FRANKFURT: European shares closed slightly higher on Tuesday as investors watched for developments in US-Iran tensions that could influence oil prices and risk appetite.
The pan-European STOXX 600 ended 0.1 percent higher, after posting its biggest daily gain in more than two months on Monday. Most major regional bourses also finished higher.
US President Donald Trump, speaking at the UN General Assembly, called for Iran’s complete economic isolation, showing no intention to resume talks. However, he predicted a deal could be reached after November’s US midterm elections. The comments came days after he hinted he could meet his Iranian counterpart.
The war with Iran is deeply unpopular in the US, with Trump’s approval rating falling to a record low as inflation hits Americans’ pockets.
“Even though hopes are still alive that there may be some kind of breakthrough behind the scenes at the UN conference … there is still a lot of caution about just how complex the war in Iran has become,” said Susannah Streeter, chief investment strategist at Wealth Club.
Hopes for a diplomatic breakthrough and reports that Iran has offered to reopen the Strait of Hormuz within seven days helped push oil prices to two-week lows. European energy stocks reversed earlier declines to end 0.2 percent higher.
Most STOXX 600 sectors advanced, led by retailers, which posted their biggest one-day gain since early April.
The rise was largely powered by a 12.4 percent jump in Kingfisher after the home improvement retailer raised its full-year profit guidance.
Technology stocks gained 1.5 percent, taking cues from the US Nasdaq, which hit an intraday record high.
Broader gains were capped by a 1 percent fall in banking stocks . Telecom stocks lost 2.1 percent, with Ericsson dropping 3.8 percent after Morgan Stanley downgraded its rating on the Swedish telecom equipment maker.
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