NEW YORK, July 27 (Reuters) - Investors cautiously

embraced news of a trade deal Sunday between the U.S. and

European Union, a move that is expected to bring clarity for

companies and some certainty to markets ahead of Friday's

tariffs deadline.

U.S. President Donald Trump announced the United States has

struck a framework trade deal with Europe.

The deal includes a 15% tariff on EU goods entering the

U.S. and significant EU purchases of U.S. energy and military

equipment.

"It's really in line with the Japan deal, and I assume

investors will view it positively as they viewed the Japan

deal," said Rick Meckler, partner at Cherry Lance Investments in

New Vernon, New Jersey.

Optimism over easing trade tensions broadly helped push U.S.

stocks to record highs last week and lifted European shares to

their highest since early June. Trump's April 2 "Liberation Day"

announcement of sweeping global tariffs sent stocks plunging in

the immediate aftermath, due to spiking fears about a recession

that have since faded.

Hopes for a deal with Europe were reinforced by Trump

striking a trade agreement with Japan on July 23.

Still, investors have been bracing for increased volatility

heading into August 1, which the U.S. has set as a deadline for

raising levies on a broad swath of trading partners.

"The two obvious reactions that you would expect are upside

in the euro and upside in equity futures. I don't think equities

in particular needed much of an excuse to rally and now they've

got one," said Michael Brown, senior research strategist at

Pepperstone in London.

The announcement came after European Commission

President Ursula von der Leyen traveled to Scotland for talks

with Trump to push a hard-fought deal over the line.

In the agreement with Japan, the country's auto sector,

which accounts for more than a quarter of its U.S. exports, will

see existing tariffs cut to 15% from levies totaling 27.5%

previously.