European stock markets rally after report of ‘secret outreach’ by Iran to try to end war

European stock markets have rallied on a report claiming Iran is engaging in a “secret outreach” to end the war in the Middle East, after several days of heavy losses on indices around the world.The New York Times reported that a day after the attacks began, operatives from Iran’s Ministry of Intelligence indirectly contacted the CIA with an offer to discuss terms for ending the conflict.Officials briefed on the outreach are, however, sceptical – at least in the short-term – that either the Trump administration or Iran is really ready for an off-ramp, according to the report. There are also questions over whether any Iranian officials could negotiate a ceasefire agreement, as Israeli strikes have taken out many senior figures.The report helped push the UK’s FTSE 100 share index up by more than 50 points, or 0.5%, with mining companies and airlines leading the risers. The pan-European Stoxx 600 share index rose 1.2% on Wednesday, and Wall Street futures are also higher.The US dollar, which had been strengthening as investors sought out a safe haven asset, slipped 0.2%. Oil retreated, too, with the price of a barrel of Brent crude easing back to about $82.50, after jumping 3% earlier to more than $84.Gas also reversed earlier gains. European natural gas futures fell 9.5%, after soaring 60% over the past two days.“The report suggests Iranian openness to talk,” the Rabobank energy strategist Florence Schmit told Bloomberg News. “But an actual decline of prices back to pre-March levels hinges on a cessation of attacks.”Asian stock markets tumbled earlier in the day despite Donald Trump’s offer to have the US navy escort tankers through the Strait of Hormuz and the US military’s claim that there was “not a single Iranian ship under way” in the crucial waterway.The Middle East conflict has crippled the strait, which was in effect closed by Iran after strikes by the US and Israel at the weekend, raising fears of a sustained energy supply crisis that reverberated around the world.Trading in Seoul was briefly suspended on Wednesday as South Korea’s benchmark Kospi share index slumped 12%, its biggest single-day drop since 2008, after a 7% decline on Tuesday. The stock exchange of Thailand index was also suspended for a period after losses exceeded the 8% trigger point.Japan’s Nikkei 225 dropped 3.6%, while China’s CSI 300 lost 1.1% and India’s Nifty 50 declined 1.75%.In the Middle East, the Dubai and Abu Dhabi stock exchanges opened for the first time since the US and Israel struck Iran on Saturday, with the Dubai index sliding 4.9% and Abu Dhabi’s ADX down 3.3% during early trading.The US military has destroyed 17 Iranian ships, including a submarine, since Saturday, Brad Cooper, the commander of the US Central Command, said late on Tuesday. “Today, there is not a single Iranian ship under way in the Arabian Gulf, Strait of Hormuz, or Gulf of Oman,” he said in a video statement.Shipping through the Strait of Hormuz – typically a vital artery of the world economy, with about a fifth of oil supplies and seaborne gas tankers passing through it – has largely ground to a halt.How shipping slowed to a stop through the strait of HormuzHow shipping slowed to a stop through the strait of HormuzTrump sought to mitigate fears of long-term disruption to the global oil market on Tuesday, suggesting that the US military stood ready to protect ships moving through the strait, and offer political risk insurance “at a very reasonable price” to vessels navigating the Gulf.“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” the US president wrote on his Truth Social platform. “No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”Mohit Kumar, an economist at Jefferies, said: “A US insurance for ships passing through the Strait of Hormuz could be a gamechanger, if successfully implemented.”Meanwhile, thousands more Britons stranded in the Middle East were returning home on Wednesday as airlines increased their flights from the region.