Europe open: Stocks gain despite geopolitical uncertainty as oil prices fall

(Sharecast News) - European stock markets headed higher on Wednesday morning, helped by another leg down in the price of oil as investors weighed the latest developments in the Middle East.

With the exception of London's FTSE 100, stocks across all major European equity indices were putting in moderate gains, with the benchmark Stoxx 600 index up 0.23% at 629.45.

The Stoxx 600 closed at a three-month high of 631.63 on Monday, within touching distance of the record closing high of 633.85 reached in late February.

Brent crude was down 2.6% at $94.14 a barrel, holding firmly below the $100 level for the third straight session, despite a rise in hostilities between US and Iran, with recent exchanges of fire threatening to dismantle a ceasefire that began at the start of April.

"It looks like geopolitical tensions are no longer bothering investors as much as they did in previous weeks. Iran's explicit dissatisfaction regarding the progress in talks over its nuclear program - or even US strikes - didn't reverse hopes that the war will end soon," said Ipek Ozkardeskaya, senior analyst at Swissquote.

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.