By Barbara Kollmeyer, MarketWatch , Emily Horton
Trade headlines also inspire gains
European markets got into rally mode on Tuesday, boosted by upbeat economic data out of the region's biggest economy, and positive signals on the global trade front.
Pharmaceuticals, oil and auto stocks were driving the gains.
What did markets do?
The Stoxx Europe 600 surged nearly 2% to 342.05, after closing down 1.8% on Monday.
Germany's DAX 30 rose by 1.9% to 10,822.03, while France's CAC was up by the same amount, to 4,833.20.
The U.K.'s FTSE 100 jumped 1.7% to 6,835.92 , and Italy's FTSE MIB Italy index gained 1.5% to 18,679.71.
The euro was stronger versus the U.S. dollar, fetching $1.1383, up from $1.1358 late Monday in New York. The British pound rose to $1.2608 from $1.2561.
What is driving the markets?
President Donald Trump tweeted Tuesday (https://twitter.com/realDonaldTrump/status/1072480983683870720) that the U.S. was engaged in "very productive conversations" with China. A fresh round of trade talks kicked off late Monday via a phone call between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, according to The Wall Street Journal (https://www.wsj.com/articles/u-s-china-trade-talks-get-under-way-11544498812).
Along those lines, auto stocks in Europe and the U.S. surged after a report from Bloomberg News (https://www.bloomberg.com/news/articles/2018-12-11/china-is-said-to-move-on-u-s-car-tariff-cut-trump-tweeted-about) that the Chinese government is reviewing a proposal to cut tariffs on U.S. made autos to 15% from 40%.
Cheer on the European economic front also lifted investor spirits. The ZEW economic research institute reported that German economic expectations rose in December , though they remained below the long-term average. Those expectations came in above forecasts.
And in France, markets got a lift after President Emmanuel Macron announced plans to cut taxes and lift wages for workers (https://www.wsj.com/articles/macron-pledges-tax-cuts-minimum-wage-hike-to-placate-protests-1544474039?mod=searchresults&page=1&pos=9), in a bid to calm the civil unrest that has been gripping Paris and other cities.
The pound recovered some after hitting its lowest level in more than a year on Monday after U.K. Prime Minister Theresa May delayed Tuesday's landmark parliamentary vote over the proposed Brexit deal. She plans to meet EU leaders in a bid to rescue the deal (https://news.google.com/articles/CBMiL2h0dHBzOi8vd3d3LmJiYy5jby51ay9uZXdzL3VrLXBvbGl0aWNzLTQ2NTE1NzQz0gF5aHR0cHM6Ly93d3ctYmJjLWNvLXVrLmNkbi5hbXBwcm9qZWN0Lm9yZy92L3Mvd3d3LmJiYy5jby51ay9uZXdzL2FtcC91ay1wb2xpdGljcy00NjUxNTc0Mz9hbXBfanNfdj0wLjEjd2Vidmlldz0xJmNhcD1zd2lwZQ?hl=en-GB&gl=GB&ceid=GB%3Aen).
What stocks are active?
Pharmaceutical stocks gained ground, with Novartis (NOVN.EB) climbing 2.7%, Novos Nordisk AS (NOVO-B.KO) climbed 1.2%.
Advertising giant WPP rose by almost 5%, after the company said it will simplify its structure in an effort to pursue savings goals by 2021.
Ashtead Group, the equipment rental company, climbed nearly 3% on the news of a profit rise and positive expectations for their year-end results .
Among autos, Daimler and BMW AG (BMW.XE) each jumped 3.3%,