European stocks rise as Iran talks hopes send oil and gas sharply lower

Energy prices fall on hopes for talks

Hopes that diplomacy between Iran and the United States could resume pushed energy prices sharply lower on Monday, 2 November. Brent crude for January delivery settled down 7.63% at 104.77 dollars a barrel on the London futures market, after closing the previous Friday at 113.43 dollars. European gas fell 8.5% to 95.1 euros per megawatt hour in the same session, while gold was also lower at 3,897.07 dollars an ounce in one trading update. The move came as investors grew more optimistic about intensified diplomatic efforts, and the fall in crude was attributed to that optimism. Energy shares lagged the rally, with Eni down 2.28% at the Milan close.

European stocks close higher

Milan finished up 0.90%, Paris rose 0.98%, Madrid gained 1.7%, Frankfurt added 0.63% and London closed up 0.29%, making Madrid the strongest of the group. Earlier in the session Milan had been trading 1.2% higher, led by Buzzi and Stm. At the Milan close, Buzzi was up 6.23% and Stm rose 3.22%. Airlines gained in the morning, with Air France-KLM up 4%, Ryanair up 3.32% and IAG up 3%. Utilities were weaker, with A2A down 2.54% earlier in the day, while carmakers slipped, Porsche down 0.88% and Volkswagen down 0.7%.

Madrid1.7%

Paris0.98%

Milan0.9%

Frankfurt0.63%

London0.29%

Madrid

1.7 %

Paris

0.98 %

Milan

0.9 %

Frankfurt

0.63 %

London

0.29 %

Data from the article text

Iran's conditions and the diplomatic track

Over the weekend Iran sent a letter to Qatar, which is mediating contacts between Washington and Tehran. Earlier in the week, US Vice President J. D. Vance sent a letter to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, to restart negotiations. Tehran says that if Washington accepts its terms, it could begin a plan to open the Strait of Hormuz within two days and start deeper talks to end the war that began on 28 February with Israeli and US attacks. Those terms include an end to the conflict on all fronts, including Lebanon, the unfreezing of Iranian assets held in third countries, recognition of control of Hormuz by Tehran and Muscat, and the lifting of oil sanctions. Press reports said Donald Trump was willing to give diplomacy room, and that Supreme Leader Mojtiba Khamenei had granted the government specific powers to deal with Washington.

Bonds, currencies and the Italian spread

Government bond yields fell as investors hoped for a slowdown in inflation. The Italian ten-year BTP yield dropped to 4.42% in early trading and stood at 4.43% at the close, while its spread against the German Bund narrowed to 113 basis points. The euro traded at 1.12 dollars in the morning, and the pound stood at 1.34 dollars to the euro's counterpart in the same reports. Lower energy prices eased pressure on bonds across the euro area, and the spread movement was the most closely watched figure for Italian debt.

Wall Street and the midterm vote

Wall Street opened higher, with the Dow Jones up 0.76% at 52,164.02 points, the Nasdaq up 0.61% and the S&P 500 up 0.43% at 7,612.36 points. Donald Trump hopes to keep control of Congress in the midterm elections on Tuesday, although polls point to Democrats almost certainly winning the House, with the Senate result more uncertain. Investors are also weighing whether Washington will pursue a diplomatic deal with Tehran or resume bombing Iran after the vote. Apple is due to report results after the market closes, and its shares were down 1% in the session.