European stocks close higher; Germany's DAX at fresh record as U.S.-EU trade tensions ease

European stock markets close higher

European stocks closed broadly higher on Tuesday, rounding off a calmer session following recent market rumbles.

The pan-European Stoxx 600 index finished 0.33% higher as expectations built that eye-watering 50% U.S. tariffs on the European Union — threatened by U.S. President Donald Trump on Friday last week — will be averted by a trade deal.

Germany’s DAX index closed 0.83% higher at 24,226.49 points, surpassing its record closing high set last Wednesday.

Defense stocks including Hensoldt were among the best performers Tuesday, with fighting raging in the ongoing Russia-Ukraine war and Trump trading barbs with Russian officials, dampening hopes of a ceasefire. The European Union, meanwhile, signed off a previously announced 150 billion euro ($170 billion) arms fund aiming to boost regional security.

Attention was also on the bond market following last week’s global sell-off. Government bond yields dipped in the U.S. and across most of Europe — a sign of higher prices and demand — after Reuters reported Japan may cut its issuance of longer-dated debt in response to rising borrowing costs. A lower supply of Japanese government bonds could push investors into other markets.

That’s all from the Europe markets team today. On Wednesday we’ll be watching the production output meeting of oil alliance OPEC+, and earnings from U.S. tech giant Nvidia. See you tomorrow.

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