European shares rebound as Trump withdraws tariff threats over Greenland

By Niket Nishant

Jan 22 (Reuters) - European shares rebounded on Thursday after U.S. President Donald Trump abandoned tariff threats linked to Greenland and ruled out using force to seize the autonomous Danish territory.

The pan-European STOXX 600 .STOXX climbed 1.2% by 0905 GMT, regaining some poise after renewed trade war jitters knocked 1.9% off the benchmark earlier this week through Wednesday.

Trump said he withdrew the tariff threat following a meeting with NATO Secretary General Mark Rutte, during which they reached the framework of a deal for Greenland's future.

While details were scant, Trump's comments were enough to boost the risk appetite among investors.

VOLATILITY SUBSIDES BUT RISKS PERSIST

A gauge of euro zone equity volatility .V2TX fell 1.96 points, and is on track to dip for a second consecutive session after hitting its highest since November earlier this week.

Still, "the chaos is far from over and there'll be ongoing volatility in the markets because of the Trump administration's erratic foreign policy," said Kyle Rodda, senior financial market analyst at Capital.com.

Analysts also cautioned against complacency and urged investors to remain wary as tariff threats become an increasingly normalized negotiating tactic.

"The hidden risk is complacency. Investors get conditioned to ignore threats because 'it'll get walked back,' until the day it doesn't get walked back," said Matthew Tuttle, CEO of Tuttle Capital Management.

Traders are also combing through financial updates from companies for insight into profit outlook and underlying demand trends.

Shares of Volkswagen VOWG.DE climbed 5.7% after Europe's largest carmaker reported better-than-expected net cash flow for 2025.

Swedish hygiene products maker Essity ESSITYa.ST slipped 4.3% following fourth-quarter results, while UK insurer Beazley BEZG.L dropped 1% after it rejected a 7.67-billion-pound ($10.3 billion) takeover bid from Zurich Insurance ZURN.S.

Automobile .SXAP and telecom stocks .SXKP were the biggest gainers, up 2.8% and 2.1%, respectively.

Later on Thursday, investors will also look to U.S. core Personal Consumption Expenditures data for clues on interest rate trajectory.