European share indices moved higher on Wednesday as market participants monitored a high-profile meeting between President Donald Trump and Chinese President Xi Jinping, set to take place later in the week, alongside an ongoing diplomatic deadlock between the United States and Iran.
By 03:13 ET (07:13 GMT), the pan-European Stoxx 600 had ticked up by 0.7%. Germany's Dax gained 0.6%, France's CAC 40 was up 0.2%, and the U.K.'s FTSE 100 rose 0.8%.
The upcoming face-to-face encounter between Trump and Xi is expected to cover a range of issues, including trade and Taiwan. Market attention, however, has been strongly drawn to the stand-off with Iran, where diplomatic efforts to bridge the gap with Washington appear to have stalled.
Analysts have suggested that China, as a significant importer of Iranian crude, could be persuaded to serve as a guarantor for a lasting settlement. At the same time, some commentators have tempered hopes that a decisive breakthrough will emerge from the summit.
Developments this week included President Trump dismissing an Iranian response to a U.S. peace proposal as "unacceptable" and labeling it "a piece of garbage." There have also been reports suggesting the White House may resume military strikes against Iran, although official actions have not been confirmed in this reporting.
Tehran has not indicated it plans to make further conciliatory moves toward Washington. The resulting stalemate has effectively closed the Strait of Hormuz - the strategic waterway off Iran's southern coast through which roughly a fifth of the world's oil transits - a situation that has persisted for weeks.
As a consequence, oil prices remain well above pre-war levels, a factor that is contributing to upward pressure on inflation. That dynamic was underscored by data released on Tuesday showing U.S. consumer prices rose at another brisk pace in April, continuing an acceleration from the prior month.
Investors continue to balance the geopolitical risks tied to Iran and energy supply against the potential policy and trade implications of the Trump-Xi meeting, leaving markets attentive to any new signals from diplomatic talks or economic data releases.
Market snapshot
- Stoxx 600: +0.7% (as of 03:13 ET / 07:13 GMT)
- Dax: +0.6%
- CAC 40: +0.2%
- FTSE 100: +0.8%