European shares mixed as investors assess Iran-Israel ceasefire
European shares were mixed on Wednesday as investors assessed the developments around a ceasefire between Iran and Israel.
The pan-European STOXX 600 index was up 0.04% at 541.2 points, as of 0842 GMT. Other regional indexes were mixed - Germany was down 0.2%, France rose 0.1%, Spain lost 0.8%, and the UK was 0.2% higher.
The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday.
Trump's Middle East envoy said late on Tuesday that talks between U.S. and Iran were "promising" and that Washington was hopeful for a long-term peace deal. However, doubts continued to linger about the truce's stability.
Additionally, NATO leaders gathered in The Hague for a summit on Wednesday, which is expected to endorse a higher defence spending goal of 5% of GDP - a response to a demand by Trump.
"European stocks still face trade tensions and the ECB's easing and interest in European defense stocks are now no longer strong factors anymore," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"That's why yesterday's rebound in the European stocks was overstretched and we might see some consolidation and even maybe some bearishness in the coming days."
The pan-European STOXX 600 index notched its biggest single-day jump in over a month on Tuesday on optimism over the Israel-Iran ceasefire.
Meanwhile, Spanish Economy Minister said his country does not expect any repercussions from its refusal to meet the defence spending target.
Ozkardeskaya added that Spain's unwillingness to comply with the rest of the NATO countries when it comes to spending might be weighing on the Spanish index on Wednesday.
Data also showed
Spain's economy slowed to 0.6% in the first quarter of 2025 compared to the previous period.
On Wednesday, European auto stocks led sectoral gains, rising 1.4%. European car sales rose 1.9% year-on-year in May, data by the European Automobile Manufacturers Association (ACEA) showed.
Stellantis rose 3.8% after Jefferies upgraded the carmaker to "buy" from "hold".
Ferrari gained 3.7% after the Italian luxury car maker held late on Tuesday a briefing call ahead of its second-quarter results, with brokerage Bernstein saying its "tone remained as confident as ever".
Defence stocks also advanced 1.4%.
Conversely, media stocks fell about 1%.
Babcock topped the STOXX index with a 12.6% rise after the British defence engineering company upgraded its medium-term guidance.
Investors are now awaiting U.S. Federal Reserve Chair Jerome Powell's testimony before the Senate on Wednesday to gauge when the central bank could cut rates next.
(Reporting by Sukriti Gupta and Sanchayaita Roy in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
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