European stocks climbed on Tuesday as investors reacted to softer-than-expected U.S. sanctions on Iran and a sharp decline in oil prices.
The pan-European STOXX 600 index gained 0.35% to 656.48 points, leaving it 0.6% below its record high set earlier in August. The FTSE 100 in London rose 0.29% to 10,886.16, while Frankfurt’s DAX advanced 0.61% to 26,266.14. Paris’s CAC 40 slipped 0.16% to 8,439.20, Milan’s Ftse/Mib gained 0.34% to 52,720.31, Madrid’s Ibex 35 fell 0.21% to 20,056.60, and Lisbon’s PSI 20 rose 0.57% to 9,445.44.
The health sector led gains with a 1.2% increase, driven by gains in Novo Nordisk, which rose 2.9%, and Zealand Pharma, up 5.6%. Industrial shares advanced 1.1%, marking their strongest rise in three weeks. Melrose Industries surged 10.4% after announcing plans to resume full production at GKN Aerospace, which had been halted since late May due to safety concerns at a Los Angeles facility.
Crude oil prices fell 3.5%, easing pressure on European energy-importing economies. The easing of U.S. sanctions on Iran contributed to the positive market sentiment, as investors had feared more stringent measures that could disrupt global oil supply. U.S. Treasury Secretary Scott Bessent’s announcement avoided penalties on Tehran’s trading partners, reducing the risk of broader economic fallout.
Iran responded by vowing to retaliate against the expanded sanctions and expressed confidence that its main trading partners would resist U.S. pressure. The developments underscored the sensitivity of European markets to geopolitical risks and energy price fluctuations.
