By Twesha Dikshit

File photo: Traders work at Frankfurt stock exchange / Reuters 

(Reuters) - European shares advanced to a two-week high on Wednesday, with oil prices dropping and investor optimism rising after U.S. President Donald Trump ‌cited "great progress" toward a comprehensive peace agreement with Iran.

The pan-European STOXX 600 gained 1.5% to ‌618.89, as of 0826 GMT, rising for a second session after ending up 0.7% on Tuesday.

Major regional bourses also ​rose, with London's FTSE 100, Spain's IBEX 35, Germany's DAX and France's CAC 40, gaining between 1.4% and 1.7%.

Energy-dependent Europe has lagged major global markets that have hit record highs this year, driven by artificial intelligence-led optimism, amid lingering concerns about the impact of higher oil prices on growth and inflation.

"These ‌increasing energy prices are waiting on ⁠European growth, and this is why the market is still concerned about the consequences of the energy shock on the European environment, and the capability ⁠of the corporates to absorb these shocks," said Mabrouk Chetouane, head of global market strategy at Natixis.

"Earnings are clearly growing much faster in the U.S. than in Europe. Only a 2.3% increase is expected for ​this ​quarter, which is quite low compared to the U.S."

The ​healthcare index added 1.8% aided by Novo ‌Nordisk's 7.5% gain after the Wegovy-maker raised its full-year outlook.

Demant surged 16% and was on track for its biggest one-day gain since October 2008 after the Danish hearing aids maker beat quarterly sales growth estimates.

Banks and Industrials were up 2.7% and 1.7%, respectively.

Defence shares added 2.4%. Italy's Leonardo gained 2.8% after reporting higher first-quarter earnings, while Norway's Kongsberg jumped 6.3% after its order intake more ‌than doubled for the quarter.

British banks Natwest, Barclays, Standard ​Chartered, and Lloyds rose between 3.1% and 4.6%.

The automobile ​index rose 3.1%. BMW surged 5.6% after ​the German carmaker maintained its full-year outlook despite posting a steep drop in ‌its first-quarter pretax profit.

PMI data showed that ​Eurozone services activity contracted ​for the first time in almost a year in April, hit by weakening demand amid the Middle East war, which weighed on consumer-facing sectors.

Among other movers, Diageo was up 4.8% after the world's top ​spirits maker posted a surprise ‌growth in quarterly organic sales.

Equinor fell 5.4% after the Norwegian energy group reported a bigger-than-expected ​rise in first-quarter profit and is already up 62% year-to-date due to higher energy ​prices.

(Reporting by Twesha Dikshit; Editing by Rashmi Aich)

This week on Reuters

• Barclays becomes latest brokerage to bet on no Fed rate cuts in 2026

• How investors buy gold and what fuels the market

• Three-Circle seeks to raise up to $1 billion in Hong Kong listing, sources say

• India resumes wheat exports after four years but high prices likely to limit demand