LIVE MARKETS-Could peace in Ukraine lower the heat on the euro from tariffs?

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COULD PEACE IN UKRAINE LOWER THE HEAT ON THE EURO FROM TARIFFS?

U.S. President Donald Trump stunned European allies last week when he announced he had held a call with Russian President Vladimir Putin and would start a peace process for Ukraine.

Optimism about a peace deal supported the euro, but markets are keen on the possible developments, with some analysts trying to connect the dots.

"If the contemplated 'peace deal' comes with important security guarantees from Europe to Ukraine, then Europe may have to spend more on defence, and Trump will have fulfilled a major foreign policy objective for Europe," says Thierry Wizman, global forex and rates strategist at Macquarie.

"Perhaps then, the pressure for U.S. import tariffs on Europe would fade too," he adds.

However, for the short term, scope for a further rally in European forex on a potential Russia-Ukraine ceasefire deal is limited, according to strategists at Barclays.

"Provisional details are negative for Europe's security, and the war premium is low," they say

Russian President Vladimir Putin sent a delegation to meet with senior officials from U.S. President Donald Trump's administration in Riyadh on Tuesday in their highest-level talks since Moscow sent its forces into Ukraine in 2022.

(Stefano Rebaudo)

EARLIER ON LIVE MARKETS:

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NEW RECORD HIGHS, WITH A BIT OF RED CLICK HERE

BEFORE THE BELL: EUROPE NEAR PEAKS, DEFENCE IN DEMAND CLICK HERE

ARMS STOCKS SOAR AHEAD OF UKRAINE PEACE TALKS CLICK HERE