European shares surged on Thursday after U.S. President Donald Trump announced an immediate 90-day pause on reciprocal tariffs for most trading partners, prompting a massive relief rally after days-long market rout.
The pan-European STOXX 600 (.STOXX) jumped 5.9% at 0752 GMT, after losing 12.5% since the tariffs took effect on April 2 up to last close. Trade-sensitive Germany's benchmark index (.GDAXI) rose 6.7%.
European Commission President Ursula von der Leyen welcomed Trump's move a day after the European Union said it would impose 25% tariffs on a range of U.S. imports in the first round of countermeasures, after the country-specific levies took effect.
"This 90-day pause for the tariffs gives time for everyone to negotiate, to find solutions, or in the worst case scenario, reorganize their businesses and prepare to temper the shock. So, that's fundamentally good news," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
"It's also good news to see that Trump could bend, he cannot just push forever."
Meanwhile, Trump further ramped up pressure on China by hiking the tariff on Chinese imports to 125% from 104% that kicked in on Wednesday in retaliation for China's announcement of an 84% levy on U.S. goods starting April 10.
All sectors were higher, with the most battered ones this month - banks (.SX7P), miners (.SXPP) and energy (.SXEP) - advancing 9.4%, 7.5% and 7.2% respectively.
A gauge of euro zone stock market volatility (.V2TX) was still at elevated levels of 35 points, indicating the big swings in markets was far from over.
A violent U.S. Treasury selloff on Wednesday that reignited fears of fragility in the world's biggest bond market also showed some signs of easing on the day.
"With less burdensome extra tariffs and more clarity by mid-year, the US and Europe would suffer a temporary setback to economic growth but would be spared a recession," said Berenberg economist Holger Schmieding.
In company news, Barry Callebaut (BARN.S) slumped 23.8% to the bottom of the STOXX index, after the Swiss chocolate maker lowered its annual volume guidance due to what it called "unprecedented volatility" in cocoa bean prices.
Tesco (TSCO.L) fell 6.9% after Britain's biggest food retailer warned its profit would likely fall this year.
After the U.S. S&P 500 (.SPX) soared 9.5% in its biggest daily gain since 2008 on Wednesday, futures are pointing to a lower open.
