European shares claw back lost ground on Huawei relief

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May 21 (Reuters) - European shares edged higher on Tuesday
after the United States temporarily eased restrictions on
China's Huawei, easing trade tensions and lifting
tariff-sensitive tech and auto stocks, while the banking sector
also gained.
The pan-European STOXX 600 .STOXX index was up 0.4% by
0745 GMT, with the trade-sensitive DAX .GDAXI outperforming
after the U.S. Commerce Department said it would allow Huawei
Technologies HWT.UL to purchase American-made
goods. The news came as a major relief to markets and lifted
European chipmakers, which had tumbled after reports suggested
they may pause shipments to the Chinese telecoms tech giant. The
tech sector .SX8P rose over 1% after losing almost 3% on
Monday.
Auto stocks .SXAP were around 0.4 percent higher, with
Daimler DAIGn.DE giving an additional boost after German
newspaper Handelsblatt reported the company was looking to cut
administration costs by 20%.
The banking index .SX7P , which closed at a more-than
three-month low in the previous session, climbed 0.7%
As earnings season nears its end, fewer companies are
reporting. Italy's biggest phone group Telecom Italia TLIT.MI
led gainers on the STOXX 600 after posting first-quarter
earnings in-line with expectations and confirming its guidance
for the next three years.
Swiss hearing aid maker Sonova SOON.S reported an increase
in full-year sales, sending its shares up 4%. Norsk Hydro NHY.OL rose 5.4% after Brazil gave the go
ahead for the company's Alunorte alumina plant to reopen.
Struggling Spanish retailer DIA DIDA.MC jumped 5% after
reaching an eleventh-hour agreement to secure financing, staving
off the imminent risk of having to start insolvency proceedings.
Defensive stocks - including real estate .SXDP , utilities
.SX6P and telecoms .SXKP - underperformed.
But investors remained cautious as the sudden about-turn in
China-U.S. talks over the last two weeks shattered confidence in
a speedy truce to the trade war that has roiled financial
markets for a year.
European equities have outperformed Wall Street since the
tariff war re-intensified on May 9, with the STOXX 600 .STOXX
rising 0.4% but the U.S. benchmark S&P 500 index .SPX losing
almost 1% during the same period.