By Medha Singh and Nikhil Sharma

(Reuters) -European shares ended higher on Tuesday in conjunction with global markets as investors grew optimistic about U.S. President Donald Trump adopting a more gentle tariff stance as a deadline of April 2 neared.

The pan-European STOXX 600 index closed 0.7% higher, hitting its first gain in four sessions.

Most regional stock markets also ended higher, led by a 1.2% gain in Spanish stocks, followed by a 1.1% advance in German shares.

Trump said on Monday that not all of his threatened levies would be imposed on April 2 and some countries may get breaks, a move that investors read as a sign of a softening stance, supporting sentiment across the globe.

“This week investors are in a kind of a wait and see mode,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

“Investors are getting used to the tariff shenanigans – on and off – and they learn to manage the news and the threats in a more revisable and plausible way.”

The “fear gauge” euro STOXX equity volatility index cooled to a more than three-week low, closing at 17.59 points.

Also helping sentiment in Europe was data from Germany, which showed business morale rose in March as companies expected a recovery after two years of contraction in Europe’s largest economy.

Data came on the heels of Berlin approving plans for a massive spending surge last week in a bid to revive a stagnant economy and scale up military spending.

The plans to invest hundreds of billions of euros in defence and infrastructure have led to upgrades for the euro zone economy, contributing to European equities outperforming their U.S. counterparts so far this year.

The index of European banks led the gains on Tuesday, soaring 2.1%, to end near a record high.

Swiss insurer Baloise advanced 4.3% after reporting a 60.6% surge in its 2024 profit. The broader insurers index firmed 1.3%.

Swiss logistics group Kuehne und Nagel warned its full-year operating profit could be lower than analysts’ expectations due to global economic uncertainty. Its shares fell 4%.

Home improvement retailer Kingfisher tumbled 14% to its worst day since March 2020, after reporting a 7% fall in annual profit, reflecting weak demand for more discretionary ‘big-ticket’ categories.

The stock dragged on the retail index, which fell 0.7%.

Meanwhile, the United States said Ukraine and Russia agreed separately to ensure safe navigation in the Black Sea and to implement a ban on attacks on each other’s energy facilities.

(Reporting by Medha Singh in Bengaluru; Editing by Sherry Jacob-Phillips, Sonia Cheema, Alexandra Hudson)

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