Europe open: Stocks in the black as oil gains, Greece deal reached

European stocks advanced in early trade following a positive session on Wall Street and amid rising oil prices, as investors digested news that Greece has reached a breakthrough agreement with its international creditors.

At 0855 BST, the benchmark Stoxx Europe 600 index and Germany’s DAX were both up 0.8%, while France’s CAC 40 was 0.5% stronger.

Meanwhile, Greece’s ASE index was up 0.7% after Athens agreed a deal to unlock €10.3bn in loans from its creditors in return for fiscal reforms.

Oil prices gained ground after data from the American Petroleum Institute showed US crude stocks fell by 5.1m barrels last week to 536.8m, which was a much bigger drop than expected.

West Texas Intermediate was up 1.4% to $49.29 a barrel and Brent crude was 1.3% firmer at $49.26.

“After three weeks of lacklustre market performance, investor sentiment has finally turned more positive, with markets up strongly, adding to the significant gains seen yesterday. The increased probability of a Remain vote alongside aid agreement on Greece (albeit somewhat diluted) and a more optimistic view of the US economy have all combined to encourage investors back to the table,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“The major fear over recent weeks has been about the possibility of Federal Reserve moves and what the impact of US rate rises might be. However, these fears appear to be receding as Fed speakers and underlying data confirm the US economy is improving and should therefore be able to withstand prospective rate rises. With many investors underinvested, the weight of additional liquidity could provide a boost for markets over the coming weeks.”

In corporate news, Marks & Spencer was firmly under the cosh after reporting a drop in full-year profit and warning that short-term profit would take a hit from plans to turn around the clothing business.

German chemical and pharmaceutical company Bayer was in focus after US agriculture giant Monsanto rejected the company’s bid, saying it was “financially inadequate”.

Royal Mail was higher after the postal regulator decided not to impose any new price controls on the company’s wholesale or retail products but kept the cap on stamp prices and proposed tightening some rules in the 'access' market.

Pharmaceutical company Novo Nordisk rallied after the US Food & Drug Administration recommended the approval of its new diabetes drug.