Europe midday: Shares extend gains as EZ industrial output rebounds

European shares extended morning gains on Monday despite increased tensions in the Middle East after Iran fired drones and missiles at Israel on Saturday in retaliation for what it claimed was an Israeli attack on its consulate in Syria on April 1.

The pan-regional Stoxx 600 index was up 0.39% to 507.24. Britain’s FTSE 100 was the only outlier, down 0.43%. Investors are also looking for clues from the US Federal Reserve after hotter-than-expected inflation data last week.

‘’The week is starting on a fraught note, with unease still clouding sentiment. Investors are on alert for retaliatory action following Iran’s attack on Israel. Fears are brewing that a dangerous new episode of escalating conflict is about to roll,” said Hargreaves Lansdown analyst Susannah Streeter.

“All eyes are on diplomatic efforts being made to diffuse the situation which have helped bring down a spike in oil prices.”

Energy producers BP, Shell and Equinor were in the red as fears of a surge in the crude price dissipated.

In economic news, industrial output in the eurozone rebounded slightly in February after a significant downturn the month before, according to figures released on Monday by Eurostat.

Seasonally adjusted industrial production was up 0.8% over the month, following a 3.0% drop in January, which was revised up from the initial reading of -3.2%. The reading was in line with economists' projections.

Brent crude was close to $90 a barrel as investors fretted about supply threats if the Israel/Iran situation escalated.

In equity news, Temenos shares surged 21% after the Swiss software firm said a company-commissioned report concluded that allegations made by short seller Hindenburg Research were incorrect.

The committee found the Hindenburg report, which wiped almost a third off the company’s value in February, "presented purported facts about Temenos in a distorted manner or out of context".

Shares in Ageas rose more than 3% after French lender BNP Paribas agreed to buy a 9% stake in the Belgian insurer, its long-time partner, from China's Fosun Group for around €730m.

Reporting by Frank Prenesti for Sharecast.com