European shares moved higher on Monday as falling oil prices reduced concerns about energy costs and supply disruption. Markets responded to plans for direct talks between the United States and Iran, which lowered the immediate risk of further military action.
The pan-European STOXX 600 gained 0.3% during afternoon trading and remained close to the record level reached on Friday. Germany’s DAX rose 1.4%, France’s CAC 40 added 1.2% and Italy’s FTSE MIB advanced 0.9%. The UK’s FTSE 100 was broadly unchanged.
US President Donald Trump said talks with Iranian officials were scheduled for Monday. He also called off a planned military strike while negotiations continued over Iran’s nuclear programme and the reopening of the Strait of Hormuz.
Oil prices fell by more than 4% following the announcement. Lower crude prices can reduce pressure on transport, manufacturing and other energy-intensive businesses. They may also ease some of the inflation risks created by the conflict, although the outcome of the talks remains uncertain.
European markets entered August after a positive July, supported by second-quarter company results. However, the latest economic data presented a mixed picture.
Eurozone manufacturing activity continued to expand in July. The region’s manufacturing purchasing managers’ index increased to 51.9 from 51.4 in June, while factory output grew at its fastest rate in almost four and a half years.
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