European shares notch best day in over three years after Trump's tariff pause

European shares jumped on Thursday, with most indexes recording their biggest one-day gains since 2022, after U.S. President Donald Trump's pause on reciprocal tariffs for most trading partners prompted a huge relief rally following a brutal selloff.

The suspension of punishing tariffs on dozens of countries came less than 24 hours after they kicked in. In response, the European Union on Thursday paused its own countermeasures against around 21 billion euros worth of U.S. imports.

The pan-European STOXX 600  leapt 3.7%, and major regional bourses jumped between 3% and 4.7%.

The benchmark index, as well as those in Germany  Spain, and the UK recorded their best day since March 2022. France's CAC 40 jumped 3.8%, its best day since October 2022.

"Today we've see markets sort of mechanically rebound across the continent, we've had participants reassessing and reducing some of the downside growth risks that we did have in terms of the outlook in Europe," said Michael Brown, senior research strategist at Pepperstone.

The shock reprieve came as a welcome relief to investors after a steep cross-asset selloff, as uncertainty and fears of the broad hit to economic growth from U.S. tariffs have seen markets at their most volatile in years.

The STOXX 600 has slumped about 9% since U.S. reciprocal tariffs were announced on April 2. It is down over 13% from its March record close.