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Trump announces new tariffs from October 1

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Pharmaceutical stocks fall in Asia, most indexes down

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Fed easing expectations recede on US economic resilience

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Dollar headed for weekly gain

By Naomi Rovnick and Rae Wee

LONDON, SINGAPORE Sept 26 (Reuters) - European stocks

rose on Friday, shrugging off U.S. President Donald Trump's

fresh round of punishing tariffs on the pharmaceutical sector

that knocked bourses in Asia, while Wall Street assets traded

cautiously ahead of U.S. inflation data.

The regional Stoxx 600 share index was up 0.5% in

early dealings, led by industrial and financial stocks, while

Germany's DAX added 0.5% and London's FTSE 100 rose

0.4%.

Trump announced the U.S. would impose 100% duties on

imported branded drugs, 25% tariffs on heavy-duty trucks and 50%

tariffs on kitchen cabinets.

Shares in major European drugmakers like Roche and

Novo Nordisk initially fell around 2% before

recovering those losses and edging higher.

MORE TARIFFS PRICED IN

Trump also said he would start charging a 50% tariff on

bathroom vanities and a 30% tariff on upholstered furniture,

with all the new duties to take effect from October 1.

Trump's announcements on new levies on Truth Social did not

include details about whether these would apply on top of

national tariffs, or whether there would be exemptions for

those, such as the European Union and Japan, that have already

secured trade deals with the U.S.

"The market was expecting more tariffs, and the sea of green you

see in Europe this morning shows this was priced," Premier Miton

fund manager Daniel Hughes said.

He added that better-than-expected U.S. economic data had

injected some caution into U.S. assets by lessening expectations

of future Fed rate cuts, which inflation data due later on

Friday could further reduce.

U.S. stock index futures were up 0.1-0.2% in

Europe, suggesting a modest rise at the open later.

FED CUT BETS RECEDE

A slew of data on Thursday suggested the U.S. economy remains in

rude health.

"Robust economic data - such as stronger durable goods orders

and an upward revision to GDP ... has shifted expectations

around future rate cuts and driven the dollar higher," said

Shier Lee Lim, Convera's lead FX and macro strategist for APAC.

Traders are pricing in just about 39 basis points worth of

rate cuts by December this year, compared to more than 40 bps

earlier this week.

"There was some bullish optimism built into markets, because

everybody started thinking we're going to get somewhere between

four and six rate cuts, and now I think we're probably looking

at four at most, and maybe even that seems a bit generous at

this point of time into the end of 2026," said Tony Sycamore, a

market analyst at IG.

While most Fed policymakers continue to strike a cautious tone

on the pace of future easing, the central bank's newest

policymaker, Stephen Miran, on Thursday pressed for sharp U.S.

interest-rate cuts to prevent labour market collapse.

DOLLAR GIVES UP SOME GAINS

The benchmark 10-year Treasury yield which

skirted 4% last week, was last trading at 4.1872%.

The dollar gave up some gains on Friday, though remained set

for a weekly gain of about 0.7% against a basket of currencies

, buoyed by the receding Fed cut bets.

The yen languished near the 150-per-dollar level and

was headed for a weekly fall of more than 1%, while the euro

last bought $1.1673.

In commodities, oil prices were on track for their biggest

weekly gain in three months. Brent crude futures were

flat on the day at $69.46 a barrel, while U.S. crude rose

0.3% to $65.15 per barrel.

Spot gold fell 0.1% to $3,745.53 an ounce.