European stocks posted their biggest gain since November after reports that Iran used backchannels to contact the US about ending the war. The Stoxx Europe 600 rose 1.4% by late morning in London, with travel, leisure, and technology stocks leading the advance. The rebound came as investors speculated the conflict could be short-lived.

Travel and leisure stocks rallied alongside semiconductor companies, with ASM International NV jumping 7.3% after beating fourth-quarter order estimates. Insurer Scor SE climbed 5.5% on stronger-than-expected net income. The move provided a brief reprieve for European markets, which were still on track for their worst weekly drop since April as the Iran conflict entered its fifth day.

Wall Street's relatively mild reaction helped stabilize European sentiment, with the S&P 500 down less than 1% since the conflict erupted. US futures rose 0.2% in pre-market trading. Analysts noted that options activity, particularly the liquidation of put options, was driving much of the volatility. Portfolio managers said the market's oversold conditions created potential for a bounce, with no single sector showing as overbought for the first time since January.