BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks closed on a firm note on Monday as concerns over inflation and interest rates eased after oil prices fell amid hopes about reopening of the Strait of Hormuz following U.S. President Donald Trump cancelling fresh military strikes and saying there is a 'good chance' of progress in talks aimed at ending months of fighting.
It is said that negotiators are trying to break the deadlock over transit fees and the management of the Strait of Hormuz.
Easing worries about AI infrastructure spending also contributed to the positive sentiment in the markets.
Brent crude futures fell to $81.55 a barrel before recovering to $83.90, still down more than 4.5% from previous close.
The pan European Stoxx 600 closed up by 0.45%. Germany's DAX and France's CAC 40 moved up 1.45% and 1.22%, respectively. The UK's FTSE 100 edged down 0.1%, while Switzerland's SMI settled with a gain of 0.18%.
Among other markets in Europe, Austria, Czech Republic, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden ended higher.
Belgium, Denmark and Türkiye closed weak, while Finland ended flat.
In the UK market, Barratt Redrow, Metlen Energy & Metals, Rentokil Initial, Smith & Nephew, ICG and St. James's Place climbed 3%-4%.
Lion Finance, The Sage Group, Rolls-Royce Holdings, Natwest Group, BAE Systems, Babcock International, Spirax Group, Diploma, Persimmon and Howden Joinery Group gained 2%-2.7%.
Melrose Industries, Aberdeen Group, Associated British Foods, Burberry Group, JD Sports Fashion, Lloyds Banking Group, Allianxe, Relx, HSBC Holdings, Marks & Spencer, Autotrader Group, Compass Group and Whitbread also moved notably higher.
Clarkson, a provider of shipping services, rose sharply after reporting record first-half profits.
AstraZeneca tanked nearly 9% amid reports the company had held discussions with US drugmaker Bristol Myers Squibb about a possible merger.
IG Group Holdings shed 4.1%. Coca-Cola HBC, British American Tobacco, Intercontinental Hotels Group, Imperial Brands, Hiscox, Coca-Cola Europacific Partners, Airtel Africa, Rio Tinto, GSK and Centrica also closed notably lower.
In the German market, Siemens Healthineers surged more than 6%. Deutsche Telekom, SAP, Adidas, Rheinmetall and Zalando gained 3%-5%.
Commerzbank, Mercedes-Benz, Volkswagen, Qiagen, Deutsche Boerse, GEA Group, E.ON, Brenntag, Daimler Truck Holding, BASF, Porsche Automobil Holding, BMW, Deutsche Bank and Siemens also moved notably higher.
Shares of motion control products maker Stabilus rallied nearly 5% after the company reported a sharp rise in third-quarter net profit, helped by a one-off gain from the sale of subsidiaries.
Bayer and Beiersdorf dropped nearly 2% from previous closing levels. Hochtief drifted down 1.4%. Merck and Infineon ended modestly lower.
In the French market, Capgemini, Renault, EssilorLuxottica, Safran, Dassault Systemes, Thales, Airbus, Saint-Gobain, LVMH, Legrand, Accor, Societe Generale, Vinci and Bureau Veritas gained 2%-4.5%.
BNP Paribas, Hermes International, ArcelorMittal, Kering, Credit Agricole, Publicis Groupe, Pernod Ricard and Bouygues also ended with solid gains.
Teleperformance drifted down nearly 6%. STMicroelectronics ended lower by about 3.7%. Engie, Edenred and Michelin closed with moderate losses.
The UK manufacturing activity expanded again in July, reflecting upturns in production, new business and export orders, final survey data from S&P Global showed.
The manufacturing Purchasing Managers' index dropped to a four-month low of 51.9 from 52.5 in June. The flash reading was 52.8.
Data from Destatis showed retail sales in Germany registered a monthly fall of 1.1% in June, in contrast to the 1.2% increase in May. Sales were expected to drop moderately by 0.4%.
On a yearly basis, retail sales slid 0.2%, reversing May's 2.1% increase.
In nominal terms, retail sales fell 1.2% month-on-month but increased 1.2% from the previous year. In the first half of 2026, retail sales increased 0.7% in real terms and 2.2% in nominal terms from the same period last year.
Final data from S&P Global showed the Euro area manufacturing activity strengthened in July as production posted its biggest expansion in nearly four-and-a-half years.
The Purchasing Managers' Index edged up to 51.9 in July from 51.4 in June, signaling the strongest improvement in factory operating conditions since April. However, the score was slightly below the flash estimate of 52.0.
The survey showed highly divergent trends among euro area's four largest economies. Germany was the best performer, with growth hitting joint-strongest in more than four years.
Germany's manufacturing activity improved in July as output growth accelerated on the back of an upturn in export sales. The final factory PMI rose to 52.2 in July, in line with estimate, from 50.3 in the previous month.
France's manufacturing sector slipped into the contraction territory in July with accelerated declines in new orders, production and purchasing activity. The final manufacturing PMI posted 49.8 in July compared to 51.2 in the prior month. The flash reading was 50.0.
Data from the Federal Statistical Office showed Switzerland's consumer price index rose 0.4% yearly in July, slower than the 0.5% increase in June.
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