LONDON – European stocks rallied on Tuesday as oil prices fell on renewed hopes that a lasting peace could be agreed between the United States and Iran after Israel and Hezbollah announced they would suspend fighting in Lebanon.
pan-european Stocks 600 It closed 0.7% higher. While most regional sectors ended in positive territory, the major bourses in London, Paris, Frankfurt and Milan closed in positive territory.
The Stoxx 600 index fell to a one-week low on Monday as hopes for an end to the Iran war waned, but recovered on Tuesday.
In corporate news, Abibax Shares plunged 43.6% after the French biotech company reported that several patients in its ulcerative colitis trial developed cancer.
“The cancer signal complicates matters, and even if it’s just extraneous noise, we think the overhang is real, especially given the lack of other value-impacting data events in the coming year (1 year),” Jefferies analysts said.
Inflation in the euro zone rose to an estimated 3.2% in May, official data showed on Tuesday, driven by a double-digit rise in energy prices.
The report is in line with expectations in a Reuters survey of economists, with expectations for a rate hike expected to be confirmed at next week’s European Central Bank meeting.
Energy costs in May were the highest in terms of annual inflation, with prices rising by 10.9%, preliminary data showed. This was a slight increase from the 10.8% growth in euro area energy prices recorded in the previous month.
Peace negotiations are unclear
On Monday, US President Donald Trump told CNBC that he was not concerned if peace talks with Iran collapsed.
“I really don’t care. I don’t care,” he said, adding that the drawn-out negotiations were “starting to get very boring.”
Talks between the two countries have stalled in recent weeks as the Strait of Hormuz, a key oil shipping route, remains effectively closed.
Hannah Newman, head of the European Parliament’s delegation to Iran, told CNBC’s “Europe Early Edition” on Tuesday that the Iranian regime “has a lot to gain from an ambiguous situation.”
“I am concerned that the Iranian regime’s continued strategy … will continue to prolong this problem,” she said. “What’s happening now… is that Donald Trump gets bored and walks away, and[the regime]not only gets away with massive repression at home, but also gets away with holding the whole world hostage in the Strait of Hormuz.”
Neumann added that the EU remained skeptical about “whether this war makes sense.”
“Three months into this war, I think we can clearly see that it has brought no improvement to the region or to the world as a whole,” she said. “At the same time, the European Union, like the countries of the Gulf, Africa and Southeast Asia, has been greatly affected by the aftermath of this war, primarily the closure of the Strait of Hormuz, but also the growing cross-border repression and state-sponsored terrorism against Iranians within the Union. So, while we want this war to end, we also want the Iranian regime to disappear.”
He also called for the EU to come to the negotiating table, saying the current negotiating situation “doesn’t allow us to sleep very comfortably here in the European Union.”
European investors are also closely monitoring developments in the Russia-Ukraine war after the Russian government launched a massive air raid on cities across Ukraine early Tuesday morning.
Last week, NATO and EU officials condemned Russia after a Russian drone accidentally crashed into an apartment building in Romania near the border with Ukraine.
The EU is currently preparing its 21st sanctions package against Russia.
On Wall Street, U.S. stocks rose slightly, S&P500 Set a new record with Dow Jones Industrial Average.
— CNBC’s Elsa Ohlen also contributed to this report.
