European shares start August higher on US-Iran diplomacy hopes

European shares rose on Monday, driven by hopes of a diplomatic breakthrough with Iran, as the pan-European STOXX 600 index increased 0.4% to 651.88.

European shares edged higher on Monday to start August on ‌a strong note after U.S. President Donald Trump said talks with Iran were due later in the day, lifting hopes of a diplomatic ‌breakthrough that could ease soaring oil prices.

The pan-European STOXX 600 index ‌was up 0.4% at 651.88 by 7:09 GMT Energy stocks fell 2% as oil futures dropped about 5.9% after Trump held off on a fresh attack ⁠on ​Iran, seeking a quick ⁠deal to curb Tehran's nuclear ambitions and reopen the Strait of Hormuz.

Travel and ⁠leisure sector, on the other hand, gained 2.1%. The benchmark STOXX 600 rose ​more than 1% in July, with strong earnings helping offset concerns ⁠over the U.S.-Iran conflict, which had pushed Brent crude above $90 a barrel. Europe ⁠is particularly ​exposed to higher energy costs because of its reliance on oil imports. Prysmian rose 1.5% after agreeing to buy U.S. electrical ⁠products maker Atkore for $95 per share in cash, implying an enterprise value ⁠of about $3.8 ⁠billion. AstraZeneca shares tumbled 7% after a reported possible combination of the European pharmaceutical giant with U.S.-based Bristol Myers ‌Squibb.