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(Sharecast News) - European shares surged at the open on Thursday after US President Donald Trump claimed a "deal" had been reached on Greenland and removed his tariff threat on countries opposed to his annexation plans.
The pan-regional Stoxx 600 index was up 1.14% to 609 points at 0826 GMT with all major bourses higher.
Germany's DAX rose 1.2%, France's CAC 40 1.25% and the UK's FTSE 100 0.75% as traders hailed the return of the "Taco" trade - a reference to the "Trump always chickens out" phrase used to coin his U-turns when markets start to fall in response to his actions.
In a rambling and at times wildly inaccurate speech at the Davos economic forum on Wednesday, Trump pulled back from his bellicose rhetoric of the preceding week, announcing he would not use force to take the semi-autonomous Danish territory, but still wanted to create a "Golden Dome" missile defence shield on the island.
Trump later claimed he had a framework deal on Greenland - which he confused with Iceland several times during his monologue - after talks with Nato chief Mark Rutte and withdrew his threat of tariffs against eight European countries.
Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland faced levies of 10% from February 1 over their opposition to any US takeover.
Despite the dual relief of no military intervention against a Nato member, which would effectively end the 76-year-old alliance, and a trade war, analysts were wary of what might come next, especially as Trump was vague on specifics of the deal.
Political observers also noted that Nato has no mandate to negotiate on behalf of any member state over sovereign matters.
In equity news, shares in Computacenter soared after a positive trading update, while Norway's Telenor also jumped as the telecoms firm said it had agreed to sell its stake in Thailand's True Corporation for a total value of about 39 billion Norwegian crowns ($3.92bn).
Defence stocks slid as the threat of military confrontation in Greenland was taken off the table. Leonardo, Babcock, Rheinmetall, Saab and Hensoldt were all down.
Reporting by Frank Prenesti for Sharecast.com