March 10 (Reuters) - European shares bounced back on Tuesday as investor sentiment was lifted after U.S. President Donald Trump said the war in Middle East could come to a quick end. The pan-European
Europe stocks mark biggest daily jump in months on Gulf de-escalation hopes
European Markets Surge Amid Geopolitical Developments
By Pranav Kashyap, Avinash P and Purvi Agarwal
March 10 (Reuters) - European shares marked their biggest one-day jump since April last year on Tuesday as global markets bet that U.S. President Donald Trump would call off the U.S.-Israeli war on Iran soon, lifting investor sentiment and sparking a broad-based rally.
Market Performance Overview
The pan-European STOXX 600 index ended 1.9% higher, after closing on Monday at its lowest level in more than two months.
Banking Sector Recovery
Bank stocks, which have been among the worst hit as a result of recent investor concerns, recovered 3.6%, led by HSBC and Santander and giving the biggest boost to the STOXX 600.
Regional Index Highlights
Spain's financial-heavy index outperformed major peers with a 3.1% rise, followed by the export-heavy DAX in Germany. Both logged their steepest one-day gain since April 2025.
Sector Performance
Industrials gained 2.8%, while travel and leisure stocks jumped 2.5%, on prospects of flights and tourism returning to normal operations.
Geopolitical Impact on Investor Sentiment
Although the U.S. and Israel pounded Iran with what the Pentagon and Iranians on the ground said were the most intense airstrikes of the war, investors were encouraged by Trump's saying on Monday that the war was "very complete, pretty much".
Analyst Perspectives
"For now, we believe the shock is likely to be short-lived. We see disruptions measured in weeks, rather than in months or days," said analysts led by Jean Boivin at BlackRock Investment Institute.
"In Europe, we like the financial, pharma and infrastructure sectors," they added.
Oil Prices and Inflation Concerns
Oil prices remained in the spotlight, as Iran said it would block shipments from the Gulf until the attacks cease. They swung widely, falling 11% to below $90 a barrel and energy shares reversed declines to close 0.3% higher.
Inflation and Central Bank Response
The spike in oil prices since the U.S.-Israeli strikes on Iran has revived inflation fears globally, putting central banks in a tough spot. Europe, which is heavily dependent on energy imports, remains vulnerable when growth is already fragile.
ECB Policy Outlook
Three European Central Bank policymakers said that it should take its time to reassess policy and stay on its present course for now. Investors are now pricing in at least one ECB rate hike by the end of the year, LSEG data shows.
"In the escalation scenario, the ECB could think to hike once in the short term," said Michele Morganti, equity strategist and head of insurance at Generali Investments.
"The risks continue to be high, and Europe has much to lose from the energy ... and growth point of view."
Notable Stock Movements
Among notable individual stock price moves, Volkswagen climbed 2.6% as the German autos group forecast a margin recovery after a tough 2025.
Persimmon jumped 4.5% after the British housebuilder beat expectations for fiscal year 2025 revenue and adjusted pretax profit, while Rotork slumped 13% to the bottom of the STOXX 600 after it published annual results.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Mrigank Dhaniwala, Maju Samuel and Alexander Smith)
