European stocks close higher on Hormuz deal hopes, upbeat earnings

European stock markets closed higher Tuesday, supported by growing expectations of an agreement to reopen the Strait of Hormuz and positive signals from corporate earnings.

The pan-European Stoxx Europe 600 gained 0.73% to close at 656.86 points, after reaching a new intraday record.

France's CAC 40 rose 0.61% to 8,666.63 points, while Germany's DAX 40 added 0.77% to 26,202.35.

Italy's FTSE MIB 30 climbed 1.26% to 53,540.5 points, recording the strongest gain among major European indices.

In the UK, the FTSE 100 edged up 0.2% to 10,879.38 points.

Spain's IBEX 35 increased 0.21% to a record closing of 20,023.6 points, finishing above the 20,000 threshold for the first time. The index has risen for four consecutive sessions and gained about 15.7% since the beginning of the year.

The euro/dollar exchange rate was up 0.12% at 1.152 as of 1620 GMT.

Market sentiment improved after US Treasury Secretary Scott Bessent said negotiations with Iran were continuing and that an agreement to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday.

The prospect of restoring traffic through the strategic waterway eased concerns about global energy supplies and pushed oil prices sharply lower, supporting equities across the region.

Corporate earnings also provided momentum. British energy company BP reported an underlying replacement-cost profit of $5.7 billion for the second quarter, compared with $2.35 billion a year earlier, as higher oil prices, stronger refining margins and trading performance boosted results.

BP also generated an operating cash flow of $10.9 billion and increased its quarterly dividend by 4%.

In the banking sector, HSBC reported second-quarter pretax profit of $10.1 billion, up about 80% year-on-year and above market expectations, supported by higher banking and wealth-management income.

The London-headquartered bank also announced a new share-buyback program of up to $1 billion and raised its cost-saving target.

Technology shares contributed to the broader advance, tracking gains in US and Asian chipmakers, while German pharmaceutical and agricultural group Bayer rose after reporting an unexpected quarterly profit.