European equity indices edged higher Wednesday ahead of the release of regional manufacturing activity data, but investors remain cautious amid trade uncertainty and in the build up to the latest European Central Bank meeting.

At 03:05 ET (07:05 GMT), the DAX index in Germany climbed 0.7%, the CAC 40 in France gained 0.4% and the FTSE 100 in the U.K. rose 0.1%. 

Uncertainty over trade talks

European stocks have followed their Asian counterparts higher Wednesday, boosted by hopes that a trade deal could still be possible when U.S. President Donald Trump and Chinese leader Xi Jinping talk this week.

However, these gains are tentative, with trade tensions still elevated as Trump earlier signed a proclamation raising his tariffs on steel and aluminum to 50% from 25%, making good on his earlier threat, with the higher duties effective from Wednesday.

Additionally, Trump on Wednesday described Xi Jinping as a tough negotiator, amid the ongoing tariff rift between the two countries. 

"I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!," Trump wrote in a post on his social media platform, Truth Social.

Today is the deadline for U.S. trading partners to submit their "best offer" to avoid punishing import tax rates, and so far, only Britain has struck a preliminary trade agreement with the U.S. during Trump’s 90-day pause on a wider array of tariffs.

The European Union said earlier this week that it had yet to receive a letter from Washington asking for its best proposals on trade talks, a point duplicated by Japanese Chief Cabinet Secretary Yoshimasa Hayashi earlier Wednesday.

PMI data due ahead of ECB meeting

The European economic data slate centers around a series of manufacturing activity data from the region Wednesday, as investors await the latest policy-setting meeting of the European Central Bank, due for completion on Thursday.

There have been some signs of economic recovery in Europe, but from a low base, and eurozone consumer prices slowed to 1.9% last month, which is seen providing the ECB with room to cut interest rates by a quarter point once more, in what would be an eighth rate reduction in the past year.

However, where the ECB goes after this is open to debate as U.S. tariff uncertainty, heightened further by ambiguity over court rulings on the legality of the tariffs, makes the backdrop challenging as the ECB weighs the impact to business activity against implications for inflation further out.

Remy Cointreau sees weak sales in key markets

In the corporate sector, spirits group Remy Cointreau (EPA:RCOP) reported a smaller-than-expected drop in annual organic operating profit, reflecting weak sales in its key markets of China and the United States.

The French company also withdrew its mid-term goals and said sales would return to mid-to-single-digit growth during the next financial year.

Swedbank (ST:SWEDa) said that it is maintaining its return on equity  target of at least 15% for the coming years, reaffirming a goal the Swedish banking group had set through 2025.

Airbus (EPA:AIR) will also be in the spotlight after Bloomberg reported China is reportedly contemplating an extensive order from the aircraft manufacturer, which could be finalized as early as next month.

Crude slips back from two-week highs

Oil prices slipped lower Wednesday, falling back from recent highs generated by increasing OPEC+ output and concerns that tariffs will hit global economic activity.

At 03:05 ET, Brent futures slipped 0.3% to $65.41 a barrel, and U.S. West Texas Intermediate crude futures fell 0.4% to $61.18 a barrel.

Both benchmarks climbed about 2% on Tuesday to a two-week high, driven by worries over supply disruption from Canadian wildfires and expectations that Iran would reject a U.S. nuclear deal proposal key to easing sanctions on the major oil producer.

Additionally, the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to keep output increases in July at 411,000 barrels per day, which was less than some in the market had feared.