European shares edge up as Middle East truce lifts sentiment

European shares nudged higher on Wednesday as investors viewed the ceasefire between Israel and Iran as a sign of de-escalating tensions.

The pan-European STOXX 600 index advanced 0.2% at 542.12 points, as of 0704 GMT. Other major regional indexes also traded higher, barring the Spanish index that fell 0.3%.

The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday, a day after both countries signalled that their air war had ended, at least for now.

Trump's Middle East envoy said late on Tuesday that talks between U.S. and Iran were "promising" and that Washington was hopeful for a long-term peace deal.

Oil prices edged higher on Wednesday, finding some respite after plummeting in the previous two sessions.

European auto stocks led the sectoral gains with a 1.2% rise, while defence stocks gained 0.9%. On the flip side, media shares fell 0.6%.

Stellantis rose 3.4% after brokerage Jefferies upgraded the carmaker to "buy" from "hold".

In focus will be the NATO summit later in the day, where defence spending will be a primary focus.

Investors will also await U.S. Federal Reserve Chair Jerome Powell's testimony before the Senate on Wednesday.