European stocks climb as STOXX 600 hits three-week high on easing US-Iran tensions

European stock markets climbed on Tuesday as investors regained appetite for risk following signs of de-escalation in tensions between Washington and Tehran over the Strait of Hormuz^[1]. The STOXX 600 index rose 0.6% to 600.33 points, marking its highest level in three weeks as traders returned from the Easter holiday break^[1].

The rally was broadly supported by strength in the media and banking sectors^[1]. The media sector led gains with a 5.8% surge, driven primarily by Universal Music Group's 12.7% jump after the company received a takeover offer valued at approximately 55.75 billion euros from Pershing Square^[1]. Banking stocks also participated in the advance, rising 1.5% amid improving market sentiment^[1]. Britain's FTSE 100 gained 0.2%, while Spain's IBEX index climbed 1%^[1].

However, the market faced headwinds from economic data and geopolitical concerns. Purchasing managers' indices revealed a sharp contraction in private sector expansion across the eurozone due to supply chain disruptions and elevated energy costs, though Sweden demonstrated greater resilience with consumer price increases coming in below expectations, pushing its benchmark index up 1.4%^[1]. The technology sector bucked the broader trend, with semiconductor equipment maker ASML dropping 3% as U.S. lawmakers moved forward with legislation to impose fresh restrictions on semiconductor exports to China^[1].

The modest market gains reflected investor caution regarding the ongoing Middle East crisis and its potential impact on global growth and inflation trajectories^[1]. While President Trump's announcement that he would extend Iran's deadline to reopen the Strait of Hormuz provided temporary relief, markets remained in a state of heightened vigilance, monitoring how the situation develops and its implications for energy prices and economic stability in the coming weeks.