Europe midday: Shares rally, oil falls further on hopes of Iran talks

(Sharecast News) - European shares rallied on Monday as investors eyed tech earnings and the midterm elections, while oil prices also fell sharply on hope of diplomatic progress in the US war on Iran.

The pan-regional Stoxx 600 index was up 0.05% to 647 at 1148 GMT having been 0.36% lower at the opening bell.

Apple earnings will be in focus later in the day while the Trump administration is bracing itself for what could be a tough night on Tuesday as Americans go to the polls in elections for the House of Representatives and Senate, with Democrats tipped to take control of the former and polls too close to call in the upper chamber.

On the economics front, interest rate decisions are scheduled from Sweden, Norway and the UK.

Meanwhile, oil prices moved lower on Monday following reports that Donald Trump favours allowing diplomatic efforts with Iran to continue before considering any further military action after the elections.

According to Axios, citing sources familiar with the discussions, Trump told Benjamin Netanyahu he wanted to give negotiations with Tehran more time to progress before making any decision on renewed strikes.

The prospect of a diplomatic path helped ease concerns about potential disruptions to Middle East oil supplies, weighing on crude prices. Brent crude was down 4.3% at around $108 a barrel, unwinding some of the geopolitical risk premium built into the market in recent sessions.

In other economic news, the eurozone's manufacturing sector continued to grow in October, a closely-watched survey showed on Monday, despite intensifying supply chain pressures.

The S&P Global Eurozone manufacturing PMI came in at 52.7, down marginally on September's record print of 52.9 but ahead of forecasts for a fall to 52.4. It was also the ninth consecutive month of expansion.

The manufacturing PMI output index fell from the previous month's 53.6 but remained in expansionary territory, at 52.8.

In Germany, retail sales fell by more than expected in September, according to figures from the federal statistics office Destatis, underscoring the fragile state of consumer demand in Europe's largest economy.

Retail sales dropped 2.3% year-on-year, against expectations for a 1.1% decline, after a 0.4% fall in August. Analysts had expected a 0.4% increase for the month.

On the equities front, shares in Alstom tanked by at least a quarter after the French train maker cut forecasts.

Reporting by Frank Prenesti for Sharecast.com