European stocks edged higher on Wednesday, with gains in automobile and chemical shares helping the benchmark index move closer to record levels.
However, escalating tensions in the Middle East and concerns over inflation continued to weigh on investor sentiment.
The pan-European STOXX 600 index rose 0.2% to 629.44 points by 0713 GMT.
The benchmark remained around 1% below the all-time high it touched in February before the conflict in the Middle East intensified.
Auto stocks lead gains
Automobile and parts stocks emerged as the top-performing sector during the session.
The sector index advanced 1.5%, supported by strong gains in Volvo Cars shares.
Volvo Cars climbed 8% after the company announced that it had received approval from the US government that would allow it to continue selling vehicles in the country.
The development boosted broader sentiment in the European auto sector, which has remained sensitive to regulatory and trade-related updates in recent months.
Chemical shares rally on AkzoNobel move
Chemical stocks also posted strong gains, rising more than 1% during the trading session.
The sector was lifted by a sharp jump in shares of AkzoNobel, which surged 16.6%.
The move came after the company rejected a joint cash takeover proposal worth €73 per share from rivals Nippon Paint and Sherwin-Williams.
The proposed offer highlighted growing consolidation interest within the global chemicals and coatings industry, although AkzoNobel decided not to proceed with the bid.
Middle East tensions limit market optimism
Despite gains across sectors, investor caution remained elevated due to rising geopolitical tensions in the Middle East.
Iran described recent US strikes as a violation of the fragile ceasefire that has been in place since April.
At the same time, Israel launched its heaviest strikes in weeks on Lebanon, adding to concerns about a wider regional escalation.
The geopolitical uncertainty kept market gains in check, with investors continuing to monitor developments closely for any potential impact on energy prices and global markets.
Oil prices and inflation remain in focus
Brent crude prices were marginally lower during the session.
However, prices remained elevated at around $98 per barrel, keeping inflation concerns firmly on investors’ radar.
Higher energy prices have remained a key concern for financial markets, as they could complicate the outlook for inflation and monetary policy across major economies.
EU approves new FDI screening framework
Meanwhile, the European Parliament approved new foreign direct investment screening rules that were provisionally agreed in December with the Council of the European Union.
The legislation still requires formal approval from the Council before it can enter into force 18 months later.
Under the revised framework, European Union member states will be required to screen investments across several sensitive sectors, including defence, dual-use goods, and critical technologies.
The updated rules are aimed at strengthening oversight of foreign investments across the European Union while also creating greater consistency in screening procedures among the bloc’s 27 member states.
The post Europe markets edge up as oil concerns keep investors cautious appeared first on Invezz
