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By Medha Singh, Sukriti Gupta and Lisa Pauline Mattackal
(Reuters) -European shares rebounded on Tuesday from a two-month low touched in the previous session, while the market braced for an impending April 2 deadline for U.S. reciprocal tariffs.
Barring a slight decline in the media sector, all major European sectors advanced, led by gains in bank and technology stocks.
The pan-European STOXX 600 index closed 1.1% higher, recovering from the prior day's losses as concern an escalating trade war would cause a global economic slowdown prompted a flight from riskier assets.
Most regional bourses rose over 1%.
The White House is expected to announce on Wednesday a new round of reciprocal levies, with reports that aides have drafted plans for 20% tariffs on most goods imported to the United States, the latest escalation in the trade war that has roiled markets.
David Morrison, senior market analyst at Trade Nation, said markets were struggling to predict the outcomes after "so many contradictory statements".
European stocks held firm in the year's first quarter as Germany's historic fiscal package and the prospects of slowing U.S. economic growth attracted investors to the region.
However, the benchmark index ended March with losses and has fallen 4.5% from last month's record peak as hopes for more targeted U.S. levies waned.
Goldman Sachs cut its 12-month forecast for the European benchmark index to 570 points from 580 earlier due to the potential impact of the U.S. tariffs.
The euro zone's manufacturing industry showed initial signs of a meaningful recovery last month, according to the latest survey. Separate data showed euro zone inflation eased as expected in March, while the core figure slowed more than expected.
"This increases the likelihood of further rate cuts from the European Central Bank in the near future," Morrison said.
A 7.4% jump in shares of Commerzbank lifted German shares 1.7%.
Software company SAP and semiconductor firm ASML were the biggest lifts to the STOXX 600, jumping 2.3% and 3.1%, while heavyweight Novo Nordisk snapped a nine session declining streak and rose 1.9%.
Bavarian Nordic rose nearly 2.3% after the Danish biotechnology company said the U.S. Food and Drug Administration had approved a freeze-dried formulation of its mpox and smallpox vaccine.
Airbus shares gained 3.2% after sources said the planemaker delivered about 70 planes last month, up sharply from 40 the month prior.
Italy is considering raising the ownership thresholds that trigger mandatory takeover bids in public companies, three sources told Reuters.
(Reporting by Medha Singh, Sukriti Gupta and Lisa Mattackal in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Barbara Lewis)
