By Ragini Mathur
April 7 (Reuters) – European shares rose on Tuesday, led by media and banking stocks, though a looming deadline for Iran to reopen the Strait of Hormuz kept investors on edge.
The STOXX 600 index was up 0.6% at 600.33 points by 0854 GMT at a nearly three-week high. Trading resumed after Europe’s extended Easter weekend, which included the Good Friday and Easter Monday holidays.
Regional bourses also traded in positive territory, with London’s FTSE 100 gaining 0.2%, while Spain’s IBEX was up 1%.
“Investors are positioning carefully rather than fully pricing in a worst-case scenario,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“Either way, today has the potential to be one of the most volatile trading sessions since the conflict began, with any headlines likely to drive meaningful swings across global markets.”
Markets have been volatile since the U.S.-Israel war on Iran broke out in late February, with the STOXX 600 declining more than 5% since then. Tehran’s effective closure of the strait has stoked inflation concerns and rattled investor confidence.
Despite hopes for a diplomatic breakthrough, negotiations have so far failed to yield progress. U.S. President Donald Trump has imposed a deadline of 8 p.m. ET Tuesday (0000 GMT Wednesday) for a deal to be reached.
Among sectors, media gained 5.8% as Universal Music Group soared 12.7% after Pershing Square proposed a cash-and-stock takeover valued at about 55.75 billion euros ($64.31 billion).
Heavyweight banks jumped 1.5%.
In contrast, information technology stocks lagged, with semiconductor equipment leader ASML falling 3%, after a cross-party group of U.S. politicians proposed a law to impose further restrictions on exports of computer chipmaking equipment to China.
On the monetary policy front, ECB policymaker Dimitar Radev warned that euro zone inflation expectations risk rising faster than in the past, signaling the central bank must be prepared to raise rates swiftly if price pressures persist.
Traders are now pricing in about three rate hikes by year-end, according to LSEG data.
Meanwhile, economic data painted a mixed picture. Euro zone PMI figures showed private sector expansion weakened sharply in March as the Middle East conflict drove up energy costs and disrupted supply chains, with overall demand falling for the first time in eight months.
Swedish consumer prices rose less than expected in March, showing little impact from higher oil prices so far. Sweden’s benchmark index gained 1.4%.
($1 = 0.8674 euros)
(Reporting by Ragini Mathur in Bengaluru; Editing by Nivedita Bhattacharjee and Sonia Cheema)
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