Europe’s STOXX 600 jumps over 2%

The pan-European STOXX 600 closed up 2.2% at 623.25 points, to its strongest level since April 17

Europe’s STOXX 600 jumped over 2% on Wednesday in a broad-based rally as reports of ‌a possible peace deal between Tehran and Washington boosted risk appetite and sent oil prices sharply lower, while upbeat company earnings added to the optimism.

The pan-European STOXX 600 closed up 2.2% at 623.25 points, to its strongest level since April 17.

Major bourses mirrored ​the rally. France’s CAC 40 led the rally with a 2.9% jump while Italy’s benchmark added 2.4%, hovering ​near its highest level since 2000.

Iran said it was reviewing a new U.S. proposal, following reports ⁠that the two parties were closing in on a memorandum to end the war in the Gulf.

Crude slid almost 7% with energy the only major STOXX sector trading down 2.5%. Lower oil prices helped the oil price sensitive ​travel sector add 5.8%, leading sector-wise gains on the index.

Signs of progress in the deal is in some ways more positive for Europe than it is for the US, just because it’s a sensitive region, said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

Once ​this Iran issue has passed, then the underlying picture looks really strong for corporate earnings, Ganesh added.

Easing crude prices ​could temper concerns of energy price driven inflation, a crucial factor that hangs as a major drag on European equities which are ‌still ⁠below their pre-war levels.

Money markets are currently pricing in a 67.6% chance that the European Central Bank hikes rate at its June meeting, down from a nearly 85% chance on Tuesday, according to LSEG data.

Banks and industrials were up 3.8% and 3.2%, ​respectively, and the biggest boosts ​on the European benchmark on ⁠Wednesday.

Defence shares advanced 4.7%. Italy’s Leonardo added 5% after reporting higher first-quarter earnings, while Norway’s Kongsberg also climbed 5% after its order intake more than doubled for the quarter.