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(Sharecast News) - European markets were up on Tuesday as investors eyed an historic vote on debt reform, the soaring gold price was centre stage as continuing political instability and a return to bombing of Gaza by Israel sent investors running for the precious metal as a safe haven.
The pan-regional Stoxx 600 was up 0.66% at 554 in early deals. Germany's DAX outperformed with a 1.15% rise as the country's parliament prepared to vote on seismic reforms to the so-called "debt brake" in order to increase defence and infrastructure spending.
Renewed Israeli airstrikes across Gaza killed more than 320 people, according to Palestinian authorities. The unprovoked break in the fragile ceasefire immediately increased regional tensions, with Houthi rebels in Yemen pledging support for Palestine, indicating that Red Sea commercial shipping would be targeted.
This sent the price of Brent crude oil up more than 1% to above $71 a barrel. Gold touched $3,017.64 per ounce, with analysts predicting a rise to $3,100 in the short term.
Uncertainty ahead of a telephone call on the war in Ukraine between US President Donald Trump and Russian leader Vladimir Putin also hit sentiment.
"In uncertain times, central banks and individuals demand gold, while inflation concerns emanating from President Trump's tariffs and trade war are also boosting the price of gold. Life above $3000 per ounce could be the norm for the gold price in 2025, it is already higher by 15% year to date, easily outpacing gains for global equities," said XTB research director Kathleen Brooks.
German equities were further boosted after a survey showed investor morale in March surged to its highest level in more than two years on the back of the government's new fiscal proposals.
The ZEW Indicator of Economic Sentiment jumped 25.6 points to 51.6 this month, the biggest one-month increase in 14 months. This was the highest level for the index since February 2022 and comfortably above the consensus forecast of 48.1.
Meanwhile, the current economic situation index for Germany remained relatively stable, rising just 0.9 points to -87.6.
"The brighter mood is likely due to positive signals regarding the future German fiscal policy, for example the agreement on the multi-billion-euro financial package for the federal budget," said ZEW president Achim Wambach.
Wambach said that prospects for metal and steel manufacturers improved, along with those for the mechanical engineering sector, while the sixth consecutive interest rate cut by the European Central Bank have helped sentiment.
In equity news, German industrial giant Thyssenkrup jumped on the survey findings and ahead of the vote in Berlin which could unlock billions in defence and major project spending. Weapons maker Rheinmetall was also higher
Reporting by Frank Prenesti for Sharecast.com