German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 17, 2025. REUTERS/staff

By Sukriti Gupta

(Reuters) -European shares climbed on Monday, as initial concerns over the stability of the U.S. banking sector eased, while fresh comments from U.S. President Donald Trump helped calm trade tensions, encouraging investors to move toward riskier assets.

The continent-wide STOXX 600 index was up 0.6% at 569.37 points, as of 0915 GMT. The benchmark closed nearly 1% lower on Friday.

European banks rose 0.8% on Monday, ranking among the top gainers in the STOXX 600, as U.S. banking stocks rebounded in the previous session following quarterly results from regional lenders that helped ease worries over credit risks.

Lifting the mood, Trump told reporters that he could lower tariffs on China as long as Beijing did "things" for the United States too, including resuming purchases of soybeans.

"There is this optimism that the credit worries are easing and the optimism that the U.S.-China trade tensions will also be easing. They are driving the European markets higher today," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

The STOXX aerospace & defence index climbed 2.1%, recouping from a sharp fall on Friday when news of a planned summit on the war in Ukraine jolted the sector.

Most major regional indexes traded higher except France's CAC 40, which edged 0.1% lower. S&P Global downgraded France's rating a notch on Friday, warning that political instability put the government's efforts to repair its finances at risk.

Meanwhile, the Israeli military said on Sunday a ceasefire in Gaza had resumed after an attack killed two of its soldiers and prompted a wave of airstrikes that Palestinians said killed 26 people, in the most serious test yet of this month's truce.

Swissquote's Ozkardeskaya said the news from Gaza is one of the major drivers for the defence sector on the day, also noting that despite the optimism about Ukraine "at the end of the day Donald Trump has not necessarily been successful in materially ending the war so far ... so, that optimism is not on a strong footage to lead to a sustained sell-off across the defense sector."

Rheinmetall rose 4.1%, Hensoldt climbed 6.1%, while Renk and Saab added 5.5% and 2.7%, respectively.

Among other movers, Kering jumped nearly 4% after the Gucci owner agreed to sell its beauty business to L'Oreal for 4 billion euros ($4.66 billion).

Holcim rose 2% on a 1.85-billion-euro ($2.16 billion) agreement to acquire German walling systems maker Xella.

France-based car parts supplier Forvia lost 5.8% after reporting a 3.7% drop in its third-quarter sales.

British discount retailer B&M slumped 17.4% after it trimmed its annual profit forecast.

On the data front, German producer prices fell more than expected in September.

(Reporting by Sukriti Gupta in Bengaluru; Editing by Sherry Jacob-Phillips)