European equity markets staged a broad-based relief rally on Thursday, driven by reports that the United States and Iran have reached a preliminary framework agreement to resolve the long-standing nuclear standoff.
The development marks a significant diplomatic shift, removing a persistent overhang on global risk sentiment and triggering a sharp repricing of geopolitical risk premiums across asset classes.
The rally was led by energy-intensive sectors and industrial stocks, which had been weighed down by fears of supply disruptions in the Strait of Hormuz.
Investors quickly moved to unwind short positions in European indices, with the STOXX Europe 600 climbing as traders digested the implications of a potential sanctions relief package for Tehran.
The move underscores how deeply geopolitical tail risks have been embedded in recent valuations, and how swiftly those premiums can evaporate when diplomatic channels open.
The framework deal, first reported by multiple wire services, is understood to involve a phased rollback of Iranian nuclear activities in exchange for the gradual lifting of international sanctions.