Global Market: European shares rise as easing Iran tensions lift sentiment; energy stocks slide

European shares started August on a positive note on Monday, supported by easing geopolitical concerns after U.S. President Donald Trump said talks with Iran were scheduled later in the day, raising hopes of a diplomatic breakthrough that could help cool oil prices, Reuters reported.

The pan-European STOXX 600 index was up 0.4% at 651.88 by 7:09 GMT, with gains in travel and leisure stocks offsetting weakness in the energy sector.

According to Reuters, investor sentiment improved after Trump signalled a preference for diplomacy over immediate military action against Iran. The development triggered a sharp decline in crude oil prices, with oil futures falling nearly 5.9% on expectations that tensions in the Middle East could ease and the Strait of Hormuz could remain open to global shipping.


Energy stocks were among the biggest laggards, declining 2% as lower oil prices weighed on the sector. In contrast, travel and leisure shares climbed 2.1%, benefiting from the prospect of lower fuel costs and improved travel demand.

The STOXX 600 had gained more than 1% in July, supported by a strong corporate earnings season that helped offset investor concerns stemming from the U.S.-Iran conflict, Reuters reported. The earlier surge in geopolitical tensions had pushed Brent crude prices above $90 per barrel, raising concerns over inflation and economic growth.

Europe remains particularly vulnerable to rising energy costs because of its heavy dependence on imported oil, making any decline in crude prices a positive development for regional markets.

Among individual stocks, Italian cable maker Prysmian advanced 1.5% after announcing an agreement to acquire U.S.-based electrical products manufacturer Atkore for $95 per share in cash. Reuters reported that the deal values Atkore at an enterprise value of about $3.8 billion.

Meanwhile, pharmaceutical giant AstraZeneca dropped 7% following reports of a possible combination involving the European drugmaker and U.S.-based Bristol Myers Squibb, weighing on the healthcare sector.