European shares gain on softer US Iran sanctions, falling oil prices

Melrose Industries

25/08/2026 17:41

STOXX 600 ends 0.4% higher
Germany's economy grew faster than expected in Q2 
Melrose jumps on Garden Grove production restart
Luxury stocks lag
Updates to closing levels, adds analyst comment
By Tharuniyaa Lakshmi and Utkarsh    Hathi
Aug 25 (Reuters) - European shares rose on Tuesday as investors took comfort from a softer-than-feared U.S. sanctions package on Iran and falling oil prices, with gains in heavyweight industrials and healthcare stocks lifting the benchmark.   
U.S. Treasury Secretary Scott Bessent's fresh measures to stifle Iran economically had limited impact on markets, as Washington stopped short of imposing any penalties on Tehran's trading partners. 
Iran promised to retaliate against the expanded U.S. sanctions and said it was confident major trading partners would resist Washington's pressure campaign.
The pan-European STOXX 600 .STOXX closed 0.35% higher at 656.48 points, just 0.6% away from its record high hit earlier this month. 
The healthcare sector .SXDP led gains with a 1.2% rise. Novo Nordisk advanced 2.9% after JPMorgan raised its price target for the Danish obesity drug maker, citing increased long-term sales forecasts. Peer Zealand Pharma ZELA.CO climbed 5.6%.
Industrials .SXNP advanced 1.1%, rising the most in three weeks as Melrose Industries MRON.L climbed 10.4% after the British aerospace components supplier gave a timeline for resuming full production at GKN Aerospace. 
Production was halted in late May at a suburban Los Angeles plant after an overheating tank raised fears of an explosion.
Defence and aerospace shares .SXPARO also edged 0.9% higher as a result. 
Investors also assessed signs of a turnaround in Germany's economy, as gross domestic product grew faster than expected in the second quarter and business morale hit its highest level in a year in August. 
"While it’s still too early to call this a self-sustained economic recovery, growth above potential in the first and second quarters of the year, together with four consecutive months of increasing sentiment, are promising," said Carsten Brzeski, global head of macro at ING. 
Brzeski warned however that elevated oil prices, a likely upcoming shock from higher gas prices in the next heating season and renewed trade tensions pose risks to the German outlook. 
Crude prices fell 3.5% as traders saw little immediate threat to global crude supplies from the latest U.S. measures. O/R
Federal Reserve Chair Kevin Warsh's Jackson Hole debut later this week is in focus for clues on rising bond yields and central bank independence.
Limiting the gains on the benchmark, luxury stocks .STXLUXP fell 1.2% as Gucci parent Kering PRTP.PA slipped 3.3%. 
The tech sector .SX8P rose 0.2% ahead of Nvidia's NVDA.O results on Wednesday, amid concerns the chipmaker may struggle to meet lofty expectations.
European software and data stocks ended lower as Alphabet's Google announced its Gemini Enterprise tool for lawyers and law firms. 
French corporate services firm Capgemini CAPP.PA and Amsterdam-listed software maker Wolters Kluwer WLSNc.AS fell the most, by 1.8% and 3.1%, respectively.

 (Reporting by Tharuniyaa Lakshmi and Utkarsh Hathi in Bengaluru; Editing by Rashmi Aich and Jan Harvey)
 ((tharuniyaa@thomsonreuters.com; utkarshtushar.hathi@thomsonreuters.com))