LONDON: Global stock markets diverged on Wednesday as investors remained cautious ahead of the coming wave of US President Donald Trump’s tariffs.

Paris and Frankfurt stocks dropped, while London edged up after data showed an unexpected slowdown to UK annual inflation.The reading was a boost to finance minister Rachel Reeves, who later Wednesday details billions of pounds of spending cuts to address the country’s struggling public finances.

The UK has warned that “the world has changed” since its inaugural budget, with heightened global uncertainty over US tariffs adding to economic headwinds.

With the White House’s ‘Liberation Day’ on April 2 fast approaching, investors are bracing for a wave of sweeping levies on imports amid warnings of crippled global trade, recession and a fresh spike in inflation.

“The optimism and calm that investors have experienced over the past months have given way to increasing nervousness in recent weeks,” said Jochen Stanzl, chief market analyst at CMC Markets.

But suggestions from Trump that the measures could be more targeted have provided a sliver of hope that the worst-case scenario can be avoided.

The president told Newsmax on Tuesday that he did not “want to have too many exceptions” but added: “I’ll probably be more lenient than reciprocal, because if I was reciprocal, that would be very tough for people.” Signs of a less severe approach helped lift Asian markets on Wednesday, tracking Wall Street gains the previous day.