Europe midday: Stocks rise, but Middle East tensions limit upside

(Sharecast News) - European stocks edged higher on Tuesday after two days in the red, with reports of diplomatic progress between the US and Iran helping to lift sentiment - even as oil prices continued to rise.

Just after the midday mark in London, the benchmark Stoxx Europe 600 index was up 0.24% at 640.83, partially rebounding after hitting its lowest closing price since 8 July on Monday.

Major indices across the continent were all higher, though upside was limited by another 1.3% gain in Brent crude to $90.41 a barrel.

Oil prices had initially eased back after it was reported that a senior Iranian official said mediators had proposed a 10-day ceasefire to revive an interim US-Iran agreement, and the removal of restrictions in the Strait of Hormuz. However, news that Yemen's Iranian-backed Houthis have introduced a naval blockade against Saudi Arabia was also in focus.

"The [Houthis] move raises concerns about shipping disruptions through key trade routes and introduces additional uncertainty into global energy markets," said David Morrison, senior market analyst at Trade Nation.

In economic news, German economic sentiment improved more than expected in July, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim. The ZEW economic expectations index rose to 26.3 from 10.5 in June, coming in above expectations for a reading of 18.0.

Meanwhile, the UK unemployment rate was 4.9% in March to May, unchanged on the previous month, according to the Office for National Statistics. This was marginally below forecasts for 5.0%, although other indicators continued to point to a softening jobs market.

On the corporate front, shares in Swiss pharmaceutical firm Novartis gained as its second-quarter results beat expectations. The company returned to growth, with net sales rising 1% at constant FX to $14.41bn, topping the $13.96bn consensus estimate.

London-listed outsourcing and energy services firm Mitie rocketed as it agreed to be bought by rival OCS Group in a �3.1bn deal.

On the downside, Boliden slid as the Swedish metals company's second-quarter results disappointed, while shares of Austria's Wienerberger fell sharply after a Q2 update.

Swiss private banking and financial firm Julius Baer slumped despite saying that profits had more than doubled in the first half of the year.