(fxcue news) - European stocks edged higher on Wednesday despite U.S. President Donald Trump repeating his threat to impose tariffs on EU goods entering the States. "If there is a need to defend our economic interests we will respond in a proportionate way," the European Union's commissioner for the economy, Valdis Dombrovskis said in an interview with CNBC at the World Economic Forum in Davos, Switzerland. Rate cut optimism prevailed after ECB policymaker Klaas Knot backed the idea of near-term cuts in an interview earlier today. The Dutch central banker told Bloomberg TV's Francine Lacqua in an interview in Davos, Switzerland that investor bets for interest-rate cuts in January and March are reasonable, but any commitment beyond is difficult due to heightened global uncertainty. The European Central Bank is all but certain to reduce interest rates by 25 basis points next week to support regional growth. The pan European STOXX 600 climbed 0.6 percent to 528.97 after rising 0.4 percent in the previous session. The German DAX jumped 1 percent to hit a record high, France's CAC 40 added half a percent and the U.K.'s FTSE 100 edged up by 0.3 percent. Adidas shares surged 6.5 percent after the German sportswear brand posted better-than-expected fourth-quarter results. easyJet fell nearly 3 percent after the low-cost airline posted a reduced operating loss in the first quarter. German car-parts supplier Schaeffler plunged 13 percent after warning that its profitability fell short of its guidance and consensus expectations last year. Chocolate maker and cocoa processor Barry Callebaut lost 5 percent after lowering its sales-volume guidance. On a light day on the economic front, the U.K. budget deficit more than doubled in December from last year as increases in spending were much larger than increases in receipts, the Office for National Statistics said. Public sector net borrowing increased GBP 10.1 billion from the last year to GBP 17.8 billion in December. This was the highest December borrowing for four years and also above GBP 14.6 billion forecast by the Office for Budget Responsibility.