FRANKFURT: European shares closed at their highest level in over a month on Tuesday, with investors welcoming signs of a resumption of Middle East peace talks, even as LVMH and other companies warned of fallout from the war.
The pan-European index closed 1 percent higher at 619.95 points, while other regional bourses also rose. Germany’s DAX, Spain’s IBEX 35 and France’s CAC 40 added over 1 percent each.
Signs of diplomatic talks were sufficient to trigger a rebound in stocks, while oil prices retreated below USD100 a barrel.
Meanwhile, the International Monetary Fund cut Germany’s growth forecasts for this year and next, in its largest downgrade among big euro zone economies.
European dependence on oil imports has left it vulnerable, with US equities outperforming European ones since the war began.
“Investors meanwhile seem to have already decided that the European economy and its companies will fare worse than the US in face of the war and higher energy prices,” Kristina Hooper, chief market strategist at Man Group, said in a note.
Industrials and euro zone banks boosted the index, rising 1.6 percent and 2.3 percent, respectively.
Tech shares moved higher, with Dutch semiconductor stocks BE Semiconductor gaining 5.3 percent while ASML and ASMI were up 2 percent and 1.4 percent, respectively. ASML will report its quarterly results on Wednesday.
Meanwhile, the energy index lost 1.5 percent with heavyweights Shell and BP off about 2.5 percent each.
Imperial Brands dropped 4.8 percent after the maker of Davidoff cigarettes said the impact of the Middle Eastern conflict could disrupt second-half performance.
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