European stock markets advanced for a second straight day on Tuesday, marking the first back-to-back gain this month, driven by a rally in energy shares as oil prices climbed.
The Stoxx Europe 600 index closed 0.7% higher, with TotalEnergies and Shell among the top contributors. Energy stocks extended their winning streak to eight consecutive sessions, reaching a new peak on Tuesday as Brent crude surged above $100 per barrel.
"A significant portion of the risk repricing appears to have been completed following a sharp spike in implied volatility for both equities and crude oil," said Mathias Heim, Chief Investment Officer at Bellecapital.
On the corporate front, German publishing group Springer Nature AG & Co. rose more than 12% after reporting strong earnings. Finnish refiner Neste Oyj gained nearly 6% after Barclays upgraded its rating, citing rising fossil fuel refining margins.
Among declining stocks, Amplifon SpA fell for a second day after agreeing to acquire the hearing aid business of GN Store Nord, with the deal partially financed through cash and stock issuance. Shares of Indra Sistemas SA dropped 4.2% following a report by El Confidencial that the Spanish government plans to request the resignation of the defense contractor's chairman, Ángel Escribano.
The two-day rally provided a brief respite for European equities, though the market remains on track for its worst monthly performance in three and a half years.
According to a Bank of America survey of European fund managers, investor optimism about economic growth in Europe this year has declined sharply since the outbreak of war, amid rising concerns over stagflation. The survey found that a net 29% of fund managers now expect the European economy to accelerate, down from a record 74% a month earlier.
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