UPDATE 2-European stocks rise, Huawei reprieve boosts tech shares

  • Reuters
  • Stock Market News
UPDATE 2-European stocks rise, Huawei reprieve boosts tech shares
Credit: © Reuters.

* Tech stocks gain; U.S. eases some Huawei restrictions

* Norsk Hydro surges 5.6% after court lifts embargo on Alunorte

* Vestas Wind Energy gains on Fortum order (Updates to close, recasts, adds quotes from market analyst, portfolio manager)

By Aaron Saldanha

May 21 (Reuters) - European shares rose on Tuesday, with tech stocks contributing to gains as they recovered some ground lost in the previous session following a temporary easing of U.S. restrictions on China's Huawei.

The Unites States allowed Huawei Technologies to buy U.S.-made goods to maintain existing networks and provide software updates to existing Huawei handsets until Aug. 19 after blocking it from buying U.S. goods last week. pan-European STOXX 600 .STOXX gained 0.5%, with Germany's trade-sensitive DAX .GDAXI rising 0.9%. London-traded stocks .FTSE pared gains as the pound GBP= firmed on Prime Minister Theresa May's comments about the next Brexit votes. .L GBP/

"I think the easing up on Huawei is being seen as a sign that while the United States and China are unhappy with each other, neither side wants to burn the negotiation bridge at the moment," said Connor Campbell, an analyst at Spreadex in London.

The tech sector .SX8P rose 1.6%, making back a chunk of Monday's 2.8% slide. Chipmakers Infineon Technologies IFXGn.DE , AMS AMS.S and STMicroelectronics STM.PA gained between 1% and 4.2%.

Telecom Italia TLIT.MI rose 2.3% as it posted first quarter results and confirmed its guidance for the next three years. The firm's chief executive said it was in touch with five banks over plans to create a joint venture to offer consumer credit services. biggest phone group reported a "solid set of results", with core earnings beating the consensus expectation of analysts, Deutsche Bank (DE: DBKGn ) said in a note.

Norsk Hydro NHY.OL climbed 5.6% as a Brazilian federal court allowed the Oslo-traded firm to resume full output at the world's largest alumina refinery for the first time in more than a year. and gas stocks .SXEP added 1%, with Vestas Wind Energy VWS.CO leading the gains with a 3.9% rise. The Danish firm secured an order from Finland's Fortum FORTUM.HE for a 90 megawatt wind project and launched a wind turbine targeting the U.S. market. .SX7P rose 0.7%, lifting off Monday's more-than three-month closing low.

As risk appetite crept back into markets, defensive stocks in sectors such as telecommunications .SXKP underperformed.

However, stocks are not yet out of the woods, still plagued by investor uncertainty regarding the U.S.-China trade war.

"We've had a very powerful rally (year-to-date) and if there is a continued escalation or a failure to resolve where we go from here, there is certainly downside in equity markets," said Simon Webber, lead portfolio manager on the global & international equities team at Schroders (LON: SDR ).

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