European stocks rise as Middle East tensions begin to ease

European shares rose 1.9% on Tuesday as Middle East tensions eased. Financial stocks led the recovery while oil prices dropped below 100 dollars a barrel.

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European equity markets experienced a significant recovery on Tuesday as investor confidence was bolstered by signals of potential de-escalation in the Middle East. The pan-European benchmark index climbed 1.9% to 606.26 points in early trading, rebounding from its lowest closing level in over two months. This upward movement followed statements from United States President Donald Trump, who indicated that the ongoing regional conflict could reach a resolution sooner than expected.

A graph of the DAX index at the Frankfurt stock exchange in Germany, as seen on January 20, 2026. Photo: REUTERS/staff
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