Europe close: Stocks rise as oil prices move higher

(Sharecast News) - European markets closed in the green on Wednesday, led by energy shares as escalating military exchanges between the US and Iran pushed oil prices sharply higher.

The Stoxx 600 rose 0.6% to 647.07, Germany's DAX gained 0.65% to 25,174.10, France's CAC 40 advanced 0.89% to 8,437.89 and London's FTSE 100 climbed 1.24% to 10,716.97.

"It has been a stellar 48 hours for the FTSE 100, which has found its footing thanks to strength in oil, precious metals and dividend stocks," said IG chief market analyst Chris Beauchamp.

"A rotation away from tech has resulted in a better day for European markets overall, which continue to defy the strength in oil.

"The focus now shifts to the US as the first of the hyperscalers, Alphabet, reports earnings, offering some relief from what appears to be a fast-deteriorating situation in the Middle East,"

Brent crude futures were last up 2.31% on ICE at $93.11 per barrel after earlier touching $95, while the NYMEX quote for West Texas Intermediate gained 2.04% to $86.06.

US secretary of state Marco Rubio accused Iran of breaching an agreement covering the Strait of Hormuz as American forces struck Iranian targets for an 11th consecutive day.

He said Tehran was demanding the right to control traffic through the international waterway, warning that allowing a state to charge tolls and attack non-compliant vessels would create "a very dangerous precedent".

"A strong showing for European stocks and a surge in oil prices told two different stories on Wednesday," said AJ Bell head of financial analysis Danni Hewson.

"As equities in the UK, Germany and France enjoyed decent gains, the surge in the Brent crude oil price to more than $95 per barrel reflected mounting concern about the escalation in hostilities in the Middle East."

UK inflation eases to 15-month low

In economic news, UK inflation eased to a 15-month low of 2.6% in June from 2.8% in May, slightly below expectations for 2.7%, according to the Office for National Statistics.

Transport, food and non-alcoholic beverages made the largest downward contributions, while core inflation remained unchanged at 2.6%.

ONS chief economist Grant Fitzner said food and clothing prices fell, while raw material costs declined for the first time since January and factory-gate inflation slowed again.

"A rebound in tech helped improve the prevailing market mood and a softer-than-expected reading of UK inflation stoked hopes for interest rate cuts, but a renewed energy price shock suggested easing pressure on prices could be short-lived," Hewson said.

The Confederation of British Industry said the easing was likely to prove temporary as the Iran conflict fed through to energy bills and domestic prices.

Lead economist Martin Sartorius said the Bank of England was expected to leave interest rates unchanged next week, with weaker activity, a loosening labour market and tighter financial conditions making a near-term increase unlikely.

Hiab jumps on revenue beat, Equinor in the green

In equities, Hiab jumped 11.17% after the Finnish crane maker's second-quarter revenue beat expectations, while Equinor gained 4.17% after increasing its quarterly share buyback as higher production and surging oil and gas prices boosted cash generation.

Randstad surged 13.87% following its second-quarter results, while Airbus advanced after launching a �5bn share buyback and setting new medium-term targets, including plans to nearly double profits by 2029.

Reporting by Josh White for Sharecast.com.