Washington's Huawei reprieve triggers relief rally in bruised EU chip stocks

Share traders look at their screens during early afternoon trading on the day of the Brexit deal vote of the British parliament at the stock exchange in Frankfurt, Germany, January 15, 2019. REUTERS/Kai Pfaffenbach/Files

LONDON (Reuters) - Shares in European semiconductor companies, one of the most sensitive sectors to the global trade tensions, recovered from their worst day in 4-1/2 months on Tuesday after the White House backtracked overnight on tough limits on China's Huawei.

AMS, STMicroelectronics and Germany's Infineon shot higher - between 2-5.6% - in early deals after Washington temporarily eased trade limits on China's Huawei Technologies, in a move aimed at minimising disruption for its customers.

The technology index was up 1% at 0741 GMT, recovering some of the 2.8% lost on Monday as investors shunned the sector amid worries that Huawei suppliers would lose business or have to sever ties with the world's No. 2 smartphone company due to tough U.S. restrictions imposed last week.

The U.S. Commerce Department said it will allow the world's No. 2 smartphone company to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.

The easing trade tensions also brought some relief to car 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)