Europe markets close higher; ECB's Lagarde says euro zone disinflation 'nearing completion'

European stock markets closed higher on Tuesday, with the regional Stoxx 600 index gaining 0.25%.

The U.K.'s FTSE 100 added 0.64% while France's CAC 40 and Germany's DAX rose 0.56% and 0.41%, respectively.

— Jenni Reid

The European Union's investment bank plans to more than double its defense funding for the bloc in 2025, the group's head Nadia Calviño told CNBC's Carolin Roth on the sidelines of the IMF Spring Meetings.

"It's clear that we need to reinforce and step-up our support to Europe's security and defense capabilities," the European Investment Bank president said.

"Last year in 2024 we started to get ready and expand our mandate, and this year we have expanded it further so that we will ingrain security and defense as one of our core objectives in all our projects."

Calviño added: "We will certainly increase our financing in this area. We doubled our investments last year, we are expecting to more than double in 2025 again and make a difference in terms of the security and strategic autonomy of Europe in these troubling times."

Many European nations this year held bilateral talks at which they pledged to increase their defense spending, partly in response to fears over the future of U.S. support under Trump for Ukraine and institutions such as NATO.

— Jenni Reid

European Central Bank President Christine Lagarde told CNBC that the disinflation process in the euro zone was "so much on track that we are nearing completion."

"I think that we're heading towards our target in the course of 2025," Lagarde said in an interview. The ECB targets inflation at 2%, and the March reading was 2.2%.

U.S. tariffs dampen economic growth and will likely be a "negative shock to demand," she said.

"The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the fiscal push by the defense investments, by the [German] infrastructure fund ... and the impact of [European] structural reforms."

"We need to continue checking the data," she added, saying the central bank would be "data dependent to the extreme."

Lagarde said the ECB was not factoring a euro area recession into its forecast because the bloc had already begun an economic recovery and had a large internal trading network that it was planning to strengthen, while also expanding its relationships with other partners.

— Jenni Reid

European Central Bank President Christine Lagarde told CNBC during an interview at the IMF Spring Meetings that Europe and the U.S. had scope to negotiate on tariffs.

However, Lagarde said she disagreed with Trump's past comments that the EU treats the U.S. unfairly on trade, noting that trade between the two "vast" economies was complex and spanned services and foreign direct investment as well as goods. The U.S. has a trade deficit with Europe in goods, with Trump taking particular umbrage at the gap in automotive exports, but the relationship is nearly balanced when accounting for services too.

"There might be sectors where serious negotiations need to be had ... it's not just on one side, it's on both sides," Lagarde said.

Lagarde also said that the shock from Trump's tariffs, along with renewed momentum for defense spending in Germany and beyond, had spurred a move toward long-discussed structural reform in Europe.

"Europe is now saying, 'OK, now it's time, and it's Europe's hour to actually do the things that have to be done.' So it [tariffs] obviously has an impact, some of it positive, some of it negative. I think on the growth front, we've always said that it would be lose-lose," she said.

— Jenni Reid

European Central Bank President Christine Lagarde said she hopes the prospect of U.S. President Donald Trump firing Federal Reserve Chair Jerome Powell is not on the table.

Asked by CNBC's Sara Eisen on the sidelines of the IMF World Bank Spring Meetings, Lagarde said she would not comment on the potential market implications of an event she hoped was not a risk.

It comes as Trump has been ramping up pressure on Powell to reduce interest rates, warning the U.S. economy could slow down otherwise.

Read the full story here.

— Jenni Reid

The International Monetary Fund downgraded its growth forecasts for both the U.S. and the U.K., citing the impact of Trump's tariffs.

The IMF is projecting U.S. growth of 1.8% in 2025, down 0.9 percentage points from its January forecast.

For the U.K., it sees annual growth of 1.1%, down by 0.5 percentage points.

— Jenni Reid

U.S. stocks rose on Tuesday morning, recovering some of their Monday losses.

The Dow Jones Industrial Average gained 400 points, or 1%. The S&P 500 also rose 1%, while the tech-heavy Nasdaq Composite added 1.1%.

— Lisa Kailai Han

Shares of wind energy developer Orsted were trading 7.8% lower after U.S. authorities halted construction of a competitor's offshore wind project.

The Trump administration last week ordered to halt construction activity on Equinor's Empire Wind offshore wind project off New York after the company had secured permits and approvals. Analysts suggest that investors are expecting other projects to be at risk of facing similar action.

Denmark's Orsted is currently building the 704 megawatt Revolution Wind and 924 megawatt Sunrise Wind projects in the United States and could be exposed to U.S. President Donald Trump's actions against the renewable energy industry.

