European shares rise more than 1%

The pan-European STOXX 600 was up 1.4% at 587.49 points, clinching its third straight day of gains

European shares rose more than 1% on Wednesday on expectations of ‌a de-escalation in the Middle East war, though concerns about the war’s economic impact kept traders on edge.

The pan-European STOXX 600 was up 1.4% at 587.49 points, clinching its third straight day of gains after briefly declining 10% from record highs earlier ​this week.

Some regional bourses also added more than 1%, with Britain’s FTSE 100 rising 1.4%. An index tracking volatility slid 0.7 points to 31.1.

All the ⁠key sectors logged gains, with miners and banks up 2.4% and 1.8%, respectively.

Travel and leisure stocks, which were ​hit earlier in March due to soaring energy prices, advanced 1.4%, with airlines, such as Lufthansa and Air France ​jumping 2.3% each.

Energy stocks rose 1.1%. Morgan Stanley disclosed it had turned bullish on the sector.

Oil prices slid after Trump said the U.S. was making progress in its efforts to negotiate an end to the war with Iran.

However, caution lingered as Iran denied that direct talks had taken place, with a ​spokesperson saying the U.S. is “negotiating with itself.”

The market is right now running on optimism that is being injected by the U.S. alone, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. If Iran doesn’t cooperate in the coming days, we still could see oil prices spike back up.

There is little clarity on whether the talks would lead to the reopening of ​the Strait of Hormuz, which ​has been largely cut ⁠off since the Iran war erupted, with analysts saying that the long-term repercussions of elevated crude prices on the global economy could be drawn out.

Europe’s dependence on ​oil imports has weighed on equities since the start of the war.

The question ​is no longer ⁠whether Europe can grow in a stable global environment. It is whether it can sustain that growth as geopolitical shocks begin to interact with its structural weaknesses, economists at the Institute of International Finance wrote.