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European stocks ignore tariff news as US copper soars

The European stock market opened Wednesday slightly higher, with little reaction to the announcement by U.S. president Donald Trump that he will impose a tariff of 50% on imported copper as well as levies up to 200% on pharmaceuticals.

Trump's remarks on Tuesday caused the price of Copper to reach record highs, and Wall Street to close down.

The equity markets quickly shrugged the news off. Asian stocks were mixed over night and the MSCI World Equity Index rose 0.1% at 0835 GMT.

The London FTSE 100 rose 0.1%, while the pan-European STOXX 600 increased by 0.4%.

The U.S. Dollar Index was unchanged at 97.574, and the euro dropped 0.1% to $1.1715.

The dollar reached its highest level against the yen in over two weeks, with Japan, which depends on exports, being the most far away from a deal between Washington and Washington among the major U.S. trade partners.

U.S. Copper Futures have risen by over 10%, reaching a new record, after Trump threatened to increase duties on this metal, which is essential for electric vehicles, military equipment, the power grid, and many consumer products.

The traders are waiting to see what Trump does in his trade war. He told 14 countries on Monday that their tariffs will be significantly higher from August 1, a new deadline.

Trump said that he will "probably" inform the European Union in two days of the rate they can expect on their exports to the United States. The Financial Times reported Wednesday that EU negotiators were close to a deal that would set higher tariffs for exports than the UK.

Investors are worried that tariffs could increase inflation and slow down economic growth. They will be watching the minutes of the U.S. Federal Reserve's latest meeting, which will be released on Wednesday.

Amelie Derambure is a senior multi-assets portfolio manager at Amundi. She said: "We are in the dark about tariffs because it is very difficult to determine the impact of the tariffs on the end-inflation or the margins on U.S. corporations, or on corporates in general."

She added, "The uncertainty is enormous."

Derambure stated that although equity markets expect tariffs to manageable, and are supported by the underlying expectation of growth. The impact of tariffs can be seen through the rising yields of fixed income.

The yields on U.S. Treasury bonds rose Tuesday and the auction for three-year Treasury notes saw a weak demand.

Treasury will be selling $39 billion of 10-year notes and $22 billion of 30-year bonds this Thursday.

The benchmark German 10-year yield was 2.635%.

Gold is in its third consecutive day of declines. It was down 0.4% for the day, at $3,286.17 an ounce.

Brent crude futures rose by 0.7% to $70.61.

(source: Reuters)