European stocks surged on Wednesday morning as hopes for a diplomatic breakthrough in the Iran conflict lifted market sentiment, after a report by Axios said Washington and Tehran were edging closer to a one-page framework agreement aimed at ending hostilities and paving the way for broader nuclear negotiations.

According to the report, US officials expect Iran to respond on several key points within the next 48 hours, with sources describing the talks as the closest the two sides have come to a deal since the conflict began.

Hopes of a breakthrough extended a global equity rally into Europe, with several major benchmarks climbing sharply by 12:30 CET. The EURO STOXX 50 rose 3.3%, while Germany’s DAX also gained 3.3%. London’s FTSE 100 added 2%, and France’s CAC 40 advanced 3.1%.

Oil prices also extended losses as easing geopolitical tensions reduced fears of supply disruption. International benchmark Brent crude for next-month delivery fell 8.4% to near $100 a barrel by 12:30 CET, while US benchmark West Texas Intermediate dropped more than 9.6% to $92.41 a barrel. Despite the sharp decline, oil prices remain well above the roughly $70 levels seen before the conflict began.

Crude prices have started falling previously after US President Donald Trump said Washington would temporarily pause “Project Freedom”, its naval mission escorting ships through the Strait of Hormuz, citing “great progress” in talks with Tehran.

In a post on Truth Social, Trump said the pause would allow time to determine whether an agreement “can be finalised and signed”, while stressing that the US blockade of Iranian ports would remain in force.

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In Asia, South Korea’s Kospi surged 6.5% to a record high after markets reopened following Tuesday’s holiday. The rally was led by Samsung Electronics, whose shares jumped almost 13%, pushing the company’s market value above $1 trillion for the first time.

Samsung, alongside rival SK Hynix, has emerged as a major supplier of high-performance chips powering the global AI boom. Shares in SK Hynix also rose around 10% in early trading.

Elsewhere in Asia, Australia’s S&P/ASX 200 gained nearly 1%, while Hong Kong’s Hang Seng rose 0.7% and Shanghai’s Composite index added 1%.

Japanese markets remained closed for a public holiday.

US stocks also closed higher on Tuesday, with the S&P 500 rising 0.8% to a fresh record high. The Dow Jones Industrial Average gained 0.7%, while the tech-heavy Nasdaq Composite advanced 1% to another all-time high.