Europe midday: Shares hold gains as oil surges past $108 on Trump Iran rejection

(Sharecast News) - European shares and oil prices were both higher at the open on Monday as investors assessed US President Donald Trump's rejection of the latest Iranian truce offer, sending Brent crude surging above $108 a barrel.

The pan-regional Stoxx 600 index was up 0.15% to 639 at 1053 GMT with most major bourses higher. Germany's DAX and Spain's IBEX both slipped into the red by midday

Brent crude was trading 4.16% higher at $108.70 a barrel after Trump rebuffed Iran's conditional offer to reopen the Strait of Hormuz and told aides he expects US strikes on the country to resume after November's midterm elections, the Wall Street Journal reported Saturday, citing unnamed officials.

"The week starts with a renewed advance in oil prices, as the US and Iran are still talking with no resolution in sight. Bonds are under pressure, and multi-decade-high sovereign yields are making equity investors uncomfortable," said Swissquote Bank analyst Ipek Ozkardeskaya.

"On the one hand, yields at current levels are starting to look appealing - an appeal that could encourage outflows from equities and inflows into safer bonds. On the other hand, investors are warming to the idea that we have now shifted to a structurally higher inflation regime - meaning that yields could continue to rise."

Iranian Foreign Minister Abbas Araghchi on Friday offered to reopen the key Strait of Hormuz and restart nuclear negotiations with Washington within seven days.

"If certain conditions are met, the Strait of Hormuz will be open at the end of seven days, and talks will be restarted," Araghchi told reporters on the sidelines of the United Nations General Assembly in New York.

Those conditions include an end to what Tehran describes as U.S. "acts of aggression," the lifting of the naval blockade and economic warfare, and the release of Iranian assets, according to Iranian foreign ministry spokesman Esmaeil Baghaei.

Oil prices fell slightly on the news but climbed again after Trump's outright refusal to consider the offer.

In equity news, shares in UK housebuilders took off after the ruling Labour government said it was launching a new version of the much-criticised "Help to Buy" scheme. Persimmon, Bellway and Vistry all surged on the news.

Prime Minister Andy Burnham on Saturday said the new Your First Home scheme would give first-time buyers who paid a 2.5% deposit with a 20% equity loan to buy a new-build property with an initial interest-free period, the government added.

Help to Buy faced sustained criticism for inflating new-build prices and boosting developer profits. Analysts said the scheme offered limited help to lower-income buyers and failed to improve overall housing affordability.

The National Audit Office warned the scheme created significant deadweight, with many recipients able to buy without state support. Economists said billions were tied up in loans that delivered poor long-term value for taxpayers.

The Institute for Fiscal Studies found higher earners benefited most from Help to Buy, undermining its purpose as an affordability measure. Price caps and regional variations meant the scheme had muted impact in high-cost areas.

Reporting by Frank Prenesti for Sharecast.com