European markets traded cautiously higher Monday after U.S. President Donald Trump announced that proposed tariffs on Mexican imports would be suspended indefinitely.
The pan-European Stoxx 600 edged 0.2% higher during the session, basic resources leading gains with a 1.2% rise while utilities fell 0.7%.
German stocks were closed for a holiday.
Trump pulled back from kickstarting another trade war last week, saying in a Twitter post Sunday that he has "full confidence" that Mexico will crack down on migration from Central America, after the two neighbors reached a consensus. The New York Times reported Saturday that the deal to avert tariffs largely comprised actions Mexico had already agreed to take.
Earlier, stocks in Asia traded higher Monday on the news, Hong Kong's Hang Seng index surging 2.03%, after official Chinese trade data for may beat forecasts and showed an overall trade surplus of $41.65 billion for the month.
U.S. Treasury Secretary Steven Mnuchin, a lead negotiator in trade talks with China, told CNBC on Sunday that Trump will decide whether to implement more tariffs on China after meeting with Chinese President XI Jinping later in June.
G-20 finance leaders on Sunday said that trade and geopolitical tensions have intensified, raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening U.S.-China trade conflict.
Back in Europe, the U.K. has also agreed a preliminary free trade agreement (FTA) with South Korea, which seeks to maintain existing trade arrangements post-Brexit. Meanwhile, Conservative party candidates launched their campaigns to replace Prime Minister Theresa May, who resigned as leader of her party on Friday but will remain Prime Minister until her successor is appointed.
Data released Monday showed that Britain's economy sharply contracted in April after the biggest fall in car production since records began, as manufacturers were unable to reverse closures planned for the country's departure from the European Union.
In corporate news, Reuters reported that Fiat Chrysler (FCA) and Renault are seeking ways to resuscitate their collapsed merger and secure the approval of Renault's alliance partner Nissan. FCA shares jumped 2%, also bolstered after self-driving car software startup Aurora said Sunday it would partner with the company to build autonomous platforms for commercial vehicles.
Renault climbed 2.3% as investors reacted to the merger news, while French Finance Minister Bruno Le Maire told CNBC Monday that the country has a strategy to reinforce a fragile alliance between Renault and Nissan.
In terms of individual stocks, Danish biotech company Novozymes continued to slide. falling 6.7%, while Swiss vacuum manufacturer Vat Group rose 3.9%.