while shares of LVMH slumped after the luxury sector bellwether missed first-quarter sales estimates due to weak sales in the United States and China.

The pan-European STOXX 600 gained 1.6%, with most regional indexes in positive territory. The Italian bourse outpaced the pack with a 2.4% gain.

LVMH slid 7.8%, with the group losing its position as Europe’s largest luxury company in terms of market capitalization to rival Hermes.

Luxury and beauty-related stocks across Europe took a hit following LVMH’s results, with French firm Christian Dior down 8.3% and Spanish beauty company Puig shedding 4.4%. A gauge of luxury stocks also declined 1.5%.

“This ‘miss’ doesn’t bode well for the rest of the sector,” said Kevin Thozet, a member of the investment committee at asset manager Carmignac.

However, market sentiment remained upbeat after US President Donald Trump said he was considering a modification to the 25% tariffs imposed on foreign auto and auto parts imports from Mexico, Canada and other countries. The auto and parts index rose 2.3%.

“The optimists are beginning to hope that the most recent pronouncements from the White House represent a dialling down of the extreme measures initially proposed,” said Richard Hunter, head of markets at interactive investor. “Even so, these markets are skittish and are likely to remain so until the economic tariff clouds have at least begun to clear.”

Weeks of back-and-forth over tariffs have rattled global markets, dragging Europe’s benchmark index down almost 10% from its record closing high in March.

Trump first announced “reciprocal” tariffs around the world on April 2 before suddenly dialling back those duties last week for a 90-day period, whip-sawing financial markets.

However, even with the 90-day reprieve, the European Union is still being hit by a broad 10% tariff along with higher rates on steel, aluminium and cars.

BE Semiconductor Industries jumped 13.3% after US-based computer chip equipment supplier Applied Materials bought a 9% stake in the Dutch semiconductor advanced packaging firm.

Fugro dropped 14.8% after the Dutch geodata firm said it started reducing its US workforce and is scaling back operations there, after warning its sales and earnings would miss earlier forecasts.