European stocks close higher on optimism over possible US-Iran talks

European stock markets closed higher on Tuesday as investor sentiment improved on hopes that the US and Iran will resume another round of talks in the coming days.

The pan-European Stoxx Europe 600 index rose 0.99% to close at 619.95 points.

Among major regional indexes, Germany’s DAX 40 gained 1.27% to 24,044.22, and the UK’s FTSE 100 was up 0.25% at 10,609.06.

France’s CAC 40 advanced 1.12% to 8,327.86, while Italy’s FTSE MIB 30 added 1.36% to 48,175.65.

Also, Spain's IBEX 35 index rose 1.46% to end Tuesday at 18,286.10.

The euro was also stronger, with the euro/dollar exchange rate up 0.31% at 1.1795 as of 1700GMT.

European markets welcomed expectations that negotiations between Washington and Tehran could eventually produce a deal.

Tensions had escalated over the weekend during talks in Pakistan, where the two sides reportedly had disagreements on nuclear issues and control of the Strait of Hormuz, but market concerns eased slightly after developments on Monday.

US President Donald Trump said at the White House on Monday that Iranian officials had reached out to Washington and were willing to make a deal.

US media outlets also reported that delegations from both countries could resume talks in Pakistan later this week.

Meanwhile, Airlines for Europe (A4E), which represents airlines across the region, called on the European Union to take measures against risks to jet fuel supply and rising costs.

European Commission spokesperson Anna-Kaisa Itkonen said disruptions in the jet fuel supply chain could emerge in the near term and described the situation as concerning.

Separately, EU institutions agreed on measures aimed at sharply reducing steel imports, including a 50% tariff if import quotas are exceeded.