STOXX 600 gains for a third week with focus on Middle East peace talks

By Ragini Mathur and Twesha Dikshit

April ‌10 (Reuters) - European equities ​edged higher ​on Friday, notching up a third straight week of gains as cautious optimism ahead of U.S.-Iran weekend talks outweighed frictions in a fragile ceasefire.

The pan-European index STOXX ‌600 ended 0.4% higher at 614.84 points. The index is up 3% for the ⁠week.

Most bourses also gained, with France's CAC 40 and Spain's IBEX 35 adding 0.2% and 0.6%, respectively.

European shares logged ‌their strongest one-day rise in more ‌than four years on Wednesday on news of a U.S.-Iran ceasefire, helping the STOXX 600 claw back some of the losses incurred since hostilities began on February 28.

"Investor sentiment continues to fluctuate ​amid uncertainty about the durability of the two-week Middle-East ceasefire agreement," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

"While volatility is likely to remain in the near term, ⁠we continue to believe that exposure to structural trends will remain a key differentiator for equity market performance over the long run," ​he added.

Investors will closely monitor the talks, especially efforts to reopen the Strait of Hormuz, a vital waterway for global energy supplies. Europe's airport industry ​has warned that the continent could face a systemic jet ‌fuel shortage within three weeks if it remains closed.

STOXX 600 companies are expected to report growth of 4.2% in first-quarter earnings, according to LSEG data, ⁠slightly higher than the 4% rise estimated last week.

Meanwhile, the aerospace and defence index fell 2.2% after a Bloomberg report that Ukraine and Russia were heading toward a potential deal.

Germany's Rheinmetall and Hensoldt and Italy's Leonardo fell ⁠more than 5% and CSG was off by 8%.

Construction stocks gained with Buzzi, Holcim and Heidelberg Materials up between ​3% and 5.6%. Financials and tech shares boosted the index, with gains of 1.3% each.

Europe's luxury sector gained 0.9% after Italy's Brunello Cucinelli rose 5.3% on first-quarter revenue above expectations.

Among other movers, Sodexo shares fell 10% to a ‌six-year low after the French food caterer slashed its annual sales and profitability targets.

Repsol fell 5.8% after the Spanish energy company published a worse-than-expected first-quarter ‌trading update.

In the U.S., consumer prices increased by the most in nearly four years in March as the ⁠Iran war led to a surge in ‌oil prices. Markets will continue ​to monitor inflation data closely to gauge the global economic impact of the conflict.

(Reporting by Ragini Mathur and Twesha Dikshit in Bengaluru; Editing by Harikrishnan Nair and ‌Alexander Smith)

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