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Europe: China tariff delays pull European shares out of doldrums

[BENGALURU] European shares staged a comeback from early losses on Tuesday as growth sectors led the charge, after Washington's move to delay tariffs on some Chinese goods provided a lift to battered global sentiment.

The US administration will delay imposing a 10 per cent tariff on certain Chinese products, including laptops and cell phones, beyond September, the Office of the US Trade Representative said on Tuesday. A separate list also included some imports that would be exempted altogether from tariffs.

That supported a move back to riskier assets after a cocktail of negative drivers had pressured markets for the past few sessions.

Commodity stocks, automakers and tech sectors were among the biggest gainers in Europe, and helped the pan-European STOXX 600 index close up 0.5 per cent, erasing session losses of up to about 0.8 per cent.

Market voices on:

"What we are seeing now with this announcement is a clear positive development," said Ken Odeluga, market analyst at City Index. "This definitely counts as a relief to markets because... this announcement shows the willingness to compromise from both sides."

But Mr Odeluga doubts the longevity of Tuesday's rally given recent volatility in markets spurred by recession fears, worsening Hong Kong tensions and a crash in Argentine markets.

Export-reliant Germany's DAX rose 0.6 per cent on the US news, recovering after data showed plunging economic sentiment among German investors. Investors will be closely watching Wednesday's second-quarter economic growth data to see if Europe's biggest economy is headed for recession.

The easing in trade tensions also lifted oil prices which saw energy stocks being among the top gainers on STOXX 600.

Italian shares, troubled by political turmoil, rose more than 1 per cent as banks rose with Monte Dei Paschi up 7.2 per cent.

Right-wing League leader Matteo Salvini's drive for early elections in Italy hit a road bump on Monday with parliamentary party leaders failing to decide when the Senate should debate his no-confidence motion in the government.

"I think we're going towards a technical government... that brings Italy to elections in an orderly fashion, securing public finances, which can help reduce the damage," said Carlo Franchini, head of institutional clients at Banca Ifigest.

In corporate news Henkel shares slid to the bottom of the pan-region index after the German consumer goods company lowered its full-year outlook for sales and earnings.