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Euro near 5-month high, European stocks gain

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U.S. CPI data due at 1230 GMT

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Tariffs keep traders cautious

(Updates throughout with European market open)

By Elizabeth Howcroft

PARIS, March 12 (Reuters) - Stocks rose in early

European trading on Wednesday and the euro held near a

five-month high, helped by news that Ukraine would support a

U.S. proposal for a 30-day ceasefire, but fears around U.S.

tariff plans kept traders cautious.

Financial markets were left scrambling on Wall Street on

Tuesday after U.S. President Donald Trump threatened to double

steel and aluminium tariffs on Canada to 50%, then rapidly

reversed course.

But U.S. indexes recovered some of their losses later in the

session and European futures jumped after Kyiv said it would

accept a U.S. ceasefire proposal and the U.S. said it would

restore military aid and intelligence-sharing to Ukraine.

At 1032 GMT, Europe's STOXX 600 was up 0.8% on the day, in a

sign of turnaround from its previous four consecutive days of

losses.

London's FTSE 100 was up 0.4% and Germany's DAX was

up 1.4%.

The MSCI World Equity index, which has lost around 4.1% so

far this month, was a touch higher, up 0.1% on the day

.

Stocks have suffered their heaviest selling in months lately

as Trump's focus on tariffs since taking office in January has

hurt investor, consumer and business confidence and prompted

fears of a U.S. recession.

Trump's tariffs on all U.S. steel and aluminium imports took

effect on Wednesday and the European Commission responded,

saying it would impose counter-tariffs on 26 billion euros

($28.40 billion) worth U.S. goods from next month.

"There has been a very sharp rebound in political

uncertainty in the U.S., especially regarding Mr Trump's

policies in tariffs, and that's really preventing markets from

continuing moving upward," said Amelie Derambure, senior

multi-asset manager at Amundi, Europe's biggest asset manager.

"The newsflow is quite painful for markets because it's all

about tariffs, which we know is negative (for) growth for the

U.S., but also for the rest of the world."

EURO NEAR FIVE-MONTH HIGH

The U.S. dollar index was little changed, at 103.52, but the

euro was near its highest in five months at $1.0913,

helped by the Ukraine news. The Russian rouble reached a more

than six-month high on Tuesday, but pulled back on Wednesday

.

"The risk premia that was embedded in the European currency

due to slow growth, political uncertainty etc, is diminishing

very rapidly," Amundi's Derambure said.

Euro zone government bond yields rose, with the benchmark

10-year German Bund yield near a 17-month high as Germany's

likely next chancellor, Friedrich Merz, worked to secure support

for a massive increase in state borrowing. Plans to create a 500

billion euro infrastructure fund and overhaul borrowing rules in

Germany are expected to cause structurally higher bond yields

for the country.

The German 10-year yield was up 5 basis points at 2.924%

.

In commodities, oil prices edged higher due to the weaker

dollar, but gains were limited by fears of a U.S. economic

slowdown and tariffs hurting global growth.

Brent futures were up 1.1% at $70.31 a barrel, while

U.S. West Texas Intermediate crude futures were up 1.2%

at $67.02 a barrel.

Markets are waiting for U.S. CPI data due at 1230 GMT, which

is expected to show inflation cooling.

Traders will also pay attention to Canada's central bank

meeting, where markets are expecting a seventh consecutive rate

cut.

($1 = 0.9155 euros)