The pan-European STOXX 600 index (.STOXX) advanced 1.3% to 542.2 points as of 0908 GMT, set for its biggest single-day percentage gain in over a month, if the trend holds.Other major regional indexes also traded higher - Germany (.GDAXI) was up 2.1%, France (.FCHI) gained 1.3%, Spain (.IBEX) rose 1.4%, and the UK (.FTSE) advanced 0.4%.
Trump announced late on Monday that Iran and Israel had agreed to a ceasefire. Hours later, he confirmed it was now in effect and urged both countries to uphold the agreement.
Israeli Prime Minister Benjamin Netanyahu confirmed earlier on Tuesday that Israel has agreed to Trump's proposal for a ceasefire with Iran.
"There is political will and a desire for peace from all parties...If they can follow through, I think we will see a permanent ceasefire and we have to believe it can happen," said Nick Saunders, CEO of stock trading platform Webull UK.
All major sectors, barring energy and utilities, traded higher.
European travel and leisure (.SXTP) stocks led sectoral gains with a 3.6% rise on Israel-Iran ceasefire news.Shares in airlines rose, with Air France KLM (AIRF.PA) , Wizz Air (WIZZ.L) up 9.4% and 3.5%, respectively.Europe's largest travel operator TUI (TUI1n.DE) jumped 6.9%, among the top gainers in the STOXX 600.
On the flip side, the oil and gas sector (.SXEP) lost 2.1%, hitting two-week lows, tracking a fall in oil prices.
Heavyweight BP (BP.L) fell 4.8% and Shell (SHEL.L) lost 3.1%. Norway's Equinor (EQNR.OL) slipped 6.3% to the bottom of the STOXX.
Among other stocks, Alstom (ALSO.PA) gained nearly 7% after the French train maker signed a 1.7 billion euro ($1.96 billion) contract to supply 96 additional new generation trainsets for a line in France.
Novo Nordisk (NOVOb.CO) advanced 1.6% after the Danish drugmaker launched its blockbuster weight-loss drug Wegovy as a once-a-week injection in India.
Reporting by Sukriti Gupta and Sanchayaita Roy in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala
Reuters report
This week on Reuters
