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European stock markets rose on Thursday while gas prices fell after US President Donald Trump said talks with Russia would begin “immediately” to end the war in Ukraine.
Germany’s Dax closed up 2.1 per cent and France’s Cac 40 gained 1.5 per cent as investors bet that a ceasefire could boost European companies after a three-year long war that has curbed growth across the continent.
“This [war] has been the main drag on Europe over the last few years . . . a lot of investors left when the war started,” said Barclays strategist Emmanuel Cau. “A ceasefire could make Europe investible again.”
The Stoxx Europe 600 index gained 1.1 per cent — touching a fresh high — while the euro gained 0.5 per cent to $1.043, extending a rise triggered by Trump’s comments on Wednesday afternoon.
Russia’s full-scale invasion of Ukraine in 2022 exacerbated a global surge in inflation, as commodity and energy prices soared. It also sent western markets lower on fears of supply chain disruption.
Natural gas prices, which surged when the war began and are up about 120 per cent over the past year, fell. TTF, the European benchmark, extended its losses to trade down 8.7 per cent.
If flows of Russian gas to western Europe through Ukraine returned to prewar levels, gas prices could fall as much as 50 per cent from current levels, according to Goldman Sachs.
Russian assets also benefited on Thursday, with the rouble gaining 5 per cent to 89.5 per dollar.
JPMorgan Emerging Europe, Middle East and Africa Securities, an investment trust that holds several Russian stocks and cash frozen in a Moscow account, gained 18.8 per cent in London.
Airline, chemicals and auto companies, which would benefit from lower energy prices, rose. Wizz Air gained 6 per cent and Lufthansa closed up 2.8 per cent, while carmaker Stellantis was up 4.5 per cent. BASF, the world’s largest chemicals group, gained 5.3 per cent.
But energy companies, many of which made large profits in recent years because of high oil and gas prices, fell. Equinor, Europe’s largest gas producer, fell 1.9 per cent, having dropped as much as 6 per cent earlier in the day, while TotalEnergies fell 0.5 per cent.
Construction and infrastructure stocks — companies that could help rebuild Ukraine after the war — gained. French industrial group Legrand rose 9 per cent, while steel producer ArcelorMittal rose 3.2 per cent.
“In a broader context the impact of lower energy prices and the reduction in uncertainty will be positive for European equities,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management.
Thursday’s gains extend a rally this year in European equities, driven by Trump’s softer stance on tariffs, prospects of lower interest rates in the bloc compared with the US and hopes of an end to the war.
