US stocks rise sharply after Trump hints at targeted tariffs
Dollar rises to three-week high after strong economic data
Oil rises after Trump seeks to punish Venezuelan oil buyers
German business sentiment improves
Updates with morning European trading
By Ankur Banerjee and Alun John
SINGAPORE/LONDON, March 25 (Reuters) - European shares rose on Tuesday, taking their cue from a strong overnight rally on Wall Street on hopes of narrower-than-feared U.S. tariffs, while the dollar continued its cautious rebound, trading near three-week highs against a basket of peers.
Europe's broad Stoxx 600 share index was up 0.6% in early trading with most national benchmarks and sectors cautiously in positive territory. .STOXX
Investors' primary focus was the impending reciprocal tariffs promised by U.S. President Donald Trump and, while Trump said on Monday automobile tariffs were coming soon, he indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.
That led to an exuberant "risk-on" reaction in U.S. markets and the S&P 500 .SPX closed at its highest in more than two weeks, while a rally in tech stocks led Nasdaq .IXIC up more than 2%. .N
S&P 500 share futures were steady in European trade on Tuesday. ESc1
But investors remain on edge before the April 2 deadline.
"Headline risks (are) the global investors’ daily lot," said Benoit Anne, senior managing director, at MFS Investment Management's strategy and insights group.
"Only Covid caused more concern over policy uncertainty at the global level. We are currently facing numerous sources of risks, with the risk of trade war escalation standing out as the key item to watch."
Tariff news was also showing up in the oil market. Prices were up for a fifth day in a row, with Monday's and Tuesday's rises on the back of concerns about supply after Trump issued an executive order declaring that any country buying oil or gas from Venezuela would pay a 25% tariff on trade with the U.S.
Brent futures LCOc1 were up 44 cents to $73.43 a barrel and U.S. crude CLc1 climbed 38 cents to $69.49. Both benchmarks gained more than 1% on Monday. O/R
BETTER DATA
Investors were also digesting activity and sentiment data this week. German business morale rose in March, as companies expect a recovery after two years of contraction in Europe's largest economy.
The data comes after Germany passed a landmark bill to massively boost infrastructure and defence spending.
That was also supporting European shares and caused German bond yields to tick higher, with the 10-year Bund yield last up 4 basis points at 2.82%. DE10YT=RR GVD/EUR
In the U.S. on Monday, S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased, suggesting the economy was regaining speed after hitting a soft patch halfway through the first quarter.
But so-called hard data, including retail sales and the employment report, have hinted at cracks in the foundation of the economy.
The broad risk on mode led to a selloff in safe haven bonds.
The benchmark 10-year Treasury yield rose 8 bps on Monday, and was a further 2 bps higher on Tuesday, at 4.354%, its highest in a month. US10YT=RR US/
Higher yields supported the U.S. dollar, which has been under pressure in recent months. The dollar index, which measures the currency against six peers, touched a three-week high on Monday, and was last at 104.26. =USD
The dollar hit a three-week high against the rate-sensitive yen JPY=EBS at 150.95, after jumping 0.9% in the previous session. FRX/
The strong dollar also cast a shadow across emerging markets. The Indonesian rupiah IDR= sank to its lowest level since June 1998, during the Asian financial crisis, on mounting concerns over the country's fiscal health.
Shares were also under pressure across Asia and Hong Kong's Hang Seng index .HSI fell 2.35%, as tech stocks led a broad selloff. .HK
The Hang Seng is up 17% this year though, still the best-performing major stock market in the world, on AI bets after startup DeepSeek's sparkling debut.
Gold XAU= was up a touch at $3,022 per ounce. GOL/
(Reporting by Ankur Banerjee in Singapore and Alun John in London; Editing by Christian Schmollinger, Sonali Paul and Alex Richardson)
((ankur.banerjee@thomsonreuters.com;; Mobile - +65 8121 3925;))
