European shares rose on Wednesday, recovering from a sharp drop in the previous session, as oil prices retreated after a shaky truce held between Washington and Tehran despite a deadlock in peace talks.
The pan-European STOXX 600 (.STOXX) was up 0.7% at 611.10 points, as of 0832 GMT. The index closed more than 1% lower on Tuesday.
Regional bourses were higher, with London's FTSE 100 (.FTSE) and Germany's DAX (.GDAXI) adding 0.6% and 0.9%, respectively.
Ahead of a high-stakes summit in Beijing, U.S. President Donald Trump said he does not think he will need China's help to end the U.S.-Israeli war with Iran.
Tehran's firm control over the Strait of Hormuz has kept prices above $100 a barrel, stoking inflation and weighing on global growth. Europe, dependent on energy imports, has remained vulnerable, with equities continuing to trade below pre-war levels.
"The big thing is the closure of the Strait of Hormuz. We saw relief when oil prices dropped back to $90 when there (were expectations of) a peace deal between Iran and the U.S. and the Strait reopening," said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.
"And those hopes have been dashed."
With first-quarter earnings winding up, corporate profits in aggregate are expected to rise at their fastest pace in three years. European earnings are expected to have grown 10.2% for the quarter, according to LSEG-compiled data.
"When you look at earnings growth for the whole year, I think it's around 13%. That would be quite an improvement from the past years, so we're a bit cautious on that to see if that will be realised," van Leenders added.
Technology stocks gained 1.5%, with semiconductor stocks Infineon Technologies (IFXGn.DE), STMicroelectronics and Aixtron (AIXGn.DE) up between 5.4% and 7.3%.
Financials (.SX7P) and healthcare shares (.SXDP) aided the broader index, rising about 0.6% each.
Merck (MRCG.DE) jumped 8.6% after the German firm lifted its forecast range for full-year adjusted operating profit. Wegovy maker Novo Nordisk (NOVOb.CO) was up 2.3%.
Allianz (ALVG.DE) rose 1.3% after the insurance company posted a 52% rise in first-quarter net profit. ABN Amro (ABNd.AS) added 7.2% on beating quarterly profit estimates and was on track for its best day since February last year.
Britain's Intertek (ITRK.L) surged 6.8% after the product testing company said it was likely to recommend a 9.4-billion-pound ($12.72-billion) takeover bid by Sweden's EQT (EQTAB.ST).
Official data showed France's unemployment rate rose to 8.1% in the first quarter of 2026, its highest since 2021.
Money markets are currently pricing in at least three rate hikes by the European Central Bank, with the first one expected during its next meeting in June.
