FRANKFURT: European shares started the month higher on Monday as oil prices fell sharply on hopes for renewed diplomatic efforts to end the Iran war, while AstraZeneca sank on reports of merger talks with US rival Bristol Myers Squibb.
The pan-European STOXX 600 index closed up 0.5 percent at 652.09 points and hovered near a record high it clinched on Friday. Most major regional bourses ended higher but London’s FTSE was the only outlier and inched down 0.1 percent.
Stocks “rock from positive to negative on a near daily basis because again we’ve got oil prices back down again because President Trump has signalled a more diplomatic tone. But you just don’t know what the next week will bring,” Lauren Hyslop, investment manager at Mattioli Woods, said.
Oil futures slid more than 4.5 percent. Trump’s decision to hold off on a fresh attack on Iran, while seeking a rapid agreement to curb Tehran’s nuclear ambitions and reopen the Strait of Hormuz, eased fears of further supply disruptions.
However, Iran said there were no talks under way with Washington and no plans for any meetings.
The fall in crude prices boosted oil-sensitive sectors withtravel and leisure gaining 0.6 percent. Aerospace and defence stocks were the strongest sectoral performers, rising 2.7 percent.
M&A activity also commanded investors’ attention, as markets assessed a fresh batch of deal announcements and reports of potential tie-ups.
AstraZeneca shares tumbled 9 percent, at the bottom of the STOXX 600 index, after reports of a possible USD400 billion merger of the European pharmaceutical giant with US-based Bristol Myers Squibb. The broader healthcare sector dropped 1.7 percent.
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