Oil stocks buoy European shares as US pulls out of Iran deal

MILAN - 9 May 2018: European shares were supported on Wednesday by strength in oil stocks after U.S. President Donald Trump pulled the United States out of Iran’s nuclear agreement, boosting crude prices.

While some well-received earnings updates also provided support, shares in companies with exposure to Iran fell, with plane maker Airbus and car makers Renault (RENA.PA) and PSA (PEUP.PA) all trading down more than 1 percent.

By 0823 GMT, the pan-European STOXX 600 had risen nearly 0.2 percent to fresh three-month highs, while higher crude prices helped the commodity-stocks-heavy FTSE index .FTSE gain 0.4 percent.

The oil and gas index .SXEP was the biggest sectoral gainer, up 1.5 percent at a three-year high as crude rallied after Trump’s move on Iran raised the risk of conflict in the Middle East and cast uncertainty over global supplies.

“Whilst other signatories remain onboard, Trump’s decision potentially turns the geopolitical instability dial up a notch, especially in the Middle East,” said Accendo Markets analysts in a note.

Shares in oil majors Total (TOTF.PA), Royal Dutch Shell (RDSa.L) and Eni (ENI.MI) were all trading up between 1.1 and 2.3 percent.