Europe midday: Shares extend gains on Ukraine peace hopes, China rate cut

(Sharecast News) - European shares extended gains on Tuesday after China cut interest rates to record lows as the central bank tried again to stimulate the world's second-largest economy while hopes of a ceasefire in Russia's war on Ukraine also boosted sentiment.

The pan-regional Stoxx 600 index was up 0.62% to 553 at midday with all major regional bourses higher. Germany's DAX hit a record high before settling back to be up 0.65% to 24,059.

In economic news, the People's Bank of China slashed its one-year loan prime rate (LPR), a key reference for household and business lending, to 3% from 3.1%, while the five-year LPR, which is used for mortgages, was cut by 10 basis points to 3.5%. Economic growth has been anaemic on the back of weak consumer demand and an ongoing crisis in the property sector.

Australia also cut rates to a two-year low, citing cooling inflation and an extremely uncertain outlook thanks to US President Donald Trump's erratic tariff policies.

The Reserve Bank of Australia cut its main cash rate by 25 basis points to 3.85% and remained cautious on further easing after a two-day policy meeting.

''Renewed hopes for a ceasefire between Ukraine and Russia, combined with another wave of stimulus for China's economy has provided optimism in early trading. Following a call with (President Vladimir) Putin, President Trump was bullish about negotiations for a ceasefire between Ukraine and Russia starting immediately," said Hargreaves Lansdown analyst Susannah Streeter.

"Of course, hanging on the words of unpredictable leaders isn't solid ground, and hopes for a ceasefire have risen before, only to be dashed. Russia has indicated that any progress is likely to be slow, with Putin talking about a 'memorandum on a possible future peace agreement'."

"Nevertheless, for now it's being seen as progress. If a deal is reached, it could pave the way for sanctions relief for Russia, and its crude supplies to flow more freely into world markets. That possibility of higher supplies globally is pushing down the price of Brent, which is trading around $65 a barrel."

On the equities front, shares in renewable energy firms Oersted surged by 15.74% and Vestas Wind 6.5% after the Trump administration lifted a stop-work order on a major offshore wind facility planned off the coast of New York.

Fast food chain Greggs was on the menu after an upbeat trading update, while distributor Diploma surged after lifting full-year organic revenue growth forecasts.

Reporting by Frank Prenesti for Sharecast.com