European stock markets experienced a significant surge on Thursday as U.S. President Donald Trump announced he would not impose tariffs on European countries over Greenland. This decision follows weeks of escalating tensions and uncertainty. The German index rose 1.2%, the French index soared 1.3%, and the UK index increased by 0.7%, reflecting a broad-based market relief. Trump’s announcement at the World Economic Forum in Davos also included a framework deal on Greenland and the Arctic Region, easing investor concerns about potential trade conflicts.

Trump's reversal comes after threatening escalating tariffs on several European nations unless the U.S. could purchase Greenland, an autonomous Danish territory. The market had dropped sharply at the start of the week due to these threats. European markets are now focusing on U.S. economic data, including inflation figures and GDP reports, which are crucial for gauging the strength of the U.S. economy and potential Federal Reserve actions.

In corporate news, Associated British Foods reported a decline in Primark’s sales during the Christmas period, in line with earlier estimates. Meanwhile, BKT saw a 14.4% rise in net profit, and GALE reported record sales, indicating varied performance across sectors. Oil prices remained steady despite a build in U.S. crude inventories, as the threat of tariffs eased.

The strength of the EU-U.S. alliance remains uncertain, with ECB President Christine Lagarde calling for a deep review of the European economy to adapt to 'a new international order'. Investors are now awaiting the Energy Information Administration's report on U.S. crude inventories to gauge further market movements.