(Reuters) – European shares bounced back on Wednesday after their worst day in more than six months as German leaders agreed to loosen the country’s so-called debt brake.
Germany’s blue-chip index jumped 2.6% as of 0811 GMT to trade near a record high.
The pan-European STOXX 600 index was up 1.1%. The benchmark index logged its worst day since August 2024 on Tuesday as U.S. President Donald Trump’s new 25% tariffs on imports from Mexico and Canada took effect.
The parties hoping to form Germany’s next government agreed to create a 500 billion euro ($534 billion) infrastructure fund and loosen fiscal rules to boost defence spending and revitalise growth.
Germany’s 10-year benchmark yield jumped 20 basis points to 2.680%.
The country’s construction firms and arms makers jumped. Cement maker Heidelberg Materials rose 7.8%, industrial services provider Bilfinger jumped 11.7% and construction group Hochtief advanced 7.6%.
Defence stocks Rheinmetall and Renk were up between 1.3% and 5.5%, respectively.
The index of European banks led the sectoral gains, rising about 4%.
In other stocks, Adidas fell 3.3% after the sport retailer forecast sales growth slowing slightly to up to 10% in 2025.
($1 = 0.9360 euros)
(Reporting by Nikhil Sharma; Editing by Mrigank Dhaniwala)
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