Europe close: Stocks hit two-week high as oil continues to fall

(Sharecast News) - European stocks rose to a two-week high on Tuesday, helped by another fall in oil prices as supply concerns continued to ease in the Middle East.

The Stoxx 600 finished 0.24% higher at 643.47, its highest since 8 September, with moderate losses in London and Milan outweighed by gains in Frankfurt, Paris and Madrid.

Reports that Iran could re-open the Strait of Hormuz within a week if the US eased military pressure helped to lower the price of crude, which fell for the fifth straight day.

Brent was down 0.6% at $99.71 a barrel - it has not settled below the $100 level since 8 September - further dampened by reports that Saudi Arabia is preparing to restart its EastWest pipeline as early as this week.

Meanwhile, hopes of diplomacy at the UN General Assembly this week were helping market sentiment amid speculation that US President Donald Trump will meet his Iranian counterpart, Masoud Pezeshkian.

"After the return for risk appetite which saw the Nasdaq advance to a new record last night, there was a more measured feel to proceedings in Asia and Europe on Tuesday," said AJ Bell investment director Russ Mould.

"For oil to resume its downward trend, signs of tangible diplomatic progress will need to come through sooner rather than later."

In equity news, shares in Kingfisher jumped 10% in London as the European DIY retailer lifted full-year guidance after posting a jump in half-year profits.

Also in London, Smiths Group gained after the UK `engineering firm beat full-year operating profit estimates and launched a process to sell its US asbestos liability.

Swedish telecom equipment maker Ericsson fell after Morgan Stanley downgraded to 'underweight' from 'equal-weight.

Germany's Evonik gained as M&A speculation resurfaced on reports that BASF had considered a potential transaction involving the chemicals outfit earlier this year.