Europe open: Stocks bounce as Trump sounds optimistic note on trade talks

Stocks are bouncing back from the previous day's thrashing with investors reacting to the more dovish sounding headlines on Tuesday around the intensifying US-China trade conflict, even as analysts and policymakers tried to gauge the potential downside for stocks from a protracted commercial dispute between the two economic giants.

Overnight, the head of the Federal Reserve bank of Boston, Eric Rosengren, said in an interview with Bloomberg that an escalation in the trade spat might result in a sustained boost to inflation, although it was too soon to know what it meant for the economy, but added that the reaction of financial markets would matter.

The year-to-date rally in stocks had been based partly on expectations of a resolution to the trade spat, as well as a turnaround in the US central bank's policy bias.

"To the extent we get sharp movements in financial markets that have wealth effects and other effects, those are pretty unpredictable, so it does become important how much the market reacts over time to the announcements of tariffs," Rosengren said.

As of 0920 BST, the benchmark Stoxx 600 was adding 0.38% to 373.98, alongside a gain of 0.25% to 11,905.82 for the German Dax while the FTSE Mibtel had climbed 0.50% to 20,696.89.

In the background, in remarks made overnight, US President Donald Trump said the success or failure of the last round of trade talks would be apparent "in about three or four weeks".

"You never really know, right? But I have a feeling it's going to be very successful," he said.

Speaking from Russia, China's top diplomat, Wang Yi, said both countries had the "ability and wisdom" to reach a 'win-win' outcome.

Still ahead for later in the day, Eurostat was set to publish a reading on euro area industrial output for March and the ZEW institute was due to release the results of its May economic sentiment survey for Germany.

Both were scheduled for release at 1000 BST.

Also in Germany, earlier the Federal Office of Statistics confirmed that on a harmonised basis, consumer prices in the Eurozone's largest economy advanced at a year-on-year pace of 2.1% in April.

It was a similar story in Spain, with INE reporting that harmonised CPI rose by 1.6% last month, which was in-line with its preliminary estimate.