Europe open: Stocks rise but gains limited after recent rally

(Sharecast News) - European stock markets opened flat on Tuesday with investors adopting a more cautious approach following the previous day's surge on the back of an easing of trade tensions between the US and China. The Stoxx 600 was up just 0.1% at 544.98 in early deals, having closed Monday's session at 544.49 - its highest since 27 March - following three days of solid gains.

After the unprecedented market sell-off last month following the start of the US trade war, which sent the Stoxx 600 to 469.89 on 9 April - its lowest in more than a year - the index has since jumped 16%.

While Wall Street indices rocketed overnight as US investors reacted to a temporary truce in US-China trade talks, with both nations agreeing to lower levies for 90 days as they continue negotiations, European and Asian markets were more subdued on Tuesday since they already had a chance to react to the news.

"Of course, the developments between the US and China mark a brief hiatus rather than a resolution," said Richard Hunter, head of markets at Interactive Investor.

"Even at the reduced levels, tariffs remain higher than before and it remains to be seen whether the damage which has already been wrought will have longer term and even permanent implications for the reputation of the US both domestically and indeed globally."

In economic data on Tuesday, the UK unemployment rate picked up from 4.4% to 4.5% in the three months to March, as expected by economists but the highest level in nearly four years. Average earnings growth excluding bonuses softened from 5.9% to 5.6%, slightly under expectations.

Looking ahead, the German ZEW survey tracking the economic sentiment of analysts and institutional investors will be out at 1000 BST, followed by the US inflation report at 1330 BST.

Market movers

Renewable energy stocks were surging early on, including Vestas Wind Systems, EDP Renováveis and Orsted.

Pharma giants Bayer and Grifols were putting in decent gains after Donald Trump's executive order to cut prescription drug prices - news of which hit sentiment in the sector on Monday - was largely deemed softer than expected.

London-listed DCC fell after underwhelming with its full-year results, which revealed a 5% rise in adjusted operating profit and plans to return £800m to shareholders, while Entain gained after a UBS upgrade to 'buy'.