European shares rise as US-Iran diplomacy boosts market sentiment

European shares edged higher on Monday to start August on a strong note after U.S. President Donald Trump said talks with Iran were due later in the day, lifting hopes of a diplomatic breakthrough that could ease soaring oil prices.

The pan-European STOXX 600 index .STOXX was up 0.4% at 651.88 by 7:09 GMT

Energy stocks .SXEP fell 2% as oil futures dropped about 5.9% after Trump held off on a fresh attack on Iran, seeking a quick deal to curb Tehran's nuclear ambitions and reopen the Strait of Hormuz. O/R

Travel and leisure .SXTP sector, on the other hand, gained 2.1%.

The benchmark STOXX 600 rose more than 1% in July, with strong earnings helping offset concerns over the U.S.-Iran conflict, which had pushed Brent crude above $90 a barrel. Europe is particularly exposed to higher energy costs because of its reliance on oil imports.

Prysmian PRY.MI rose 1.5% after agreeing to buy U.S. electrical products maker Atkore ATKR.N for $95 per share in cash, implying an enterprise value of about $3.8 billion.

AstraZeneca AZN.L shares tumbled 7% after a reported possible combination of the European pharmaceutical giant with U.S.-based Bristol Myers Squibb BMY.N.

-Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Nivedita Bhattacharjee/Reuters