By Danilo Masoni
MILAN (Reuters) - European shares were supported on Wednesday by strength in oil stocks after U.S. President Donald Trump pulled the United States out of Iran's nuclear agreement, boosting crude prices.
While some well-received earnings updates also provided support, shares in companies with exposure to Iran fell, with plane maker Airbus (PA:AIR) and car makers Renault (PA:RENA) and PSA (PA:PEUP) all trading down more than 1 percent.
By 0823 GMT, the pan-European STOXX 600 (STOXX) had risen nearly 0.2 percent to fresh three-month highs, while higher crude prices helped the commodity-stocks-heavy FTSE index (FTSE) gain 0.4 percent.
The oil and gas index (SXEP) was the biggest sectoral gainer, up 1.5 percent at a three-year high as crude rallied after Trump's move on Iran raised the risk of conflict in the Middle East and cast uncertainty over global supplies.
"Whilst other signatories remain onboard, Trump’s decision potentially turns the geopolitical instability dial up a notch, especially in the Middle East," said Accendo Markets analysts in a note.
Shares in oil majors Total (PA:TOTF), Royal Dutch Shell (L:RDSa) and Eni (MI:ENI) were all trading up between 1.1 and 2.3 percent.
But higher oil prices weighed on travel stocks like airlines, whose sector index (SXTP) was also hit by a 1.8 drop in Europe's largest travel and tourism group TUI Group (L:TUIT), as its earnings update failed to inspire.
Elsewhere, Siemens (DE:SIEGn) rose 4.6 percent after the German industrial giant raised its full year profit guidance, offsetting worries over exposure to Iran.
Analysts at Jefferies reiterated their buy rating on the stock, saying the quarterly performance of Siemens was strong apart from the results of its power and gas (PG) business.
"This was a very mixed picture from Siemens with PG taking the shine off what were actually very good results... with the core automation businesses doing especially well," they wrote.
In the consumer sector, AB Inbev (BR:ABI) gained 2.3 percent after a reassuring quarterly update from the world's largest brewer, while Imperial Brands (L:IMB) advanced 4.3 percent after the tobacco company posted results that were slightly ahead of estimates.
Equities in Europe have recently outperformed Wall Street, supported by a weakening euro against a surging dollar, while the earnings season has also been supportive.
According to Thomson Reuters data, earnings beats on the MSCI EMU index outnumbered missed by nearly 6 to 3 so far, with first quarter growth seen at 3.2 percent in local currency.
In M&A news, Vodafone (L:VOD) agreed to pay $21.8 billion to buy Liberty Global's (O:LBTYA) assets in Germany and a number of other countries to take on rivals with a broader offer of superfast cable TV, broadband and mobile.
"We see the move (if completed) as positive strategically in terms of creating a stronger, converged operator," said UBS analysts, adding that the absence of an equity issuance to fund the deal was a positive.