European shares mark biggest one-day jump in months

The pan-European STOXX 600 index closed 1.9% higher, after ending on Monday at its lowest level in months

European shares marked their biggest one-day jump since April last year on Tuesday.

The pan-European STOXX 600 index closed 1.9% higher, after ending on Monday at its lowest level in more than two months.

Bank stocks, which have been among the worst hit as a result of recent investor concerns, recovered 3.6%, led by HSBC and Santander and giving the biggest boost to the STOXX 600.

Spain’s financial-heavy index outperformed major peers with a 3.1% rise, followed by the export-heavy DAX in Germany. Both logged their sharpest one-day gain since April 2025.

Industrials added 2.8%, while travel and leisure stocks climbed 2.5%, on prospects of flights and tourism returning to normal operations.

For now, we believe the shock is likely to be short-lived. We see disruptions measured in weeks, rather than in months or days, said analysts led by Jean Boivin at BlackRock Investment Institute.

In Europe, we like the financial, pharma and infrastructure sectors, they added.

Oil prices remained in the spotlight, as Iran said it would block shipments from the Gulf until the attacks cease. They swung widely, dropping 11% to below $90 a barrel and energy shares reversed declines to end 0.3% higher.

Europe, which is heavily dependent on energy imports, remains vulnerable when growth is already fragile.

Three European Central Bank policymakers said that it should take its time to reassess policy and stay on its present course for now. Investors are now pricing in at least one ECB rate hike by the end of the year, LSEG data shows.

In the escalation scenario, the ECB could think to hike once in the short term, said Michele Morganti, equity strategist and head of insurance at Generali Investments.

He added: The risks continue to be high and Europe has much to lose from the energy and growth point of view.