European stocks closed sharply higher on Friday, rebounding from the previous session’s losses, led by gains in auto manufacturers, luxury brands, and major banks. The Euro STOXX 50 climbed 1% to 6,492 and the STOXX Europe 600 advanced 0.6% to 655, with both indices reaching their highest levels in nearly two weeks.
Automakers Volkswagen, Mercedes-Benz, and BMW rose between 3% and 4%, ending a volatile week on a strong note as investors continued to gauge the sector’s exposure to US tariffs on Mexico and Canada, as well as the potential upside from stronger industrial profits in China. Robust Chinese economic data also lifted luxury stocks, with LVMH, Hermès, and Ferrari gaining more than 2%.
European banks rallied after Fed Chair Warsh adopted a more hawkish stance than in previous communications, contributing to a flattening of global yield curves. BNP Paribas added 2%, while UniCredit and BBVA advanced 1.5%. Expectations of an ECB rate hike firmed following the release of stronger-than-expected inflation data in France and Spain.
