European stock markets rose on Thursday after US President Donald Trump cancelled plans to impose new tariffs on eight European countries, easing trade tensions and triggering a rebound in risk sentiment.

The rally marked the first gain for European equities this week, following several sessions of losses driven by fears of an escalating transatlantic trade dispute.

Germany’s DAX and France’s CAC 40 both climbed 1.3%, while the pan-European Stoxx 600 advanced 1.2%. In the UK, the FTSE 100 added 0.2%, lagging its continental peers but still benefiting from the improved mood across global markets.

Tariff Threats Withdrawn After Greenland Dispute

Earlier this week, Trump had announced plans to impose fresh tariffs from 1 February on Germany, France, the UK, Denmark, Sweden, the Netherlands, Norway and Finland, unless an agreement was reached for the United States to purchase Greenland.

The proposal unsettled markets and contributed to a sharp global sell-off at the start of the week. Trump only withdrew his earlier threat of using military force to acquire Greenland on Wednesday during a speech at the World Economic Forum in Davos.

Later that day, the US president said on his social media platform that he would not proceed with the tariffs, claiming to have reached an unspecified agreement with Nato Secretary General Mark Rutte.

Analysts described the market reaction as a return of the so-called “Trump Always Chickens Out” (TACO) trade, a pattern where assets rebound after Trump retreats from aggressive trade or geopolitical threats.

Wall Street Opens Higher

US stocks also moved higher on Thursday, extending a rebound that began late in the previous session. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite were all up around 0.5% in early trading, as investors welcomed the easing of trade tensions.

US equities had recovered on Wednesday afternoon in New York after suffering heavy losses earlier in the week.

Currencies and Gold Steady

In currency markets, the US dollar was little changed against major peers in London trading. The euro stood at $1.1689, while sterling traded at $1.3427.

Meanwhile, gold prices remained near record highs, reflecting continued demand for safe-haven assets amid lingering uncertainty over global trade and the long-term appeal of US assets. Spot gold was flat at $4,833 per troy ounce.

Outlook

While Thursday’s rebound offered relief for investors, analysts cautioned that market volatility could remain elevated as geopolitical risks and trade policy uncertainty continue to influence sentiment.

For now, the pullback in tariff threats has provided a short-term boost to equities, highlighting how sensitive global markets remain to political signals from Washington.