FRANKFURT: European stocks closed higher on Wednesday, buoyed by Berlin’s approval of a 46 billion euro ($53 billion) corporate tax relief package aimed at kick-starting growth.
The relief package, the first of a broader series of measures from Berlin’s new government, is an attempt to prevent the struggling economy from shrinking for a third consecutive year.
Recent surveys saw May’s euro zone business activity barely creep into expansion, while Germany’s services sector recorded its steepest contraction in over two years.
Germany’s blue-chip index finished 0.8% higher, just off an all-time high it hit earlier in the session.
Other bourses, such as France’s posted a 0.5% gain, while Britain’s saw a 0.2% rise, and Spain’s slipped 0.2%.
The pan-European STOXX 600 closed up 0.5% after briefly touching a one-week high.
An undercurrent of caution persisted as Washington’s decision to double tariffs on steel and aluminum imports cast a long shadow, amplified by the looming deadline for countries to present their offers to US President Donald Trump to avoid higher tariffs.
Adding to the complex geopolitical backdrop, the US and China are set for high-stakes trade talks this week.
Attention will also turn towards the European Central Bank’s policy meeting on Thursday, where a quarter-point rate cut is almost fully baked-in.
“Softer inflation and looming ECB rate cuts continue to support STOXX 600 valuations, though the upside in most of these names can’t match the momentum of US tech leaders,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Wall St. indexes rose, supported by a gain in tech stocks.
Most European sectors rose, with Technology leading gains. The food and beverages sector rose 1.1% buoyed by a 6.4% rise in Campari
Among individual movers, Airbus SE shares rose 2.2% after Bloomberg News reported Chinese airlines are considering ordering hundreds of aircraft as soon as next month.
STMicroelectronics jumped 11.1% after its chief executive said the French-Italian chipmaker has seen signs of an upturn.
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