Investing.com - European stocks were on the front foot on Wednesday, with an impasse between the U.S. and Iran in focus as President Donald Trump traveled to China for crunch summit.
By 03:13 ET (07:13 GMT), the pan-European Stoxx 600 had ticked up by 0.7%, the Dax in Germany had gained 0.6%, the CAC 40 in France was up by 0.2%, and the FTSE 100 in the U.K. had risen by 0.8%.
Trump is set to meet face-to-face with Chinese counterpart Xi Jinping later this week, with the two anticipated to discuss of range of topics, including trade and Taiwan.
But it may be the ongoing fight between the U.S. and Iran that will likely receive much of the attention. Analysts have suggested that China, as a major importer of Iranian crude, could be persuaded to act as a guarantor of a lasting peace deal, although some observers have ramped down expectations that such a breakthrough could come from the gathering.
Diplomatic efforts to forge an agreement between Washington and Tehran appear to have stalled. Earlier this week, Trump dismissed an Iranian response to an American peace proposal, describing it as “unacceptable” and a “piece of garbage.” Reports have also swirled around whether the White House will resume strikes against Iran.
Tehran, for its part, has not indicated that it has further plans to appease Trump.
Crucially, the stalemate means the Strait of Hormuz, a vital waterway off of Iran’s southern coast through which roughly a fifth of the world’s oil transits, is effectively shuttered, as it has been for weeks.
Oil prices are well above pre-war levels as a result, placing upward pressure on inflation — a trend underscored by data on Tuesday which showed that U.S. consumer prices rose at another brisk pace in April, after a notable increase in the prior month.