European stocks rise despite Middle East tensions

European equity bourses gained on Monday as institutional allocators weighed continued geopolitical tensions and impending third-quarter corporate earnings. 

The pan-European Stoxx Europe 600 Index rose 0.7%, after last week’s volatile swing.

Germany’s DAX and France’s CAC 40 gained 0.7% and 0.4% respectively, while London’s FTSE 100 rose 1%.

Spain’s IBEX 35 jumped around 1.3%, boosted by banks, which were at the forefront of the equity sell-off during the bond rout.    

Energy desks led early sector re-positioning after U.S. President Donald Trump announced an immediate "energy ceasefire" between Russia and Ukraine over the weekend, raising transient hopes for reduced disruptions to global fuel flows.

However, after an earlier decline, oil is now trading higher. Brent crude futures for December initially dropped 1.8%, but are now up 2% above $106 a barrel, adding to last week’s 3% geopolitical surge.

Trump’s proposal for Russia to scale up diesel exports to the U.S. and global markets faces severe operational hurdles. Persistent Ukrainian drone strikes on major Russian refineries have significantly impaired domestic refining throughput, leaving market participants questioning how much surplus fuel Moscow could realistically export while meeting its own domestic obligations.

Highlighting the fragility of any unconfirmed pause, Russia launched additional attacks on Ukrainian power grids over the weekend, while Ukrainian strikes expanded deeper into Russian technology infrastructure - including data centers belonging to tech giant Yandex - disrupting regional online and banking services.