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(Sharecast News) - European shares rallied on Wednesday as US President Donald Trump tried to extricate himself from his war of choice with Iran by offering a 15-point "peace plan" that has so far been ridiculed by Tehran.
The pan-regional Stoxx 600 index was up 1.67% to 588 at 1147 GMT with all major bourses also in the green.
Trump overnight presented the plan and claimed Iran wanted to "make a deal so badly" although Tehran dismissed this as fake news, adding that the US was "negotiating with itself". Meanwhile US strikes on the Gulf state continued unabated and another 1,000 American troops were deployed to the region.
Crude oil prices fell on the news with benchmark Brent crude down 5.76% to $98.47 a barrel and West Texas Intermediate 5.74% lower to $87.05. Month-ahead gas for April slumped 7.3% to 50.08 per kilowatt hour.
"European markets are following the wider global theme of optimism as rumours swirl around the apparent negotiations that could lead us out of the conflict in Iran," said Scope Markets analyst Joshua Mahony.
"Dip buyers have started to grab what they can, while oil prices shift lower as the perceived length of time associated with the disruption shortens. The banks have been a notable loser of late, and thus it comes as no surprise to see them lead the gains, with stagflation concerns easing somewhat."
"Overnight price action in Asia saw Japanese stocks jump over 2%, outperforming on the prospect of a reopening of the Straits. Notably, Japan is the most reliant upon the Straits, with 73% of their oil coming through that passage. This serves to highlight the heightened sensitivity to developments in the region."
In economic news, German business morale fell sharply in March, as the Iran war made companies more pessimistic and threatened the long-awaited recovery of Europe's biggest economy although the decline was not as big as expected.
The Ifo institute's business climate index fell to 86.4 in March compared with a revised 88.4 in February. Analysts had tipped a drop to 86.1.
In equity news, shares in Lanxess surged after an upgrade by JP Morgan for the German chemical supplier.
Travel and leisure stocks rose on the hopes of a ceasefire, with airlines Lufthansa and Air France both climbing.
RS Group fell as it warned of weaker revenues amid market weakness and tariff impacts, notably in Mexico.
Reporting by Frank Prenesti for Sharecast.com