LONDON — European stocks closed preliminarily higher on Wednesday, with luxury brands driving gains, as the region's markets rebounded after touching a two-week low in the previous trading session.
The pan-European Stoxx 600 closed the session almost 0.7% higher, with most sectors in positive territory.
France's CAC 40 was up 2% at the closing bell — marking its biggest daily gain since May — with investors closely monitoring Prime Minister Sebastien Lecornu's new government after he promised on Tuesday to suspend a controversial pension reform until after the 2027 election, one of the signature economic policies of President Emmanuel Macron.
The suspension of the reform was welcomed by the Socialists, who said they would support Lecornu's government when confidence votes, called by opposition parties, are held on Thursday.
Meanwhile, Italy's FTSE MIB closed 0.4% lower, and the U.K.'s FTSE index was down 0.3%, as Germany's DAX oscillated above and below the flatline through the day to end 0.1% lower.
Europe's luxury brands led day's trading, as LVMH jumped 12.2%. Christian Dior, which owns a large stake in LVMH, gained almost 12%. Kering traded around 4.8% higher, as Moncler added 4.7% and Burberry rose more than 3.4%. Overall, the Stoxx Europe Luxury 10 was up almost 6.5%, marking its biggest daily gain since January and its second-best intraday performance this year.
In contrast, European defense stocks edged lower. German tank parts manufacturer Renk shed 8.6% through the session, while fighter jet maker Saab dropped more than 4.9%. Hensoldt had fallen 5%, as Rheinmetall was down more than 5% by the time the market closed.
Elsewhere, copper producer Aurubis dropped 6.5% after German steel producer Salzgitter, which owns a large stake, sold 500 million euros ($582 million) in convertible bonds, which can be exchanged for about 7% of Aurubis' stock.
Global markets
The change in sentiment comes after regional stocks touched on two-week lows on Tuesday, amid the threat of a new trade dispute between the U.S. and China.
U.S. President Donald Trump threatened China last Friday with a fresh wave of tariff increases to "financially counter" new export controls that China imposed on rare earth minerals.
Then on Tuesday he criticized China for not buying soybeans, calling it an "an economically hostile act." He also threatened "retribution" such as a cooking oil embargo.
Asia-Pacific markets traded higher overnight, while U.S. stocks rose following a volatile session.
Investors were also watching for news from the IMF and World Bank annual meetings in Washington.
The meetings brought together central bankers, ministers of finance and development, the private sector, civil society and academia to discuss issues of global concern, including the global economy, poverty eradication and economic development.