Volkswacht Bodensee - Stock markets advance after Japan-US trade deal

Investors were also cheered by news that Washington had reached agreements with Indonesia and the Philippines, stoking optimism that more countries will follow suit before Trump's August 1 deadline.

"News of a trade agreement between the US and Japan is fostering optimism among investors that further deals might be reached before punishing tariffs come into force," said AJ Bell investment director Russ Mould.

Wall Street pushed higher, with the S&P 500 rising off a record close to flirt with its all-time high.

In Europe, London's FTSE 100 ended the day up 0.4 percent, after hitting another record high at the open.

Paris piled on 1.4 percent and Frankfurt also advanced, tracking gains in Asia.

Tokyo surged over three percent after the US president announced a deal lowering tariffs on some Japanese goods to 15 percent, down from the threatened 25 percent.

The deal will also reduce tolls on autos -- a sector accounting for eight percent of Japanese jobs -- to 15 percent, compared with 25 percent for other countries.

In return, Japan pledged to invest $550 billion in the United States, Trump said on social media.

Shares in carmaker Toyota rocketed higher by more than 14 percent, Mitsubishi 13 percent and Nissan eight percent.

European carmakers also rallied, Stellantis jumping around nine percent in Paris.

Shares in German automakers BMW, Mercedes Benz, Porsche and Volkswagen all rose more than four percent.

The deal is providing optimism that other countries can "seal good deals if they pledge investment into the US", said Kathleen Brooks, research director at trading group XTB.

Trump also hailed an agreement with Manila to lower levies on Philippine goods by one percentage point to 19 percent, while tariffs on Indonesia were slashed from 32 percent to 19 percent.

Shares in Manila and Jakarta rallied.

The announcements boosted hopes of other deals before next Friday's deadline, though talks with the European Union and South Korea remain elusive.

US Treasury Secretary Scott Bessent said Wednesday that Washington was making progress on tariff negotiations with the European Union, with talks planned later in the day between the bloc's top trade negotiator and his American counterpart.

Bessent will meet his Chinese counterparts in Stockholm next week, as a separate mid-August deadline approaches for levies on Chinese goods to snap back to steeper levels.

Japan's 10-year government bond yield soared to the highest since 2008 after media speculation that Prime Minister Shigeru Ishiba would resign after a weekend election debacle. He denied the reports.

Elsewhere in Asia, Hong Kong hit its highest level since late 2021, while Shanghai was flat.

Eyes are also on the release of earnings from Google parent Alphabet, Tesla and Intel, with investors looking at performance of AI investments.

If Alphabet's "AI investments pay off, then it may ignite another rally in tech stocks, especially those with AI exposure", said Brooks.

- Key figures at around 1530 GMT -

New York - Dow: UP 0.5 percent at 44,741.11 points

New York - S&P 500: UP 0.3 percent at 6,328.75

New York - Nasdaq Composite: UP 0.1 percent at 20,918.76

London - FTSE 100: UP 0.4 percent at 9,061.49 (close)

Paris - CAC 40: UP 1.4 percent at 7,850.43 (close)

Frankfurt - DAX: UP 0.8 percent at 24,240.82 (close)

Tokyo - Nikkei 225: UP 3.5 percent at 41,171.32 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 25,538.07 (close)

Shanghai - Composite: FLAT at 3,582.30 (close)

Dollar/yen: DOWN at 146.37 yen from 146.66 yen on Tuesday

Euro/dollar: DOWN at $1.1733 from $1.1755

Pound/dollar: UP at $1.3566 from $1.3532

Euro/pound: DOWN at 86.51 pence from 86.84 pence

West Texas Intermediate: DOWN 0.7 percent at $64.86 per barrel

Brent North Sea Crude: DOWN 0.6 percent at $68.15 per barrel

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C.Kreuzer--VB