European shares climb up as investors assess US-Iran agreement

European shares inched up at open on Tuesday, following a rally in the previous session, as investors assessed the preliminary agreement between the U.S. and Iran, weighing prospects for the resumption of oil supplies through the Strait of Hormuz.

The pan-European STOXX 600 index .STOXX edged 0.3% higher to 636.01 points by 0717 GMT, with the industrial goods & services .SXNP index's 1.2% rise leading gains.

The benchmark closed at a record high on Monday following a premliminary agreement between the U.S. and Iran to end the three-month long conflict and reopen Strait of Hormuz, a crucial global oil supply route.

Oil prices extended declines on Tuesday, with Brent Crude LCOc1 trading near $82 a barrel, easing some concerns over inflation that had pushed expectations of further monetary tightening.

The European Central Bank lifted interest rates by 25 basis points last week to combat price pressures, and traders are pricing in another hike by year-end, according to LSEG-compiled data.

Central banks elsewhere are also lifting borrowing costs. The Bank of Japan raised borrowing costs to a 31-year high on Tuesday to counter price pressures linked to energy. Rate decisions by the U.S. Federal Reserve and the Bank of England later this week are also on the radar.

AI-linked stocks, which have swung sharply in recent sessions, also declined. The broader tech index .SX8P slipped 0.2%.

STMicroelectronics STMPA.PA fell 2.5% after announcing plans to issue convertible bonds worth $1.5 billion.

UniCredit CRDI.MI gained 2.8% after Germany rejected the Italian lender's offer to buy Commerzbank CBKG.DE shares, citing a low price and support for an independent Commerzbank. Commerzbank's shares were up 1%.

-Reporting by Utkarsh Hathi and Johann M Cherian in Bengaluru; Editing by Janane Venkatraman/Reuters