European shares rebound from selloff
The pan-European STOXX 600 closed 1.4% higher, after declining more than 4% from Friday’s record high
European shares rebounded on Wednesday from the previous day’s bruising selloff, as investor fears over the ripple effects of a prolonged Middle East war ebbed for the time being, while Spanish stocks shrugged off U.S. trade threats.
The pan-European STOXX 600 closed 1.4% higher, after declining more than 4% from Friday’s record high, while Germany’s DAX added 1.7%. The rally marked the biggest one-day gain for both indexes since May.
The merest whiff that a resolution to the conflict is on the cards is helping European stocks rebound, said Kathleen Brooks, research director at XTB. Sentiment is fragile and headline risk can materialize at any time.
Banks, which shed over 7% in the selloff, bounced back 2.3%, led by Santander and BBVA.
Travel and luxury stocks, the epicentre of the selloff, added 2.8% and 1.9% respectively. Tech stocks and industrials added 2.5% and 1.9%, among the biggest boosts to the STOXX 600.
The STOXX volatility index eased over 5 points after gaining for four straight sessions.
Spain’s finance-heavy benchmark index rose 2.5%. It dropped as much as 1% in early trading.
Oil prices remained close to multi-month highs as attacks disrupted energy infrastructure and shipments across the region.
Europe’s reliance on energy and goods shipped through the Strait of Hormuz has left it exposed, reviving inflation fears, as alternative routes would likely mean higher cost pressures.
The oil sector declined for the second straight session, down 0.3%.
Markets are also contending with a mixed economic picture. PMI readings showed euro zone services activity expanding slightly faster in February, Germany’s growth hit a four-month high, France remained stuck in contraction, and Italy’s growth cooled.
Among movers, Vistry plunged 25% after the UK home builder announced its CEO and Chair, Greg Fitzgerald, intends to step down and the roles will be separated after his retirement.
Adidas declined 3.6% following results, while ASM International jumped 5% after the world’s second largest chip equipment maker said it expects first-quarter 2026 revenue to rise to nearly 830 million euros.