FILE PHOTO: German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 24, 2025. REUTERS/staff/File Photo

By Shashwat Chauhan and Amir Orusov

(Reuters) -European shares bounced back from three-week lows on Friday with a boost from financial and industrial stocks, while the healthcare sector recouped early losses following U.S. President Donald Trump's latest tariff salvo on pharmaceutical firms.

The pan-European STOXX 600 rose 0.3% to 551.8 points by 0851 GMT, although still on track to record a second successive weekly decline.

Germany's Munich Re and France's SCOR led gains in European insurer stocks, which jumped 1.3% after a three-day losing streak when it declined 0.5%.

Construction and materials gained 0.6%, with Ireland's Kingspan jumping 2.9% after brokerage Citigroup raised its price target.

Steel stocks across Europe also gained after German business daily Handelsblatt reported that the European Commission plans to impose tariffs of 25% to 50% on Chinese steel and related products.

The world's second-largest steelmaker ArcelorMittal gained 2.7%, while Aperam rose 2%. Germany's Thyssenkrupp gained 3% and Salzgitter jumped 5%.

TARIFFS BACK IN FOCUS

Healthcare stocks were flat after earlier losing as much as 0.8%, a day after Trump unveiled a new round of punishing tariffs, including a 100% duty on branded drugs.

"It was already priced in," said Nabil Milali, multi-asset & overlay portfolio manager at Edmond de Rothschild Asset Management in Paris.

"A lot of investors were expecting these kinds of tariffs and it was partly reflected in valuations in the healthcare sector."

The sector is one of the worst performers in Europe so far this year, with a sharp decline in weight-loss drugmaker Novo Nordisk being one of the biggest drags.

Trump also announced a 25% levy on heavy-duty trucks, dragging the shares of truckmakers Daimler Truck and Traton down more than 2% each.

Later in the day, focus would turn to a key inflation reading in the United States that could help assess the Federal Reserve's future policy path.

Markets had been betting on aggressive interest rate cuts by the Fed this year, though strong U.S. economic data have led to some trimming in optimism.

Traders currently see about 39 basis points worth of easing by December, compared to more than 40 bps earlier this week, according to data compiled by LSEG.

Among top-moving stocks, UK's InterContinental Hotels Group gained 2.4% after J.P.Morgan double upgraded its rating to "overweight" from "underweight".

Italian fashion group Brunello Cucinelli extended Thursday's losses, rocked by short-seller Morpheus Research's report. It was last down 5.3%.

(Reporting by Shashwat Chauhan in Bengaluru and Amir Orusov in Gdansk; Editing by Harikrishnan Nair)