European shares rise on AI optimism as investors eye China summit
AI-fueled buying pushed European stocks higher even as Middle East tensions and a Beijing summit kept geopolitical risk on the table.
Artificial intelligence optimism kept European equities in the green as investors brushed past stalled U.S.-Iran peace talks and watched a high-stakes U.S.-China summit in Beijing. The pan-European STOXX 600 rose 0.4% to 614.05 points by 0703 GMT after climbing 0.8% on Wednesday, while Britain’s FTSE 100 added 0.2%. Trading was thinner than usual because several local markets were closed for a public holiday, but the move still showed how quickly sentiment was being driven by a narrow set of powerful themes.
Fresh UK data added another reason for traders to keep buying risk. The Office for National Statistics said monthly GDP rose 0.3% in March 2026, an unexpected expansion that gave investors a cleaner read on the British economy at a time when growth concerns and policy uncertainty are still shaping asset prices. The European Central Bank also remained in focus after chief economist Philip Lane said further rate hikes might be needed to fight inflation. The ECB cut its deposit facility rate to 2.75% in February 2025, but its guidance still ties future decisions to the inflation outlook, underlying inflation and the transmission of policy. Money markets were pricing in more than two ECB increases this year, with the first expected in June.
Burberry offered a sharper reminder that geopolitics can still cut directly into corporate earnings. The luxury group said fiscal fourth-quarter sales rose 5% and full-year sales rose 2%, but sales in EMEIA fell 2% in the quarter because reduced tourism linked to the Middle East conflict hurt demand. Burberry said the Middle East accounts for about 2% of annual group sales, a small direct exposure that still translated into a 4% drop in the share price as investors weighed the hit to travel flows and spending. Chief executive Joshua Schulman has described the year as an inflection point, a sign that management sees the recovery as real but still fragile.
The contradiction in European markets is clear: investors are paying up for AI-linked growth and the hope of stronger earnings, even as unresolved risks in the Middle East and U.S.-China relations hang over the macro outlook. That confidence can last if earnings broaden beyond a handful of technology and industrial names. But with the STOXX 600 representing 600 companies across 17 European countries, the day’s gain also showed how easily a narrow rally can mask a market still vulnerable to geopolitics, higher oil prices and the next policy surprise.
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