Europe midday: Stocks near three-month high as oil price falls

(Sharecast News) - European stock rose for the seventh time in eight sessions on Wednesday amid rising hopes that the US and Iran will soon agree on a deal to bring peace to the region and reopen the Strait of Hormuz.

Another fall in oil prices was helping sentiment in morning trade, with Brent down 3.2% at $93.59 a barrel, marking its third straight session below the $100 level. The leg down came despite a rise in tensions between Washington and Tehran, with recent exchanges of fire threatening to dismantle a ceasefire that began at the start of April.

The Stoxx Europe 600 index was 0.5% higher at 631.11 by the lunchtime period, with mild to moderate gains seen across all major indices across the continent.

The benchmark index is now within a whisker of Monday's three-month closing high of 631.63, its highest level since hitting a record closing high of 633.85 in late February.

Positive moves followed yet more records on Wall Street overnight, with the S&P 500 and Nasdaq setting new all-time highs, helped by strong performances in the chip sector.

"The surge higher in US stocks is boosting Europe, where sentiment remains high. The oil price is down 2% today, even though no deal has been formally announced between the US and Iran to end the conflict in the Middle East," said Kathleen Brooks, research director at XTB.

"Brent crude oil is back below $94 per barrel, and the oil price is lower by 10% in the past week. This is boosting overall market sentiment; bonds are also higher and 10-year yields are falling across the major economies."

On the downside, investors were also likely digesting comments from the European Central Bank, which warned in its biannual report on Wednesday that current market prices were underestimating current geopolitical and fiscal risks.

"Despite initial declines, financial asset prices still look stretched by historical standards, all the more so when current geoeconomic stress and uncertainty are taken into account," said ECB vice president Luis de Guindos. "This leaves markets vulnerable to sharp repricing."

In equity news, Dutch paint maker AkzoNobel saw shares surge 16% after its board rejected a €12.5bn takeover approach from Nippon Paint Holdings and Sherwin-Williams, continuing to recommend a proposed deal with Axalta Coating Systems. The latest offer price of €73 a share represented a 39% premium to Tuesday's closing price.

Amsterdam-listed CVC Capital Partners rose after offloading its stake in Spanish energy firm Naturgy Energy Group for €3.1bn. Naturgy shares dropped after the news, which followed BlackRock's exit from the company in a €3.3bn share sale in March.

In London, retail, travel and leisure stocks were performing well, with JD Sports Fashion, M&S, IAG, easyJet and InterContinental Hotels all putting in decent gains.