European Stocks Close Higher as Oil Slumps, Iran-U.S. Diplomacy Hopes Ease Inflation Fears

European equities closed sharply higher on Monday, September 21, 2026, rebounding from the prior session's losses as falling oil prices eased inflation concerns and diplomatic efforts between Iran and the U.S. raised hopes of reduced Middle East tensions. The broad rally lifted major regional benchmarks, with energy costs retreating on expectations that renewed negotiations could stabilize supply routes. Lower crude prices fed directly into investor sentiment, tempering fears that elevated energy costs would keep consumer inflation stubbornly high. The gains mark a strong reversal from the previous session, when markets sold off amid escalating geopolitical risk. Traders now eye further signals from Washington and Tehran, with any concrete de-escalation likely to extend the risk-on tone across European equities.