Investing.com - European equity indices rose Wednesday, as investors welcomed indications of a less destructive trade war between China and the U.S., reducing the chance of a global recession.

At 03:05 ET (07:05 GMT), the DAX index in Germany climbed 2.5%, the CAC 40 in France gained 1.5% and the FTSE 100 in the U.K. rose 1.3%.

Chinese trade tariffs to fall?

European stock markets have followed their Asian counterparts higher Wednesday after U.S. President Donald Trump indicated that the current trade tariffs against China were too high, and needed to be well below current levels of 145%.

This came after Treasury Secretary Scott Bessent reportedly said that the ongoing Sino-U.S. trade war was unsustainable, and that he expected a de-escalation soon.

These comments drove up hopes that the president will walk back further on his tariff agenda, lessening or even completely negating the potential impact of steep U.S. trade tariffs on major economies.

Sentiment has also been given a boost after Trump stated that had "no intention of firing" Jerome Powell, and his recent vitriol towards the Fed chair was just him angling for a rate cut or two.

Trump has repeatedly criticized Powell, raising fears that he would seek to remove him from his post at the central bank, undermining the independence of the critical institution.

Eurozone PMI data due

Back in Europe, economic data releases will include the latest purchasing managers’ index data on activity in the eurozone’s services and manufacturing sectors.

Additionally, Britain’s government borrowed £151.9 billion over the course of the 2024/25 financial year, considerably more than the official budget forecasters had estimated only a month ago, data showed on Wednesday.

In its forecasts published in March, the Office for Budget Responsibility had projected a budget deficit for the financial year ending in March 2025 of £137.3 billion.

Volvo struggles with North American market

Looking at the European corporate sector, Swedish truck maker Volvo (OTC: VLVLY ) reported a bigger-than-expected fall in first-quarter profit and lowered its North America truck market outlook, pointing to increased uncertainty around tariffs and their impact on global trade.

Dutch paint maker Akzo Nobel (OTC: AKZOY ) reported a small drop in its first-quarter core profit, beating expectations, citing cost reductions and higher pricing.

BE Semiconductor Industries (AS: BESI ) posted an 8.2% jump in order bookings for the first quarter of 2025, fueled by a rise in demand from Asian subcontractors supporting AI-focused data center applications.

Across the pond, Tesla (NASDAQ: TSLA ) stock rose premarket after the EV manufacturer reported profitability for its core auto business topped rock-bottom expectations in the first quarter, although it missed on other metrics such as revenue and net profit.

Helping the tone, chief executive officer Elon Musk said he would significantly cut back the time he devotes to the U.S. administration from next month and spend more time running his many companies.

Crude rise after U.S. increases sanctions on Iran

Oil prices rose Wednesday, continuing the previous session’s positive tone after the U.S. imposed fresh sanctions on Iran amid ongoing nuclear talks.

At 03:05 ET, Brent futures climbed 1.5% to $68.47 a barrel, and U.S. West Texas Intermediate crude futures rose 1.6% to $64.66 a barrel.

Both contracts settled nearly 2% higher on Tuesday.

The U.S. issued new sanctions targeting Iranian liquefied petroleum gas and crude oil shipping magnate Seyed Asadoollah Emamjomeh on Tuesday.

This action is part of Washington’s broader strategy to curtail Iran’s energy revenues, which are believed to fund destabilizing activities in the Middle East.

Both parties have agreed to commence expert-level discussions to design a framework for a potential nuclear deal, with the next meeting scheduled on Saturday in Oman.

Additionally, {{8849|U.S. crude oil inventories fell by around 4.6 million barrels last week, according to data from the American Petroleum Institute .

Official numbers on oil stockpiles are due later in the session.