"This immediately changes the rules of the game, as already approved projects are being halted, and it could potentially be very costly for Ørsted," Jacob Pedersen, head of equity research at Sydbank, said in a note to clients, according to an automated translation.

Such action, Pedersen said, is a "nightmare for the offshore wind industry in the US if already approved projects can be derailed and stopped."

— Ganesh Rao

Geopolitics could drive gold prices above a record $4,000 per ounce in the next 12 months, according to JPMorgan's commodity research team.

Gold is up 30% so far this year to $3,424.24, according to FactSet data. The jump builds on a 27% increase in 2024 and a 13% rise in 2023.

"Tariff-driven recession and stagflation risks are forecasted to continue to supercharge gold's structural bull run," said Gregory Shearer, JPMorgan's head of base and precious metals research.

The Wall Street bank said demand for the yellow metal from global central banks and investors, enabled by ETFs, is likely to be at "elevated levels" due to concerns over the global economy.

Shearer's team said that gold was the "most optimal hedge" for investors concerned about a "unique combination of stagflation, recession, debasement and US policy risks" this year and next.

— Ganesh Rao

London's FTSE 100 bucked the regional trend on Tuesday, trading 0.4% higher by 11:00 a.m. U.K. time. It put the index on course for its seventh consecutive day of gains and its biggest winning streak in two years.

The FTSE AIM All-Share index, home to companies listed on the London Stock Exchange's Alternative Investment Market, gained around 0.5%.

The biggest gainers in London included pest control firm Rentokil, British grocery giant Sainsbury's and sportswear retailer JD Sports.

— Chloe Taylor

Stockholm-listed shares of Swedish biotech firm Biotage jumped 56.1% by 10:25 a.m. in London, after private equity giant KKR made a $1.2 billion bid to take over the company.

In a statement on Tuesday, KKR said it had made a cash offer to Biotage shareholders of 145 Swedish krona ($15.24) per share. The offer values the company at around 11.6 billion krona, or $1.2 billion.

Biotage's Board of Directors has recommended that shareholders accept the offer.

KKR is currently Biotage's biggest shareholder, holding 17% of outstanding shares through Gamma Biosciences, which it owns and operates. Other shareholders include Vanguard, BlackRock and Norges Bank Investment Management, which controls Norway's $1.8 trillion sovereign wealth fund.

— Chloe Taylor

Healthcare stocks were among the biggest losers on the Stoxx 600 on Tuesday, with the regional Stoxx Healthcare index down 1.5% by 9 a.m. London time.

Novo Nordisk and Zealand Pharma, both down by around 8.4%, tumbled to the bottom of the Stoxx 600 index after U.S. rival Eli Lilly posted positive results from a late-stage trial of its oral weight loss drug orforglipron.

— Chloe Taylor

Swiss pharmaceutical giant Roche on Tuesday said that it would invest $50 billion in the U.S. over the next five years, amid concerns about the impact of possible new White House tariffs on pharma goods from abroad.

The investment will create more than 12,000 jobs, Roche said — 1,000 with the company, and the remainder to support new U.S. manufacturing capabilities.

Shares of Roche were 1.2% lower at 8:43 a.m. in London.

Read the full story here.

The euro was around 0.2% higher against the dollar by 7:08 a.m. in London, trading at $1.154.

Meanwhile, the British pound gained almost 0.3% against the greenback to trade at $1.341, and the Swiss franc was 0.1% higher.

The U.S. dollar has been on a largely downward trajectory since U.S. President Donald Trump's so-called liberation day tariffs sparked widespread market volatility earlier this month, even after the levies were paused for 90 days for most countries.

— Chloe Taylor

The dollar has been sliding and the ripple effect on other currencies has brought a mix of relief and headache to central banks around the world.

Uncertainty about U.S. policymaking has led to a flight out of the U.S. dollar and Treasurys in recent weeks, with the dollar index weakening more than 9% so far this year. Market watchers see further declines. 

According to Bank of America's most recent Global Fund Manager Survey, a net 61% of participants anticipate a decline in the dollar's value over the next 12 months — the most pessimistic outlook of major investors in almost 20 years.

Read the full story here.

— Lee Ying Shan

European markets are expected to open in flat to mixed territory Thursday.

The U.K.'s FTSE 100 index is expected to open 6 points higher at 8,404, Germany's DAX flat at 21,933, France's CAC 2 points lower at 7,475 and Italy's FTSE MIB 53 points lower at 35,942, according to data from IG.

Earnings are set to come from Unilever, Banco Sabadell, Sanofi, Eni, BNP Paribas and Dassault Systemes. Data releases include French consumer confidence and EU new car registrations.

— Holly Ellyatt