02.06.202616:13:48UTC+00European Stocks Rebound

European stocks closed sharply higher on Tuesday, recovering part of last week’s losses as a pause in selling pressure on sovereign bonds supported risk appetite, despite the ongoing standoff between the US and Iran. The Euro STOXX 50 advanced 1.2% to 6,100, while the STOXX Europe 600 rose 0.7% to 625.

Technology shares led the rally following news that SK Hynix will double its wafer capacity and on upbeat signals from major industry players. ASML climbed 5% and Infineon jumped 9.5%. STMicroelectronics surged 15% after lifting its earnings target, and Prosus gained 9.4% after Tencent said it was testing a new AI agent.

Banks also finished notably higher in line with the rebound in sovereign bond markets, with UniCredit, BNP Paribas and Deutsche Bank all adding more than 1.6%.

On the macro front, preliminary Eurozone inflation data showed headline CPI rising to 3.2%, in line with expectations, while core inflation ticked up slightly more than forecast to 2.5%. The figures reinforced market expectations for a European Central Bank rate hike next week.