European stocks close 2.7% higher, snapping streak of tariff-led losses

The regional Stoxx 600 index closed 2.72% higher at 486.9 points. Insurance stocks were 4.08% higher on the day, financial services were up 3.89% and travel was 3.85% higher.

It comes after the Stoxx 600 index ended Monday’s session around 4.5% lower, falling to its lowest closing level since January 2024, following days of market volatility and extreme selling.

The equity rebound was reflected globally on Tuesday, kicked off by Asia-Pacific markets and later joined by U.S. stocks. Amid some dip buying, investors also appeared hopeful the U.S. will begin talks that could lead to deals that lower the duties over time.

The world has been rocked by the frequent updates around U.S. President Donald Trump’s tariffs regime in recent days, and despite stock gains, tensions between the U.S. and its trading partners do not appear to be easing.

Speculation on Monday about a potential tariff pause was quickly shut down by the White House, while Trump threatened to hike tariffs on China by another 50% unless it scrapped retaliatory duties. Beijing last week imposed a 34% tariff on American products in response to Trump announcing his full list of so-called reciprocal tariffs.

Overnight, China’s Commerce Ministry said it “resolutely opposes” Trump’s threat of escalating tariffs and vowed to take countermeasures to safeguard its own rights and interests.

Also on Monday, European Commission President Ursula von der Leyen said the EU had offered Trump a “zero-for-zero tariffs” deal for industrial goods, and reiterated that the bloc was keen to negotiate but was also prepared to impose countermeasures. Trump promptly rejected the EU’s 0% tariff offer, however.