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European shares rise on US-Iran talk; UK's Starmer steps down

Investors viewed the latest round of U.S. - Iran?negotiations as a sign of progress toward a resumption of shipping through the Strait of Hormuz, and also the resignation of British PM Keir starmer.

After two sessions of declines, the STOXX 600 closed up 0.6%.

Barclays, NatWest, and Standard Chartered all made gains in the UK. They were up 3,9%, 4%, and 1,3%, respectively. The banking index as a whole rose 1.4%. Starmer's Monday resignation announcement paves the path for what is expected to be an orderly transition of power to Labour Party leader Andy Burnham. Burnham could become Britain's 7th leader in 10 years by next month.

Michael Field, Morningstar's equities analyst, said that the recent weakening in Labour's grip on the electorate had negatively affected the perception of the UK as an investment destination.

"The election of a popular politician like Andy Burnham will likely improve market perception." Qatar and Pakistan, who are acting as mediators, said that Washington and Tehran had agreed on a roadmap to a final peace deal and measures to protect shipping through the Strait of Hormuz. Brent crude oil fell 2%, to less than $8 a barrel.

Uncertainty lingered, however, as Tehran declared the waterway closed Sunday, citing that fighting between Israel, Lebanon and Syria had not ended.

There is a bit of uncertainty about the Strait of Hormuz. Fiona Cincotta, City Index, said that there do seem to be "some vessels" passing through the Strait of Hormuz.

Last week, the benchmark STOXX reached a new high on optimism about Middle East peace talks. The hawkish forecasts of the U.S. Federal Reserve, however, reminded us that concerns about inflation and higher energy costs are likely to persist. The European Central Bank's Christine Lagarde stated that the inflation shock in Europe is not big enough to drive up long-term price bets.

Chipmaker Infineon gained 4.8% in line with the gains made by Asian stocks. EasyJet, a budget airline, rose 2.8% following the IPO of?Castlelake by a U.S. investment firm. British defence and engineering company Babcock fell 5.9% following a sharp drop in its annual profits due to a PS140m charge on the Royal Navy Type 31 frate programme.

(source: Reuters)