Europe midday: Shares pare gains as reality of US-EU trade deal sinks in

(Sharecast News) - European share pared gains on Monday as investors assessed the real impacts of the US-European Union trade deal agreed on Sunday.

The pan-regional Stoxx 600 index was up 0.54% at 553, while Germany's DAX rose 0.17% and France's CAC 40 gained 0.52%.

The deal between the two trading partners on Sunday means that the US will impose a 15% tariff on most EU imports, including autos, halving the 30% rate threatened by US President Donald Trump.

Steel and aluminium still face 50% tariffs - but this will now only apply above certain quotas.

Aerospace parts, some chemicals and raw materials will be exempt from any duties, while the EU will also agree to buy $750bn in US energy, and more military equipment.

"Stock and bond markets are welcoming the deal agreed by European Commission President Ursula von der Leyen and America's President Trump, largely in the view that the outcome could have been worse, the risk of an escalating trade war has been lowered and that the EU is better off than it was on 2 April, after the United States' initial launch of baseline and reciprocal tariffs," said AJ Bell investment director Russ Mould.

"However, the European Parliament still has to ratify the agreement, the EU is still worse off than it was on 1 April and defence stocks are in retreat, as Europe promises to buy more US materiel as part of the trade agreement.

"Even though financial markets seem happy to embrace a deal as being better than no deal, there are still material uncertainties as to what even the new agreement could mean once it is implemented - assuming the European Parliament ratifies it - and that applies to both sides of the Atlantic.

As expected, shares in auto and computer chip makers gained on the news. With car parts maker Valeo up, along with BE Semiconductor and ASML Holding.

Reporting by Frank Prenesti for Sharecast.com