Europe's STOXX 600 jumps 2% on Middle East de-escalation hopes
By Avinash P and Johann M Cherian
April 1 (Reuters) - Europe's STOXX 600 jumped more than 2% on Wednesday in a broad-based rally as U.S. President Donald Trump's comments that the month-long conflict in the Middle East could come to an imminent end sparked a global equities rebound.
The pan-European STOXX 600 index .STOXX rose 2.1% to 595.62 points by 0847 GMT, with heavyweight banks .SX7P leading the sectors with a 4% rise.
Most major regional bourses traded around 2% higher, with financials heavy Spanish .IBEX and Italian benchmarks .FTMIB leading with a 3% rise each.
Europe's fear gauge, the volatility index .V2TX, fell 2.6 points to near two-week lows.
Trump said on Tuesday that the end of the war with Iran could be near, with Washington signalling potential for both direct talks with Tehran's leadership and a winding down of the conflict even without a deal.
"We'll be leaving very soon," Trump told reporters at the White House, saying the exit could take place "within two weeks, maybe two weeks, maybe three."
Brent crude futures LCOc1 slid more than 2% to $100 a barrel, pushing the STOXX energy index .SXEP down 0.9%.
The drop in oil prices was a relief to airlines stocks. Shares of Air France AIRF.PA and Lufthansa LHAG.DE jumped 7.9% and 6.7%, respectively. The sector had taken a beating in March.
"Iran has found that it has a certain power over the rest of the world through this control of the Strait, and they might wish to keep that," said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
"It's also not clear whether everybody on the Iranian side will have the same view in terms of how to negotiate and we know that the troops from the U.S. are still in the region, so the prospect of renewed escalation is also still there."
European shares have been under massive pressure since the U.S. and Israel began airstrikes on Iran on February 28 due to the continent's heavy reliance on oil imports through the largely blocked-off Strait of Hormuz.
The STOXX index had fallen more than 10% from its record high at one point earlier in March, and finished the month with losses that were its biggest since June 2022.
Bond yields dropped sharply and markets now see the European Central Bank hiking interest rates by two 25-basis-points this year from three earlier this week.
Among others, sportswear makers Adidas ADSGn.DE and Puma PUMG.DE added 2.3% and 5%, respectively, even after U.S.- based rival Nike NKE.N forecast a surprise drop in fourth-quarter sales.
Meanwhile, index provider MSCI said Greek stocks will return to its developed markets index in May 2027. J.P.Morgan had earlier flagged that STOXX could announce by April that it will include Greek stocks in the European benchmark index.
Greece's benchmark .ATG was up 3.4%.
J.P. Morgan analysts said that they are unhappy about Greece's potential promotion since it would make a smaller share in developed market indexes compared with its bigger share in emerging market indexes.
