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Washington Huawei deferral triggers relief rally in the battered EU-chip shares

FILE PHOTO: The logo of the semiconductor manufacturer Infineon, is on show at the Austrian headquarters in Villach, Austria, 3 June 2018. REUTERS/Lisi Niesner/File Photo

LONDON (Reuters) – Shares in European semiconductor companies, one of the most sensitive sectors of the global trade tensions, recovered from their worst day in 4-1/2 months on Tuesday after the White House backtracked night of heavy restrictions on the chinese Huawei.

AMS, STMicroelectronics and the German Infineon shot higher between 2-5.6% – in early deals after Washington temporarily eased trade restrictions on the chinese Huawei Technologies, a move aimed at minimising disruption for its customers.

The technology index was up 1% at 0741 GMT, the restoration of some of the 2.8% lost on Monday as investors shunned the sector amid concerns that Huawei suppliers to lose customers or to sever ties with the world’s No. 2 smartphone company as a result of heavy restrictions imposed last week.

The U. S. Commerce Department said that it will allow the world No. 2 smartphone company to purchase American-made goods in order to maintain existing networks, and software updates for existing Huawei phones.

The easing of trade tensions also brought some relief to auto-makers and suppliers. The European index rose as much as 1.1% in early deals and was up 0.3% at 0734 GMT.

Reporting by Josephine Mason and Helen Reid

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