Europe close: Stocks rebound, oil prices retreat as Israel-Iran conflict continues
By Benjamin Chiou
Date: Monday 16 Jun 2025
(Sharecast News) - European stocks advanced on Monday as risk appetite returned following five days of losses on the back of rising geopolitical risks in the Middle East, with gains in Milan and Madrid providing a boost.
The pan-European Stoxx 600 index was up 0.4% by the close of play, as a moderate performance in London (up just 0.3% with the FTSE 100 trading close to record highs) was countered by strong gains from the FTSE MIB and IBEX 35 (up 1.2% and 1.4% respectively. Stocks in Frankfurt and Paris rose 0.8%, while Zurich equities fell 0.5%.
The Stoxx 600 fell 1.6% last week to settle at 544.94 - its lowest close since 14 May - after Israel sent airstrikes to nuclear bases in Iran, causing oil prices to surge. Fighting continued over the weekend, with both sides exchanging strikes for four straight days.
"Friday's outbreak of volatility has given way to a rebound in risk appetite, as investors breathe a sigh of relief that the Middle East conflict now underway remains contained," said Chris Beauchamp, chief market analyst at IG. "This might seem like excessive optimism, given the potential for the war to spiral into a new and much more dangerous phase."
Sentiment was also helped on Monday by reports that Iran was seeking to de-escalate hostilities. According to the Wall Street Journal, Tehran has sent messages to Israel via intermediaries saying that would be open to talks, provided that the US doesn't join Israel in the conflict.
Brent was down 3.2% at $71.86 a barrel, having topped the $78 mark briefly on Friday, its highest since January, as supply concerns eased slightly. Crude surged on Friday given the risk of an escalating conflict disrupting shipments through the nearby Strait of Hormuz.
"Analyzing three quarter-centuries of geopolitical risks in crude oil markets tells you that Brent crude at $75/bbl is consistent with the average conflict in the region," analysts at TD Securities said in a note on Monday. "However, this conflict is now pivoting away from nuclear and military targets to engulf economic ones -including oil and gas infrastructure - raising the stakes that this conflict could be larger than typical."
Closer to home, the head of Germany's Bundesbank, Joachim Nagel, pushed the European Central Bank not to rush into further interest-rate cuts following another reduction this month - its eighth such move this month since June 2024. "We should continue to make decisions on a meeting-by-meeting basis depending on the data and not rush into anything," Nagel said in a speech.
Market movers
Shares in Kering surged 12% on the back of speculation that Renault boss Luca de Meo is set to join the French luxury group as its new chief executive. While the appointment has not been confirmed, Renault announced in a statement that De Meo would be leaving the company after five years to "pursue new challenges outside the automotive sector", causing shares in the automaker to drop 9%.
FTSE 100-listed gambling and sports betting group Entain jumped 15% after guidance for its US operations was upgraded folloinw a stronger-than-expected second quarter from BetMGM. Swedish peer Evolution Gaming and London's Playtech also rose.
Meanwhile, M&A activity was moving mid-cap stocks in London: Metro Bank was up 17% following reports over the weekend that it has been approached by private equity firm Pollen Street Capital about a possible takeover; while Spectris rallied 6% after it rebuffed a takeover approach from US private equity giant KKR, fuelling hopes of a potential bidding war with buyout firm Advent International.
Swiss pharma giant Roche was 3% lower on the news it had paused the commercial and clinical use of Duchenne muscular dystrophy treatment Elevidys after it was linked to two fatal cases of acute liver failure.
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