European Shares Remain Subdued as Markets Await U.S.-China Trade Talks

European stocks traded cautiously on Monday, following a positive week, as investors remained on edge ahead of a new round of Sino-U.S. trade talks. The pan-European STOXX 600 index held steady at 553.21 points at 0746 GMT, after achieving gains over the previous four sessions.

However, trading volumes were thin, with several markets, including those in Switzerland, Denmark, and Norway, closed for the Whit Monday holiday.

Investors are closely watching the high-level trade discussions scheduled between top U.S. and Chinese officials in London. The hope is that the talks will bring progress in de-escalating the trade tensions that have been weighing on global markets. The meeting follows a phone call between U.S. President Donald Trump and Chinese President Xi Jinping last week, during which both leaders agreed to continue discussions in an effort to resolve the ongoing trade war. The conflict, which initially centered on tariffs, has now expanded to include export controls and other trade-related restrictions.

China made headlines on Friday, offering to accelerate the review and approval process for rare earth exports to European Union companies. This gesture comes as rare earth minerals, vital for many high-tech industries, have been a point of contention in the trade dispute.

Automakers, an industry highly exposed to rare earth mineral shortages, were among the most mixed performers early on Monday, with some stocks gaining and others slipping as traders awaited further updates from the trade talks.

The STOXX 600 ended last week on a positive note, driven by optimism that a potential thaw in trade tensions could support economic growth. Additionally, a stronger-than-expected U.S. jobs report last week helped soothe concerns about the strength of the labor market, giving global equities a boost.

This week, U.S. inflation data will be closely watched to assess any impact from President Trump’s unpredictable tariff policies. Analysts will be watching for signs that the tariffs have begun to influence inflationary pressures in the broader economy.

On the domestic front, a slew of key regional data will be released, including UK unemployment figures and GDP growth, which are expected to offer further insights into the economic outlook.

In stock-specific news, London-listed Alphawave surged more than 23% after U.S. chipmaker Qualcomm agreed to acquire the semiconductor company for approximately $2.4 billion.

Revolution Beauty also saw strong gains, jumping 10.8% as it was reported that Frasers Group, led by billionaire Mike Ashley, was conducting due diligence for a potential takeover of the cosmetics company.

On the downside, WPP, the advertising giant, saw its stock slip 1.9% after the company announced that its CEO, Mark Read, would retire by the end of 2025 after serving in the role for seven years.

In summary, European markets are holding steady as investors weigh the potential for trade progress between the U.S. and China, with inflation and key economic data in focus throughout the week.